REVENUE AND FINANCE

SALES TAX DEPARTMENT

SALES TAX IS AN INDIRECT TAX. Being an indirect tax, the burden is not much felt by the tax-payer and thus the State Government is in a position to collect large sums causing less dissatisfaction to the tax-payer. It has become a very important source of revenue. It occupies a very significant place in the State's Budget. Its importance can be gauged from the extent of amount that is being collected through this source. It has more than compensated the loss of revenue by the introduction of Prohibition.

Being an elastic source of revenue it helps to collect more revenue by levy of tax at different stages of sales and at different rates on different commodities. The rate of tax is proportionately more on articles which are not daily necessities of life and therefore it can be said that indirectly more tax is levied on rich classes. It thus helps to bridge the gap to some extent between the income of the poor and that of the rich.

The Sales Tax Act was introduced for the first time in the then State of Bombay from 1st October, 1946. It was levied under that. Act only at the last stage of sale and it was, therefore, known as a single-point tax. This system lasted till 31st October, 1952. Under this system any reseller whose turnover of sales exceeded Rs. 30,000 or any processor or importer whose turnover exceeded, Rs. 10,000 was made liable to pay the tax. The rate of tax was Re. 0-0-6 per rupee and Re. 0-1-0 in the rupee on some selected goods which were normally consumed by persons belonging to higher income groups.

There was a provision for voluntary registration under the Act for some time. Tax on the goods despatched outside the then Bombay State, was levied at a reduced rate.

From 1st November, 1952, a new Act was put in force and it came to be known as multi-point tax. Unlike the single-point tax, tax under this Act was levied at every stage of sale excepting the stages exempted under the provisions of the Act and the Rules. This method of tax helped to raise more revenue and also to check evasion to some extent.

The rate of tax under this system was at Re. 0-0-3 per rupee except on articles scheduled as tax free and as special goods. The rare of tax varied from 1 per cent to one anna in a rupee on special goods.

The limit for registration under the Act was Rs. 30,000 without any distinction between a reseller and importer or processor. However a limit of Rs 5,000 was prescribed for the dealers dealing in special goods. This Act remained in force up to 31st March, 1954.

Current Sales Tax Act.

From 1st April. 1954 a new Act [This Act has been repealed and replaced by the Bombay Sales Tax Act, 1959, which came into force on the 1st January 1960.], was brought into force and the same continues till to-day. The system of levy of tax under this Act is known as two-point tax system. The tax is levied at every stage except when sale is to a dealer holding a licence and/or authorisation. It thus has the element of multi-point taxation. This has helped to raise more revenue.

Under this Act the tax is levied at the first point on the first sale or on the first purchase and at second point on subsequent sale of the same article, except when sold to a licensed dealer. There are three classes of tax, viz., (1) Sales Tax, (2) Purchase Tax and (3) General Sales Tax. Unlike under the system of single-point and multi-point tax there is a provision to levy purchase tax under this two-point tax. This has helped to check evasion to a great extent. The Purchase Tax is, however, not a separate tax and is only intended to seal off a loophole for evasion of either of the taxes. In effect, therefore, there is only a two-point tax system, viz., a tax generally levied at the first stage of sale (sales tax) and the tax levied generally at the last stage of sale (general sales tax).

The limit of registration under this new Act is Rs. 25,000 for resellers and Rs. 10,000 for processors, manufacturers and importers, etc., (i.e., who obtain goods from places outside the State of Maharashtra).

The rate of tax on different commodities is levied at different rates ranging from ¼ per cent to 7 per cent, in addition to general sales tax.

Great care is taken to see that at any point of sale, the tax is not collected at more than two points as provided in the Act. To ensure this, there is provision to allow set-off under rule 11 (1) to manufacturers and processors and under rule 11 (2) to resellers. This is a salient feature of this Act. This set-off is allowed to the extent of taxes paid on the purchases of goods such as raw materials, lubricants, subsidiary materials, fuel, machinery and allied goods. These provisions have ensured that the tax as far as possible, would not be recovered more than what is intended in the law.

Licences and Authorisations.

Another distinguishing feature of this Act is of granting licences and authorisations to dealers whose turnover of sales either to registered dealers or to dealers of other States exceeds Rs. 50,000. A dealer holding both these certificates can buy goods without payment of any of the taxes and can send goods outside the State or out of India. This has helped to encourage inter-State sales and export of goods. This has also helped dealers of the State to compete successfully with the traders of other States where the rate of tax is less as compared to the rate of tax in Maharashtra State.

