REVENUE ADMINISTRATION

SALES TAX DEPARTMENT

General.—Sales Tax, an indirect tax, is an important source of revenue to the State exchequer. A General Sales Tax was first introduced in the former State of Madhya Pradesh (Central Provinces and Berar) with effect from June 1, 1947 by the Central Provinces and Berar Act (XXI of 1947). The Act underwent various amendments by the legislature, important amongst which were those effected by the Amendment Acts dated 8th October 1948, 11th April 1949, and 1st December 1953. The Act was repealed on 1st January 1960 by the Bombay Sales Tax Act (LXXVI of 1959). Up to 30th November 1953, the Act provided for levy of tax only on the sales of goods excluding those mentioned in Schedule II appended to the Act. By the Amendment Act (XX of 1953), however, provision was made to tax the purchase price of the goods purchased, on the strength of declarations prescribed under Central Provinces and Berar Sales Tax Rules [26 (3) of 1947] and utilised for purposes other than those specified in the declaration, i.e., if resold out of the former State of Madhya Pradesh or used unauthoritatively in the manufacture of goods.

Dealers liable to pay Tax:—Under the Bombay Sales Tax Act, 1959 the dealers have been divided in three categories, i.e., (1) Importer, (2) Manufacturer, and (3) Other dealer.

In respect of importer, the liability to pay tax commences when the value of goods imported is not less than Rs. 2,500 and his total turnover of sales or purchases exceeds Rs. 10,000. The manufacturer becomes liable to pay tax if the value of goods manufactured by him exceeds Rs. 2,500, if his total turnover of sales or purchases exceeds Rs. 10,000 and if his taxable sales or purchases exceed Rs. 2,500 or more.

The other dealer becomes liable to pay tax if the turnover of his purchases or sales exceeds Rs. 30,000 and his taxable sales or purchases exceeds Rs. 2,500.

No tax was levied on goods specified in schedule II which has 43 entries. The list of items exempted from taxation comprised largely the necessaries of life. A provision for voluntary registration for dealers whose turnover did not exceed the prescribed limits was introduced in 1948. In 1949, a levy at half the regular rate was introduced in respect of goods transported to other States. The general rate was similarly reduced to three pies in a rupee on goods of special importance, namely bullion and specie and vegetable oils (excepting hydrogenated products). The position originally obtaining under the Central Provinces Act was that the purchase price was added to the taxable turnover where goods were purchased by registered dealers against their registration certificates free of tax and were resold outside the area of the Madhya Pradesh State. Even after the reorganisation, Nagpur remains an important centre for the distribution of goods to the Mahakoshal area of Madhya Pradesh State and so the original restriction was found to be onerous and detrimental to the interests of the dealers of Nagpur. This restriction was accordingly removed by the Government after reorganisation.

Raw cotton, the sales of which were tax-free in the Madhya Pradesh at the time of reorganisation, was brought into the list of taxed goods after reorganisation. The Bombay Sales Tax Act, 1959, was applied to the region from January 1, 1960.

If the dealer becomes liable for payment of sales tax he has to apply for registration. If he is registered he has to file returns under Section 32 of the Bombay Sales Tax Act, 1959.

The assessment of the dealers is done under Section 33 of the Bombay Sales Tax Act, 1959. The assessments are completed after allowing deductions contemplated under Sections 7, 8, 9 and 10 of the Bombay Sales Tax Act, 1959. For the purpose of assessment the dealers are divided in two categories—viz., (1) non-document holders and (2) document holders.

On fulfilment of certain conditions stated in Sections 23, 24, 25 and 27, the dealer is entitled to hold documents known as licence, authorisation, recognition and permits. On the strength of his documents he can purchase goods without payment of tax to his vendor or on concessional rates under Section 11 of the Bombay Sales Tax Act, 1959. Section 35 contemplates reassessment of the dealer if his turnover has escaped assessment under Section 33.

Penalty has been provided under Section 36 for not furnishing the returns in time and payment of tax and concealment of transactions by the dealer.

If the dealer does not pay the amount of tax assessed, the same is recovered as arrears of land revenue under Section 38 of the Bombay Sales Tax Act, 1959. Section 39 has been provided for special mode of recovery. Under this Section the recovery can be effected from a person who holds money on account of the defaulter.

Section 37 has been provided for forfeiture of tax being collected by the dealer in contravention of the provisions under this Act.

Section 52 has been provided to allow the persons to get their disputed question determined by the department.

Provisions for appeals against the assessment order have been made in Sections 54 to 61 of the Bombay Sales Tax Act, 1959.

Section 62 has been provided for rectification of mistakes apparent on the face of records.

Section 63 has been incorporated for prosecutions of the person committing various offences. The compounding of offences has been provided for under Section 69 of the Bombay Sales Tax Act, 1959.

Before the commencement of the Bombay Sales Tax Act, 1959, the repealed Act of Central Provinces and Berar was in force and hence the actions taken under this Act have been retained by introducing Section 77 of the Bombay Sales Tax Act, 1959.

There are five schedules incorporated in the Act. Schedule A deals with tax-free commodities. The rest of the schedules B, C, D and E are incorporated for subjecting the commodities for Sales Tax and General Sales Tax, whereas, Sections 13 and 14 have been provided for imposition of purchase tax under the Act.

For regularising the administration of the Act, Bombay Sales Tax Rules, 1959 have been framed. The Act being a multi-point one, provision of the set off to be given are made under the Rules so that industrial progress in the State may not be hampered. Such set off is ordinarily given to dealers who manufacture goods for sale or who export goods outside the State.

Administrative Organisation.— Bhandara district comes under the jurisdiction of the Assistant Commissioner, Sales Tax stationed at Nagpur.

Under the Act and Rules made thereunder the Sales Tax Officer exercises the power delegated to him by the Commissioner of Sales Tax for the general administration of the Act. He registers the dealers liable to pay tax under the Act and receives periodical returns from them which show their gross turnover, taxable turnover and tax payable by them. After the closing of the year (followed by the dealers), an assessment case of all the returns for that year is prepared and the dealer is assessed by the Sales Tax Officer or the Assistant Sales Tax Officer as the case may be. Up to June 1958, the Assistant Commissioner of the Sales Tax used to exercise the powers of assessment of dealers whose gross and taxable turnover exceeded Rs. 20 lakhs and Rs. 4 lakhs, respectively. In June. 1958, powers of assessment in case of dealers whose gross turnover exceeded Rs. 1 lakh in the preceding year were delegated to the Sales Tax Officers and Assistant Commissioners were thus relieved of the assessment work. The Assistant Sales Tax Officers assess dealers having gross turnover below Rs. 1 lakh. The Sales Tax Officer is also responsible for detection of cases involving evasion of tax, etc. In short, the Sales Tax Officer is the head of the office and is principally responsible for the general administration of the Act in his circle.

The officer next above the Sales Tax Officer is the Assistant Commissioner of Sales Tax and he is the first appellate authority. Any order passed by the Sales Tax Officer is appealable. The Assistant Commissioner is also in charge of administration of the Act in the circles in his jurisdiction. He guides the Sales Tax Officer in complicated matters. Against the appellate order passed by Assistant Commissioner, Sales Tax, second appeal could be made before the Deputy Commissioner of Sales Tax. Against the second appellate order the dealer could prefer revision before the Board of Revenue or the Commissioner of Sales Tax. In the latter case, however, the decision of the Commissioner of Sales Tax is final, whereas the order of the Board of Revenue is subject to a reference and ultimate revision in the High Court.

The following statement gives the amount of Sales Tax collected in the Bhandara district and the collection charges: —

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