Whether 'duplicate part' of C form is sufficient?

Recently in a group discussion the following question was raised:-


Whether filing of the ‘Original’ part of the ‘C’ form is must for concessional rate of tax under CST Act, 1956 in the State of Assam? Is there any bar on allowing the benefit of concessional rate of tax, if the dealer had deposited ‘duplicate’ part of the ‘C’ form?

You may agree that neither the Central Sales Tax Act, 1956 nor the Central Sales Tax Registration & Turnover) Rules, 1957 prescribes that the ‘original’ portion of the ‘C’ form is must for availing the benefit of concessional rate of tax. However, rule 8(2) of the Central Sales Tax (Assam) Rules, 1957, as amended by notification no. ‘FTX.90/2004/Pt-II/2’ dated 5th June 2009, makes it clear that a registered dealer, who claims to have made a sale in the course of inter-state trade or commerce to another registered dealer, shall furnish to the assessing authority, within the time specified in rule 12 of the Central Rules, the portion marked “Original” of the Declaration Form “C” received by him from the purchasing dealer. Thus if we analysis the provisions of section 8(4) of CST Act together with rule 8(2) of Assam Rules in the light of the judgment of the Apex Court in the case of – ‘India Agencies (Regd.) Vs. Additional Commissioner of Commercial Taxes, Bangalore, [2005] 139 STC 329’, there remains no doubt that filing of the ‘original’ part of the C form is mandatory.

But, the rule 8(2) of Assam Rules was not same before the amendment dated 5th June, 2009. It will be interesting to study the cases prior to the said amendment. I invite the learned readers to think that whether I will be wrong in saying that for the cases prior to 5th June 2009, concessional rate of tax can be legally allowed in the State of Assam, even if the dealer had filed ‘duplicate part’ of the C form.

मैं बचकर रहना चाहता हूँ

एक समाचार पत्र के रिपोर्टर ने राह चलते एक व्यक्ति से पूछा ,"दो गुने दो कितने होते हैं "

"चार, पर इसमे पूछने की क्या बात है ? दो गुने दो चार होते हैं. " उस व्यक्ति का उत्तर था.

"क्या आपको पुरा विश्वास है की दो गुने दो चार ही होते हैं "

"हाँ ,दो गुने दो चार ही होते हैं ."

"सचमुच ?"

"हाँ, सचमुच.मैं इस बात पर ख़ुद को दाव पर लगाने को तैयार हूँ "

"वाह ! क्या कहने ,अच्छा तो आप मुझे यह बात लिख कर दे सकतें हैं ?"

"क्या ?"

"यही की दो गुने दो चार होते हैं ..बस आप यह लिखकर आज की तारीख डालकर निचे अपने दस्तखत कर दीजिये "

"आप बड़े मुर्ख जान पड़ते है.खैर मेरे पास कलम नही है "

"आप कलम की चिंता न करें मेरी कलम से लिख दीजिये"

"मैं दूसरों की कलम का उपयोग नही करता इससे छूत का भय रहता है "

"अच्छा चलिए मैं आपको नई कलम खरीद कर देता हूँ "

"तुमने क्या मुझे भिखारी समझ रखा है .मेरे घर पर मेरी अपनी बीसिओं कलमें हैं "

"कोई बात नही .क्या आज शाम को मैं आपके घर आ सकता हूँ ?"

"यदि तुम मेरे घर आओगे तो मैं तुम्हे धक्के मारकर निकाल दूंगा "

"अच्छा! तो यह बताइए दस्तखत करने में क्यों हिचकिचा रहे हैं? आपने अभी-अभी कहा है की दो गुने दो चार होते हैं ,और इस बात पर आप ख़ुद को दाव लगाने को तैयार है. "

"हाँ यह तो है ही ,पर मैं कभी भी तुम्हे यह लिखकर नही दूंगा. तुम उसे बाद में कभी भी किसी को भी दिखा सकते हो "

"तो इससे क्या हुआ? दो गुने दो तो हमेसा चार ही होते हैं न ?"

