CENTRAL SALES TAX
ACT, 1956
[74 OF 1956]
(As amended by Finance
Bill, 2005)
An Act to formulate principles for determining when a
sale or purchase of goods takes place in the course of inter‑State trade or
commerce or outside a State or in the course of imports into or export from
India, to provide for the levy, collection and distribution of taxes on sales
of goods in the course of inter‑State trade or commerce and to declare
certain goods to be of special importance in inter‑State trade or
commerce and specify the restrictions and conditions to which State laws
imposing taxes on the sale or purchase of such goods of special importance
shall be subject :
Be it enacted by Parliament
in Seventh Year of Republic of India as follows:
1. Short title, extent and commencement
(1) This Act may be called the Central Sales Tax Act, 1956.
(2) It extends to the whole of India [* * *].
(3) It shall come into force on such date as
the Central Government may, by notification in the Official Gazette, appoint,
and different dates may be appointed for different provisions of this Act.
In this Act, unless the
context otherwise requires,-
(a) "appropriate State" means-
(i) in relation to a dealer who has one or
more places of business situate in the same State, that State;
(ii) in relation to a dealer who has places
of business situate in different States, every such State with respect to the
place or places of business situate within its territory;
(aa)
"business" includes-
(i) any trade, commerce or manufacture, or
any adventure or concern in the nature of trade, commerce or manufacture,
whether or not such trade, commerce, manufacture, adventure or concern is
carried on with a motive to make gain or profit and whether or not any gain or
profit accrues from such trade, commerce, manufacture, adventure or concern;
and
(ii) any transaction in connection with, or
incidental or ancillary to, such trade, commerce, manufacture, adventure or
concern;
(ab)
"crossing the customs frontiers
of India" means crossing the limits of the area of a customs station in
which imported goods or export goods are ordinarily kept before clearance by
customs authorities.
Explanation: For the purposes
of this clause, "customs station" and "customs
authorities," shall have the same meanings as in the Customs Act, 1962 (52
of 1962);
(b) "dealer" means any person who
carries on (whether regularly or otherwise) the business of buying, selling, supplying
or distributing goods, directly or indirectly, for cash, or for deferred
payment, or for commission, remuneration or other valuable consideration, and
includes-
(i) a local authority, a body corporate, a
company, any co‑operative society or other society, club, firm, Hindu
undivided family or other association of persons which carries on such
business.
(ii) a factor, broker, commission agent, delcredere agent, or any other mercantile agent, by
whatever name called, and whether of the same description as hereinbefore
mentioned or not, who carries on the business of buying, selling, supplying or
distributing goods belonging to any principal whether disclosed or not; and
(iii) an auctioneer who carries on the business
of selling or auctioning goods belonging to any principal, whether disclosed or
not and whether the offer of the intending purchaser is accepted by him or by
the principal or a nominee of the principal.
Explanation I: Every person
who acts as an agent, in any State, of a dealer residing outside that State and
buys, sells, supplies, or distributes, goods in the State or acts on behalf of
such dealer as-
(i) a mercantile agent as defined in the
Sale of Goods Act, 1930 (3 of 1930), or
(ii) an
agent for handling of goods or documents of title relating to goods, or
(iii) an agent for the collection or the
payment of the sale price of goods or as a guarantor for such collection or
payment,
and every local branch or
office in a State of a firm registered outside that State or a company or other
body corporate, the principal office or headquarters whereof is outside that
State, shall be deemed to be a dealer for the purposes of this Act.