With the introduction of the Central Sales Tax Act, 1956, it became necessary to provide for the taxation of goods resold within the various areas of the State by dealers who were registered under the Central Sales Tax Act, but not under the Local Sales Tax Laws. Such an amendment was made in the enactments applicable to the five regions. Simultaneously with the introduction of decimal coinage, the enactments were suitably amended.

On 13th December, 1957 textiles, sugar and tobacco and its products ceased to be liable to sales tax by virtue of the Bombay Sales Tax Laws (Special Exemptions) Act 19S7, and became subject only to the levy of additional excise duty imposed under the Central enactment called the Additional Duties (Goods of Special Importance) Act, 1957. This exemption did not, however, affect stocks of these commodities which were held in the then Bombay State on the midnight of 12th December, 1957, and, therefore. The Special Exemptions Act provided for the continuance of the levy of Sales Tax in respect of such stocks alone, for a further period, which actually expired on 29th June, 1958.

The dealers who hold licences only and do not hold authorisations can effect purchases free of general sales tax which is levied at second stage. This helps big dealers to buy goods without locking up their capital in payment of general sales tax at the time of purchases. This provision has thus removed difficulty in the way of wholesale trade.

The rate of tax applicable to different commodities is given in Schedule B of the Act.

No tax is levied on goods specified in Schedule A, containing 42 entries. These entries contain—

Goods not taxed.

(i) goods required mostly by agriculturists for cultivation, e.g.,agricultural implements worked or operated exclusively by human or animal agency of the following kinds: chaff-cutters, clod-crushers, harrows, iron and leather mots, iron ploughs and plough points, pick-axes, rahals, shovels, sickles, spades and wooden seed drills (entry 1); cattle, sheep and goats (5); cattle-feeds including fodder and other concentrates but excluding cotton seed (6); fertilisers (17); and manures including oil cakes (32);

(ii) necessaries of the poorer sections of the community, e.g., betel leaves (2); bread (3); butter-milk and curds (4); cereals and pulses in all forms (7) [Except when sold in sealed containers.]; chillies, chilly powder, tamarind and turmeric, whole or powdered (9) [Except when sold in sealed containers.]; eggs (15); firewood and charcoal (18); fish (19) [Except when sold in sealed containers.]; flour including atta, maida, suji and bran (20) [Except when sold in sealed containers.]; flowers (21); food and non-alcoholic drinks consumed at a hotel, restaurant, refreshment room eating house or other place where such food and drinks are served (except when the cost of food and drinks consumed at one time by one person exceeds one rupee) (22); fresh fruits (23); fresh vegetables and edible tubers (24); glass bangles sold at a rate not exceeding two annas each (25); gur (26); kerosene (28); kum-kum (30); mangalsutra with black glass beads sold at a rate not exceeding Rs. 5 each (31); meat (33) [Except when sold in sealed containers.]; milk, whole or separated (34); salt (37); slates and slate sticks and crayons; foot-rules, exercise and drawing books and lead pencils; and mathematical and drawing instrument boxes used by primary and secondary school students (38); text-books, books for supplementary reading and school atlases sanctioned by the State Government, Director of Education for the State of Maharashtra, the Educational Inspectors of Divisions or the Secondary School Certificate Examination Board or approved by the Maharashtra Municipal Schools Committee (41); and water, other than aerated and mineral water (42);

(iii) implements or raw materials of cottage industries and products of cottage industries, e.g., charkha and other implements used in the production of handspun yarn or handwoven cloth as may be specified by the State Government by notification in the official gazette (8); cloth woven in handlooms sold at a rate not exceeding Rs. 2 per yard (10); clothes and other articles of khaddar (11) [When sold by dealers recognized for the purpose by the Collector of Sales Tax.]: cotton yarn and cotton thread (13); edible oils manufactured in ghanis by human or animal agency (14); handmade paper (27) [When sold by dealers recognized for the purpose by the Collector of Sales Tax.]; khaddar (29) [When sold by dealers recognized for the purpose by the Collector of Sales Tax.];

(iv) sources of power, e.g., coal gas (when sold by a gas supply company to a local authority for consumption by such local authority for the purpose of street lighting) (12); electrical energy (16): motor spirit (as defined) (35);

(v) periodical journals published at intervals not exceeding one month (36);

(vi) stamp paper sold by vendors duly authorised under the provisions of the Indian Stamp Act, 1899 (39); and

(vii) sugar-cane (40).

Goods subject only to one class of tax.