"हाँ ,होतें हैं पर भाई देखो मैं बाल -बच्चे वाला आदमी हूँ कभी राजनीती के चक्कर में नही पड़ता "

"पर यह राजनीती नही है "

"यह मैं नही जानता,पर मैं बचकर रहना चाहता हूँ. मैं नही चाहता की तुम्हे ऐसा लिखकर देने के कारन मैं किसी परेशानी में पड़ जाऊँ "

"अच्छा तो आप एक काम करें मैं स्वंय एक कागज पर लिख देता हूँ कि दो गुने दो चार होते हैं.बस आप उसपर दस्तखत कर दीजिये तब आपकी भी छुट्टी और मेरी भी, और आपको किसी भी प्रकार की परेशानी का खतरा भी नही रहेगा "

"यह तो वही बात हुई ! अगर तुम चाहो तो मैं यह लिखकर दे सकता हूँ कि आजकल सामान्यतः लोग मानते हैं कि दो गुने दो चार होते हैं .ठीक है न ? "

"नही .मैं आपकी राय जानना चाहता हूँ क्योंकि मैं लोगों के निर्भीक वक्तव्य एकत्र कर रहा हूँ "

"तब तुम भाड़ में जाओ मैं कुछ भी लिख कर देने वाला नही ."

"ठीक है ,पर यह भी याद रखिये. मैं सब लोगों से कह दूंगा की आपने कहा था, दो गुने दो चार होते हैं "

"मुझे इसकी चिंता नही मैं इंकार कर दूंगा की मैंने ऐसा कभी कहा था"

Courtsey- kadambani

Tax on deemed sale of exempted goods (Works contract).

If we go through section 11 of the Assam Value Added Tax Act, 2003, we can find that there is no scope for deducting the value of the exempted goods (First Schedule goods) from the gross turnover/ value of the works contract. In other words as per the Assam Value Added Tax Act, 2003, in case of works contract, the TIN holder contractor is liable to pay VAT @ 13.5% also on deemed sales of exempted goods.

The Constitution bench of the Supreme Court in Gannon Dunkerley (1993)’s case had clarified that “In our opinion, therefore, it would be permissible for the State Legislature to tax all the goods involved in the execution of a works contract at a uniform rate which may be different from the rates applicable to individual goods because the goods which are involved in the execution of the works contract when incorporated in the works can be classified into a separate category for the purpose of imposing the tax and a uniform rate may be prescribed for sale of such goods.” (para-236, 237).

Accordingly, it seems that the states are authorized to charge tax at a uniform rate in a works contract, but if we read the para 235 of the same judgment, it appears that the Supreme Court  had made it clear that, while calculating value of goods involved in the execution of works contract, the value of few goods are to be excluded. The Court clarified that:-:

 “We may, however, make it clear that apart from the deductions referred to above, it will be necessary to exclude from the value of the works contract the value of the goods which are not taxable in view of sections 3, 4 and 5 of the Central Sales Tax Act and goods covered by sections 14 and 15 of the Central Sales Tax Act as well as goods which are exempt from tax under the sales tax legislation of the State. The value of goods involved in the execution of a works contract will have to be determined after making these deductions and exclusions from the value of the works contract.” (para-235)

If we read all the above said three paras of the order, it appears that the power of State legislature in charging the tax at uniform rate is applicable only on the value of goods calculated as per the above said clarification of the Court. Now, I leave the matter for esteemed readers of this blog to think that, “whether in terms of the aforesaid judgment, tax on exempted goods can be levied”?

Note: Similarly, there is no provision in the Act to tax the deemed sales of declared goods in case of works contract @ 5%, but the department is levying tax @5% in view of the order of Hon'ble Gauhati High Court.

Whether Rule-8(1) has been amended……….?

Rule 8(1) of the Central Sales Tax (Assam) Rules, 1967 reads as under:-

“A registered dealer, who wishes to purchase goods from other such dealer on payment of tax at the rate applicable under the Act to sales of goods by one registered dealer to another for the purpose specified in the purchasing dealer's certificate of registration, shall obtain from the Superintendent of Taxes of his area, subject to rule 8F, a blank declaration Form 'C' for furnishing it to the selling dealer. Before furnishing the declaration to the selling dealer the purchasing dealer, or any responsible person authorised by him in this behalf, shall fill in all particulars required to be filled in the Form and shall also affix his usual signature in the space provided in the Form for this purpose. Thereafter the counterfoil of the Form shall be retained by the purchasing dealer and the other two portions marked "Original" and "Duplicate" shall be made over by him to the selling dealer”.

I don’t know whether the aforesaid rule is amended recently!!!!!!!!