Explanation 2: A government which, whether or not in the
course of business, buys, sells, supplies or distributes, goods directly or
otherwise, for cash or for deferred payment or for commission, remuneration or
other valuable consideration, shall, except in relation to any sale, supply or
distribution of surplus, unserviceable or old stores or materials or waste
products or obsolete or discarded machinery or parts or accessories thereof, be
deemed to be a dealer for the purposes of this Act
(c) "declared goods" means goods
declared under section 14 to be of special importance in inter‑State
trade or commerce;
(d) "goods" includes all
materials, articles, commodities and all other kinds of movable property, but
does not include newspapers, actionable claims, stocks, shares and securities;
(dd)
"place of business"
includes,-
(i) in any case where a dealer carries on
business through an agent by (whatever name called), the place of business of
such agent;
(ii)
a warehouse, godown or other place where a
dealer stores his goods; and
(iii) a place where a dealer keeps his books of
account
(e) "prescribed" means prescribed by rules made under
this Act;
(f) "registered dealer" means a dealer who is
registered under section 7;
(g) "sale", with its grammatical
variations and cognate expressions, means any transfer of property in goods by
one person to another for cash or deferred payment or for any other valuable
consideration, and includes,-
(i)
a transfer, otherwise than in
pursuance of a contract, of property in any goods for cash, deferred payment or
other valuable consideration;
(ii) a transfer of property in goods (whether
as goods or in some other form) involved in the execution of a works contract;
(iii) a delivery of goods on hire‑purchase
or any system of payment by installments;
(iii)
a transfer of the right to use any goods for any purpose (whether or
not for a specified period) for cash, deferred payment or other valuable
consideration;
(v) a supply of goods by any unincorporated
association or body of persons to a member thereof for cash, deferred payment
or other valuable consideration;
(vi) a supply, by way of or as part of any
service or in any other manner whatsoever, of goods, being food or any other
article for human consumption or any drink (whether or not intoxicating), where
such supply or service, is for cash, deferred payment or other valuable
consideration, but does not include a mortgage or hypothecation of or a charge
or pledge on goods
(h) "sale price" means the amount
payable to a dealer as consideration for the sale of any goods, less any sum
allowed as cash discount according to the practice normally prevailing in the
trade, but inclusive of any sum charged for anything done by the dealer in
respect of the goods at the time of or before the delivery thereof other than
the cost of freight or delivery or the cost of installation in cases where such
cost is separately charged:
PROVIDED that in the case
of a transfer of property in goods (whether as goods or in some other form) involved
in the execution of a works contract, the sale price of such goods shall be
determined in the prescribed manner by making such deduction from the total
consideration for the works contract as may be prescribed and such price shall
be deemed to be the sale price for the purposes of this clause
(i) "sales tax law" means any law
for the time being in force in any State or part thereof which provides for the
levy of taxes on the sale or purchase of goods generally or on any specified
goods expressly mentioned in that behalf, and includes value added tax law, and
"general sales tax law" means the law for the time being in force in
any State or part thereof which provides for the levy of tax on the sale or
purchase of goods generally and includes value added tax law;
(j) "turnover" used in relation
to any dealer liable to tax under this Act means the aggregate of the sale
prices received and receivable by him in respect of sales of any goods in the
course of inter‑State trade or commerce made during any prescribed period
and determined in accordance with the provisions of this Act and the rules made
thereunder;
(ja) "works contract" means a
contract for carrying out any work which includes assembling, construction,
building, altering, manufacturing, processing, fabricating, erection,
installation, fitting out, improvement, repair or commissioning of any movable
or immovable property
(k) "year", in relation to a
dealer, means the year applicable in relation to him under the general sales
tax law of the appropriate State, and where there is no such year applicable,
the financial year.
Sec. 2(d): Sec. 2, which
defines certain expressions occurring in the Act, opens with the words "In
this Act, unless the context otherwise requires". This shows that wherever
the word "goods" occurs in the enactment it is not mandatory that one
should mechanically attribute to the said expression the meaning assigned by it
in cl. (d). Ordinarily that is so. But where the
context does not permit or where the context requires otherwise, the meaning
assigned by it in the definition need not be applied.‑Printers (Mysore) Ltd. v. Asstt. CTO 1994
(93) STC 95.
Sec. 2(g): Refusal to
entertain the application for issue of C form by the purchaser of the goods in
the course of inter‑State sale which is intended to be used by him in the
execution of works contract on the anvil of there being no amendment under s.
2(g) pursuant to 46th Constitutional amendment cannot be sustained.‑N.J. Devani Builders (P) Ltd. v. STO 1995 (99) STC 506.
Sec. 2(h): It is only the
cash discount which has been allowed as a deduction from the sale price and
that should also be according to the practice normally prevailing in trade.
According to the normally prevailing practice in trade different types of
discounts are being given, The important factor which is to be seen is the
agreement or the contract which has been entered into between the buyer and the
seller. If at the time of entering of the contract for sale of any goods it is
stipulated that the price which has been charged or mentioned in the catalogue
shall stand reduced if a particular purchase is made within a particular month
or even a year, then it would be the abatement of the said price and in
accordance with the contract the price shall stand reduced as contemplated in
the contract.‑CTO v. Radiant Industries of India 1994 (95) STC 463.
The collection of charges
for printing, packing, freight, etc., which are nothing but expenses for sales
promotion, cannot be considered as exigible to sales
tax or fall within the definition of "sale" within the meaning of s.
2(h).‑Jenson & Nicholson (India) Ltd. v. State of Tamil Nadu 1,994 (93) STC 110.