Schedule B lists 79 specific entries and entry 80 "all goods other than those specified from time to time in Schedule A and in the preceding entries". The first 8 of these entries composed of certain raw materials of industry, viz., raw cotton (whether ginned or un-ginned) (1): cotton seeds (2); artificial silk yarn.(3); hides and skins (4); oil-seeds (5); raw silk and silk yarn (6); raw wool, wool tops and woollen yarn (other than knitting yarn) (7); staple fibre and staple fibre yarn (8); and entries 9 to 18. which specify those goods out of the goods declared essential by Parliament [under the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952] which are not specified in Schedule A to the Act, are subject only to the general sales tax and not to the sales tax. On the other hand, entries 19 to 22, viz., betel nuts (19); text-books and periodical journals except such text-books and journals as are declared tax-free under entries 36 and 41 of Schedule A, and other than account books, diaries, calendars and books containing space exceeding eight pages for being written up (not being exercise books) (20); coal (21); and safety matches (excluding matches used as fire-works) (22); are subject only to the sales tax and not to the general sales tax.

Under the present Act, the dealers have to send quarterly returns. In these returns, they are expected to give details of their sales as well as of purchases. For the first time, dealers are required to return their purchases. This helps to compare their sales with purchase at the time of assessment.

Till 31st December, 1956 dealers were required to file returns as per financial year. But thereafter they are allowed, if they so choose, to file quarterly returns as per their accounting year. This has given a great relief to the business community as otherwise they had to take out details per quarter financial year which involved a lot of trouble. This also will go a long way to expedite the assessments.

Administrative Organisation.

The Collector of Sales Tax is the head of the department for the whole of Maharashtra State. Under him are the Additional Collectors of Sales Tax in charge of different divisions. Next are Assistant Collectors of Sales Tax who are in charge of still small areas called circles and at the district level are the Sales Tax Officers.

Jalgaon comes under the jurisdiction of the Additional Collector of Sales Tax, Central Division, Bombay. The appeal against the order passed by the lower authority lies with the immediate higher authority.

Till January, 1959 there was only one Sales Tax Officer in charge of whole of the former East Khandesh district. Now there are two officers. This will help speedy assessment of dealers.

The District Officer camps at various taluka places every month. Thus dealers at taluka places are not required to come to the headquarters. This is a great facility to dealers at taluka places which are 13 in this district. This also helps speedy and better assessment.

The Sales Tax Officer exercises all the powers delegated to him under the Act. He grants registration certificates, licences and authorisations; assesses the dealers and takes steps to recover the dues. He has in addition to see that office record is properly maintained. At the stage of assessment of dealers he is assisted by Sales Tax Inspectors. The final responsibility is however that of the officer who passes the assessment order.

In addition to the administration of Sales Tax Act, he has also to administer other Acts such as (1) Motor Spirit, (2) Intoxicants Tax and (3) Central Sales Tax.

The yearwise receipts of revenue for the District of Jalgaon under the different Acts are as follows: —

TABLE No. 1

RECEIPTS.

* Motor Spirit Tax Act is being administered by the Department, since 1951.

 †Intoxicants Tax Act came into force as from 1st January, 1954 and Central Sales Tax Act from 1st July, 1957,

‡Figures are given in rupees and naye Paise.

Special Features.

The Jalgaon district had a peculiar geographical position till 1st November. 1956. it was surrounded by other State territories on three sides. So, there was possibility of evasion of tax to a larger extent. (Dealers could manage to remove goods to other Staus or to import goods from the surrounding territories and could thereby suppress transactions for evading the tax. But now. with integration of Vidarbha and Marathwada regions, the possibility of evasion of tax on a large scale by manipulation has decreased to a great extent.

Secondly, from the point of view of tax collections, Jalgaon is not an important district. It is neither industrialized nor are there big commercial centres. The internal trade is mostly in agricultural goods and particularly in plantains, grains, groundnuts and cotton. Important trade centres are Jalgaon, Amalner, Bhusawal, Pachora, Erandol, Parola and Chalisgaon. In the rural areas, there is not much trade and commerce which could be counted for the sales tax revenue. There are few industrial concerns except some powerloom factories in Jalgaon and Amalner. Besides, agricultural produce and powerloom cloth, there is some trade in mill-made cloth, kirana and tobacco goods. These articles are mostly imported from other districts and areas.

Statistics of Collection.

The following table gives for the years noted the amount of sales tax collected and collection charges in the Jalgaon District:—

TABLE No. 3

* The figures are given in rupees and naye Paise.

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