REVENUE ADMINISTRATION

SALES TAX

Sales Tax is an indirect tax. It has become an important source of revenue and occupies a significant place in the State budget. Its importance can be gauged from the total revenue yield from this tax. It has more than compensated for the loss of revenue resulting from the introduction of Prohibition in the State. The Sales Tax was introduced for the first time in the former Bombay State from October 1, 1946. Under that Act the tax was levied only at the last stage of sale and was, therefore, known as a single point tax. From November 1, 1952, a new system known as multipoint sales tax was introduced. Unlike the single point tax system, tax under the new Act was levied at every stage of sale excepting stages exempted under the provisions of the Act and the rules thereunder. This helped to raise more revenue and to check evasion to some extent. From April 1, 1959, a new Act was brought into force. Under this Act a system known as two-point tax system was introduced. Under this system a tax was levied at every stage except when sale is to a dealer holding a licence and/or authorisation. It has thus an element of multipoint tax system.

The Bombay Sales Tax Act which came in force from January 1, 1960, is applicable to the entire State of Maharashtra. The new Act embodies the various recommendations of the Sales Tax Enquiry Committee and has repealed and replaced the various Sales Tax laws in force in the five Sales Tax regions of the State.

With the introduction of the above Act. the Bombay Sales of Intoxicants Taxation Act has been repealed and provisions for the taxing of spirituous medical preparations containing more than 12 per cent volume of alcohol (but other than those declared by Government to be not capable of causing intoxication) will now be taxed under the Bombay Sales Tax Act, 1959, at the rate of 30 nPs. in a rupee at the first stage. Similarly, country liquor brought into or manufactured in India including spirits, wines and fermented liquors will be taxed at the rate of 45 nPs. in a rupee.

In the initial stages a dealer who holds goods purchased before January, 1960, from a registered dealer in the old Bombay State area will, on the resale of the goods, be liable to pay the tax under the new Act subject to certain modifications and the benefit of section 8 (a) of the Bombay Sales Tax Act, 1953, will not be avail-able to him. Similarly, exemptions granted under the earlier laws to certain classes of goods generally or conditionally will in some cases not be accrued under the new law.

Schedule 'A' of the Bombay Sales Tax Act, 1959, lists the exempted goods subject in some cases to certain conditions and Schedules B to E list the taxable goods. Taxable goods an: broadly divided into five classes: (i) goods declared as important to interstate trade taxable only at the first stage (Schedule B, Page I); (ii) goods declared as important to inter-state trade, taxable only on the last sale (Schedule B, Part II); (iii) seventy other classes of goods taxable at only the first stage of sale (Schedule C); (iv) nine classes taxable only at the last sale (Schedule D) and (v) twenty-one classes specified and all other goods not specified elsewhere in any schedule, taxable at the first stage and on the last sale and, again to a very small incidence, at the retail stage.

Exempted Goods.

The Act seeks to exempt 47 categories of goods from the levy of tax. These are mostly goods which are exempt from the old Bombay law and consist, among others, of foodstuffs; salt, chillies and chilly powder; books and periodicals; agricultural implements of certain kinds; manures and fertilisers; firewood, char-coal and kerosene; glass-bangles; kumkum and mangalsutra pro-ducts of village industries as defined in the Khadi and Village Industries Commission Act, 1956, charkha and handloom; cattle, sheep and goats, bullock carts; cattle-feed; meals served at eating places costing not more than Re. 1 a meal; ready-made garments costing not more than Rs. 5 each; and articles which are subject-ed to tax under other laws such as fabrics of art silk and woollen and cotton fabrics, sugar, sugarcane, tobacco and its products and motor-spirit.

Single-point Tax at the First Stage of Sale.

The Act seeks to impose a single-point levy at the first stage of sale of 75 categories of goods, some of which are goods commonly known luxury goods such as motor cars; air-conditioning plants; arms and ammunition; foam-rubber sheets; cushions, etc., iron and steel furniture and upholstered furniture and also other varieties of goods both of domestic and industrial use, like dyes and chemicals, furnace oil, lubricants, safety matches, starch; drugs and medicines; machinery; vegetable oils; vanaspati; footwear; electrical goods; petroleum products other than those exempted; soap, razors; pipes and fittings of pipes; coffee and tea. The rate of tax on these goods ranges from 1 per cent leviable on cotton yarn and cotton-yarn waste to 45 per cent leviable on country and foreign liquors.

Single-point Tax at the Last Stage of Sale.