Sec. 2(j): What is
contemplated by s. 20) is the net amount which is entered in the books of the
parties as the amount realisable and, therefore, any
rebate which formed an integral part of the agreement or contract and is
allowed in accordance with regular business practice has to be adjusted in the
sales tax assessment when it varies the price payable in respect of the goods.
It is the sale price which ultimately enters into the computation of the
turnover which has to be taken as the consideration for which the goods are
sold by the dealer. The dealer is entitled to have the rebate excluded from the
taxable turnover even where the case does not strictly fall under S. 2(h) in
the sense that the rebate was not given as cash discount but was otherwise
allowed in accordance with regular business practice and formed an integral
part of the agreement or contract between the dealer and the buyer and did vary
the price payable by the buyer to the extent thereof.‑State v. Alkali
& Chemical Corporation of India Ltd. 1994 (92) STC 597.
A sale or purchase of goods
shall be deemed to take place in the course of inter‑State trade or
commerce if the sale or purchase-
(a) occasions the movement of goods from one
State to another; or
(b) is effected by a transfer of documents
of title to the goods during their movement from one State to another.
Explanation I: Where goods
are delivered to a carrier or other bailee for
transmission, the movement of the goods shall, for the purposes of clause (b),
be deemed to commence at the time of such delivery and terminate at the time
when delivery is taken from such carrier or bailee.
Explanation 2: Where the
movement of goods commences and terminates in the same State it shall not be
deemed to be a movement of goods from one State to another by reason merely of
the fact that in the course of such movement the goods pass through the
territory of any other State.
Where there is a transfer
of document of title to the goods while the goods were in transit from one
State to another, the transaction was an inter‑State sale within the
meaning of s. 3(b).‑State of AP v. D. R.N. Tagore
& Co. 1995 (97) STC 451
The question whether a sale
is an inter‑State sale or not depends upon the finding as to whether
there has been a movement of goods from one State to another under a contract
of sale. If the movement of goods from one State to another is made
independently of the contract of sale, then it would not attract the provision
of s. 3(a).‑Similipahar Forest Development
Corporation Ltd. v. State of Orissa 1995 (96) STC 627
A sale would be deemed to
have occasioned the movement of the goods from one State to another within the
meaning of cl. (a) of s. 3 when the movement of those
goods is the result of a covenant or incidence of the contract of sale, even
though the property in the goods may pass in either State.‑State v. K. V.
Baby & Co. 1994 (95) STC 39
It is wholly immaterial
whether there was any contractual obligation on the part of the seller to move
the goods from one State to another. The decisive factor in the movement of
goods from one State to another State, pursuant to and as an incident of the
contract for sale.‑Indian Explosives Ltd. v. State of Bihar 1993 (89) STC
417
The question whether a
deemed sale resulting from transfer of property in goods involved in the
execution of a particular works contract amounts to a sale in the course of
inter‑State trade or commerce under s. 3 has to be decided in the light
of the particular terms of the works contract and it cannot be decided in the
abstract.‑ Gannon Dunkerley & Co. v. State
of Rajasthan 1993 (88) STC 204
The test laid down under s.
3 so as to consider a sale as an inter‑State sale is whether it occasions
the movement of goods from one State to another. If the movement of goods from one State to another is the result of a
covenant or an incident of the contract of sale, then the sale is an inter
state sale.‑East India Cotton Manufacturing Co. Ltd. v. State of Haryana 1993 (90) STC 221.
4. When is a sale or purchase of goods said to take place
outside a State
(1) Subject to the provisions contained in
section 3, when a sale or purchase of goods is determined in accordance with
sub‑section (2) to take place inside a State, such sale or purchase shall
be deemed to have taken place outside all other States.
(2) A sale or purchase of goods shall be
deemed to take place inside a State, if the goods are within the State-
(a) in the case of specific or ascertained
goods, at the time the contract of sale is made; and
(b) in the case of unascertained or future
goods, at the time of their appropriation to the contract of sale by the seller
or by the buyer, whether assent of the other party is prior or subsequent to
such appropriation.
Explanation: Where there is
a single contract of sale or purchase of goods situated at more places than
one, the provisions of this sub‑section shall apply as if there were
separate contracts in respect of the goods at each of such places.
The question whether a sale
is an outside or inside the State or whether it is a sale in the course of
import or export will have to be determined in accordance with the principles
contained in ss. 4 and 5 of the Act and the State
Legislature while enacting the sales tax legislation for the State cannot make
a departure from those principles.‑Larsen and Toubro
Ltd. v. State of Tamil Nadu 1993 (88) STC 289.