TAX COLLECTED BY FOREST DEPARTMENT ON ROYALTY

It is a well known fact that in the State of Assam, the department of forest use to collect VAT on royalty paid by the vendors. The collection of VAT is made similarly as tax collected at source under Income Tax Act. The vendors from whom such taxes are collected are in dilemma regarding the way to get credit of such taxes.

The first set of questions, which emerges, amy be summarised as below:-

·         Whether the forest department is collecting tax as a seller of goods?

·         Whether the forest royalty is sale price?

·         Whether the forest department is a dealer?

·         If it is a dealer, has it been registered under the Assam Value Added Tax Act, 2003?

·         Is it issuing any retail or tax invoices?

·         If the tax has been collected on sale as an unregistered dealer, is it not a violation of    the provisions of section 31?

·         Whether the tax collected should not be forfeited as per the provisions of section 31(2)? 

·         Whether the tax payers are not entitled for refund of such tax?

It has been said that forest department is collecting VAT on behalf of the Government as per the provisions of section 31(1)(b). Most respectfully, I differ on this issue. Neither, section 31 and nor section 47 of the Act empowers any authority to collect tax unless and otherwise he is a registered dealer.

Even if for the sake of argument it is assumed that collection of tax in the instant case is legitimate, let me ask a further question- what is the mechanism and provision in the Act to provide the credit on such tax to the vendors?

In my opinion, the royalty collected by forest department is for the right to use specified immovable property and the said transaction does not falls under the ambit of ‘sale of goods’. The forest department is collecting tax at source for which there is no provision in the Act. The concern of the department for proper collection of tax on forest products can be appreciated, but it is to be remembered that the said collection should be constitutional and lawful. It is true that there is no constitutional bar on collection of tax at source, but for being lawful, the said collection must be authorised by the embedded provisions of law.

Even, if the revenue wants to continue with the present system of tax collection at source, at least a direction should be issued by the highest authority to the prescribed authorities to provide credit of the tax so collected to the respective dealers. In my humble opinion, such credit should not be in the form of input tax credit.

Let the justice prevail.

O.P. Agarwalla

MISHRI - EXEMPTED GOODS!!!!!!!!!!

Mishri is a form of sugar …. It is not sugar………

Recently a clarification bearing distinctive no. CTS-69/2006/88 has been issued on 27^th April, 2012 and it has been clarified that Makhana, Nakuldana and Mishri are nothing but sugar and is exempted under the Assam Value Added Tax Act, 2003.

I may be forgiven for saying something in contrary to the aforesaid clarification. What is being exempted under the Assam Value Added Tax Act, 2003 is ‘sugar’ and not ‘sugar in any form’.

Sugar as defined in the Central Excise Tariff Act, 1985 and adopted in section 14 of the Central Sales Tax Act, 1956 means any form of sugar in which the sucrose content would be more than 90%. Whereas the Schedule-I appended to the Assam Value Added Tax Act, 2003 exempt ‘sugar’. It may be emphasized that there is difference between two terms, i.e.‘any form of sugar’ and ‘sugar’. Mishri, Batasa etc. are undoubtedly a form of sugar, but as per my little knowledge, these goods cannot be treated as ‘Sugar’.  Case of ‘Commissioner of Sales Tax vs. Puran Chand and Sons [48 STC 284 (DEL)]’ may also be referred to, wherein the Hon’ble Court held “We are of the view that the definition of the term "sugar" given in the Central Act is given for purposes of that Act. Sugar as used in the local Act in entry 9 of the Second Schedule must be understood to be sugar which is understood to be that commodity by the common man or by a shopkeeper or a trader or a customer”.  A reference may also be made to an earlier clarification no. CTS-77/2007/270 dated 22^nd November, 2011 issued by then Commissioner of Taxes, Government of Assam.

I leave it upon the learned readers to think and decide that whether the aforesaid goods such as Makhana, Nakuldana and Mishri are exempted as ‘sugar’. In my humble opinion the aforesaid goods are ‘sugar’ as stipulated in CST Act and the said goods are liable to be taxed as declared goods.

If the aforesaid clarification is given an extended meaning, many new issues may be emerged in near future, such as:- Vermicilli/ Sewai is nothing but Maida and should exempted! Besan is nothing but pulses or gram,  and so on…….

Your honour .. please………

O.P. Agarwalla