A single-point tax leviable at the last stage of sale is proposed for 17 classes of good, including gold and silver, and articles made of gold and silver; cotton and cotton waste; hides and skins; jute; oil seeds; raw wool; gur; ready-made garments costing more than Rs. 5 each; tamarind and turmeric; milk products; dried fruits, jari; jewellery; precious stones, synthetic or artificial precious stones and pearls-real, artificial or cultured. The range of tax on these categories of goods varies from half per cent leviable on gold and silver and articles made thereof to 6 per cent; leviable on categories of goods last mentioned above.

Two-point Tax.

Goods not exempted as stated previously, nor liable to the levies already mentioned, are proposed to be taxed at two stages of Sale. These include among others, goods such as cakes, biscuits, pastries, toffees and chocolates; floor and wall tiles; tinned foods; toilet roods, braids, borders, laces and trimmings; ladies' handbags and vanity bags; suit cases and attache cases; sarees and other articles of personal wear which have been embroidered or otherwise, decorated articles made of ivory, sandalwood or blackwood; culinary and flavouring essences; musical instruments; marble and articles made of marble, perfumes, depilatories and cosmetics; table cutlery; stainless steel articles, and pure silk goods. Tax is leviable at the rate of 3 per cent on the first sale of these goods other than those for which higher rates have been laid down in Schedule E of the Act. These higher rates range from 4 per cent leviable on cakes, biscuits, pastries, toffees and chocolates to 8 per cent in the case of articles made of ivory, sandalwood or black-wood, culinary and flavouring essences, musical instruments, perfumes, depilatories and cosmetics, table cutlery and stainless steel articles and pure silk goods. A uniform levy of 2 per cent has been provided on the last sale of all categories of these goods.

Elimination of System of Set-off.

An important feature of the Act is the elimination of the present Bombay system under which a dealer, whether a manufacturer or a reseller, is allowed to setoff, in full or in part, tax paid by him on the goods purchased by him which are resold by him or are used by him in the manufacture of goods for sale.

Retail Sales Tax.

A retail sales tax at the rate of ¼ per cent has been imposed on the sale of goods which are liable to the levy of tax both at the first and the last stages of sale. A dealer who does not hold a licence will alone be liable for this levy and that too on goods which he has purchased from another registered dealer. The transactions liable to this levy will not attract the other taxes on sale sought to be imposed under the Act.

Purchase Tax.

The Act also contains provisions for the levy of purchase tax in lieu of tax on sales as under the old Bombay law. An innovation made in this regard is the exemption of the first purchases to the value of Rs. 2,500 made by dealers having an annual turnover not exceeding Rs. 50,000. The purchase tax is not a separate tax and is only intended to set-off the loopholes under the Act for evasion.

Minimum turnover limits.

The minimum limits of turnover of sales or purchases laid down in the Act for attracting liability to register and to pay tax are Rs. 10,000 in the case of importers and manufacturers and Rs. 30,000 in the case of other dealers. The importers and manu-facturers who will be liable on the lower limits of turnover will be those having annual imports or manufactures to the value of Rs. 2,500 or more. Further, a dealer who has exceeded the above-said limits of turnover will not attract the liability unless he has sold or purchased taxable goods to the value of Rs. 2,500 or more. The turnover limits as proposed will have the effect of excluding from the scope of the tax a substantial number of the present assessees and afford them relief from the difficulties, felt in particular, by small dealers in complying with the administrative requirements of the tax.

For the purpose of the Administration of the Sales Tax Act, the Kolaba district is attached to Thana district and there is one Sales Tax Office for both these districts with headquarters at Thana.

There are three sales tax officers and 15 Sales Tax Inspectors in this office. Out of these officers, one officer is looking after the administration of the Sales Tax Act in Kolaba district.

The Sales Tax Officer exercises the powers delegated to him under the Bombay Sales Tax Act and Rules for the general administration of the Act in his charge. He registers and licenses dealers who are liable to payment of tax on sales and is invested with the power of assessing them. He receives periodical returns from the dealers who are registered showing their gross turnover during the period and the tax payable by them and he checks the returns, passes orders of assessment and takes steps for the recovery of the tax assessed. He has also to detect cases of tax evasion. He is the head of his office and is primarily responsible for the general administration-.

The officer next above the Sales Tax Officer is the Assistant Commissioner of Sales Tax (Administration-cum-Appeals), Central Division, Range I, Bombay, whose range of jurisdiction includes the district of Kolaba. The Sales Tax Officer seeks clarification and advice from the Assistant Commissioner in certain matters relating to the administration of the Act. He has also to submit to the Assistant Commissioner all cases which he is not competent to deal with. Appeals, against the orders of the Sales Tax Officer lie with the Assistant Commissioner. Revisions against orders passed in appeal lie before the Additional Commissioner of the division. Revisions against his orders lie before the Sales Tax Tribunal.

The following table gives for the years noted the amount of sales tax collected in Kolaba district.―

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