5. When
is a sale or purchase of goods said to take place in the course of import or
export
(1) A sale or purchase of goods shall be
deemed to take place in the course of the export of the goods out of the
territory of India only if the sale or purchase either occasions such export or
is effected by a transfer of documents of title to the goods after the goods
have crossed the customs frontiers of India.
(2) A sale or purchase of goods shall be
deemed to take place in the course of the import of the goods into the
territory of India only if the sale or purchase either occasions such import or
is effected by a transfer of documents of title to the goods before the goods
have crossed the customs frontiers of India.
(3) Notwithstanding anything contained in sub‑section
(1), the last sale or purchase of any goods preceding the sale or purchase
occasioning the export of those goods out of the territory of India shall also
be deemed to be in the course of such export, if such last sale or purchase
took place after, and was for the purpose of complying with, the agreement or
order for or in relation to such export.
(4) The provisions of sub‑section (3)
shall not apply to any sale or purchase of goods unless the dealer selling the
goods furnishes to the prescribed authority in the prescribed manner a
declaration duty filled and signed by the exporter to whom the goods are sold
in a prescribed form obtained from the prescribed authority,
(5) Notwithstanding anything contained in sub‑section
(1), if any designated Indian carrier purchases Aviation Turbine Fuel for the
purposes of its international flight, such purchase shall be deemed to take
place in the course of the export of goods out of the territory of India.
Explanation: For the
purposes of this sub‑section, "designated Indian carrier" means
any carrier which the Central Government may, by notification in the Official
Gazette, specify in this behalf.
Under s. 5(3) penultimate
sales will be deemed to be sales in the course of export provided the sales or
purchases took place after the agreement or order for the export of the goods
was made and the sale or purchase was for the purposes of complying with an
agreement or order for export of the goods.‑Sujir
Ganesh v. Board of Revenue 1994 (95) STC 368.
The assessee
can succeed in claiming exemption from any tax on sale of goods, if he is able
to show that the sales, occasioned the export of the goods under s. 5(1) or the
sale was effected by the transfer of documents of title to the goods after the
goods had crossed the customs frontier of India, in the case of export sale and
in the case of import by showing that the sale or purchase which occasioned the
import or the sale or purchase was effected by a transfer of documents of title
to the goods before the goods had crossed the customs frontiers of India.‑Hindustan
Motors Ltd. v. State of Tamil Nadu 1994 (93) STC 159.
The integrated activities
which form parts of the transaction which occasions the import, are the
purchase and the resultant import. The purchase by import does not involve
series of integrated activities commencing from the agreement of purchase with
the foreign seller and ending with the delivery of the goods to a common
carrier for transport into the country by land or sea. Such a purchase cannot
be dissociated from the import and therefore the said purchase and the
resultant import alone would form part of the transaction occasioning the
import. It cannot be said that a purchase of the goods, after the importation
of the same in to the country has been completed, is inextricably connected
with the transaction which occasioned the import.‑K. Gopinathan
Nair v. State of Kerala 1993 (90) STC 283.
So as to claim that the
sale of the goods has taken place in the course of export it must be satisfied
that the sale is effected by transfer of documents of title to the goods and
that the transfer of documents was effected after the goods had crossed the
customs frontiers of India.‑Kedia Vanaspathi Ltd. v. CCT 1993 (89) STC 555.
The question whether the
disputed sales were exempt from sales tax would rest on the finding to be
recorded as to whether the sales were effected by transfer of documents of
title to the goods after the goods crossed the customs frontiers of India and
without deciding this Board of Revenue would not be justified in holding that
the sales did not constitute sales in the course of export of goods.‑Steel
Authority of India Ltd. v. CST 1996 (102) STC 134.
The two requirements of sub‑s.
(3) of s. 5 which have to be satisfied for deeming the last sale or purchase of
any goods within the state to be in the course of export are that such sale or
purchase of the goods should take place after the agreement or order for or in
relation to their export and that such sale or purchase should take place for
the purpose of complying with such agreement or order. Both the conditions have
to be satisfied cumulatively.‑Mica Trading Corporation of India Ltd. v.
State of AP 1996 (100) STC 142.
6. Liability to tax on inter‑State
sales
(1) Subject to the other provisions contained
in this Act, every dealer shall, with effect from such date as the Central '
Government may, by notification in the Official Gazette, appoint, not being
earlier than thirty days from the date of such notification, be liable to pay
tax under this Act on all sales of goods other than electrical energy effected
by him in the course of inter‑State trade or commerce during any year on
and from the date so notified:
PROVIDED that a dealer
shall not be liable to pay tax under this Act on any sale of goods which, in
accordance with the provisions of sub‑section (3) of section 5 is a sale
in the course of export of those goods out of the territory of India.
(1A) A dealer shall be liable to pay tax under
this Acton a sale of any goods effected by him in the course of inter‑State
trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the
sales tax law of the appropriate State if that sale had taken place inside that
State.
(2) Notwithstanding anything contained in sub‑section
(1) or sub‑section (M), where a sale of any goods in the course of inter‑State
trade or commerce has either occasioned the movement of such goods from one
State to another or has been effected by a transfer of documents of title to
such goods during their movement from one State to another, any subsequent sale
during such movement effected by a transfer of documents of title to such
goods,-
(a) to the government, or
(b) to a registered dealer other than the
government, if the goods are of the description referred to in sub‑section
(3) of section 8,
shall be exempt from tax
under this Act:
PROVIDED that no such
subsequent sale shall be exempt from tax under this sub‑section unless
the dealer effecting the sale furnishes to the prescribed authority in the
prescribed manner and within the prescribed time or within such further time as
that authority may, for sufficient cause, permit,-
(a) a certificate duly filled and signed by
the registered dealer from whom the goods were purchased containing the
prescribed particulars in a prescribed form obtained from the prescribed
authority; and
(b) if the subsequent sale is made-
(i) to a registered dealer, a declaration
referred to in clause (a) of sub‑section (4) of section 8, or
(ii) to the government, not being a
registered dealer, a certificate referred to in clause (b) of sub‑section
(4) of section 8:
PROVIDED FURTHER that it
shall not be necessary to furnish the declaration or the certificate referred
to in clause (b) of the preceding proviso in respect of a subsequent sale of
goods if,-
(a) the sale or purchase of such goods is,
under the sales tax law of the appropriate State, exempt from tax generally or
is subject to tax generally at a rate which is lower than four per cent.
(whether called a tax or fee or by any other name); and
(b) the dealer effecting such subsequent
sale proves to the satisfaction of the authority referred to in the preceding
proviso that such sale is of the nature referred to in clause (a) or clause (b)
of this sub‑section.
(3) Notwithstanding anything contained in
this Act, no tax under this Act shall be payable by any dealer in respect of
sale of any goods made by such dealer, in the course of inter‑State trade
or commerce, to any official, personnel, consular or diplomatic agent of-
(i) any foreign diplomatic mission or
consulate in India; or
(ii) the United Nations or any other similar
international body, entitled to privileges under any convention or agreement to
which India is a party or under any law for the time being in force, if such
official, personnel, consular or diplomatic agent, as the case may be, has
purchased such goods for himself or for the purposes of such mission,
consulate, United Nations or other body.
(4) The provisions of sub‑section (3)
shall not apply to the sale of goods made in the course of inter‑State
trade or commerce unless the dealer selling such goods furnishes to the
prescribed authority a certificate in the prescribed manner on the prescribed
form duly filled and signed by the official, personnel, consular or diplomatic
agent, as the case may be.
Sec. 6(2) grants, subject
to certain qualifications and fulfilment of certain
formalities, exemption to an inter‑State sale of goods coming under s.
3(b), if it is subsequent to an earlier inter‑State sale of s. 3(a) type
or s. 3(b) type, provided the said subsequent sale is effected during the
movement of said goods from one State to another. In other words, if such a
subsequent inter‑State sale is effected by transfer of documents of title
to goods, during the movement of goods from one state to another pursuant to an
earlier inter‑State sale, such subsequent inter‑State sale is
exempted from tax.‑State of TN v. N. Ramu
Brothers 1993 (89) STC 481
6A. Burden of proof, etc., in case of transfer
of goods claimed otherwise than by way of sale
(1) Where any dealer claims that he is not
liable to pay tax under this Act, in respect of any goods, on the ground that
the movement of such goods from one State to another was occasioned by reason
of transfer of such goods by him to any other place of his business or to his
agent or principal, as the case may be, and not by reason of sale, the burden
of proving that the movement of those goods was so occasioned shall be on that
dealer and for this purpose he may furnish to the assessing authority, within
the prescribed time or within such further time as that authority may, for
sufficient cause, permit, a declaration, duly filled and signed by the
principal officer of the other place of business, or his agent or principal, as
the case may be, containing the prescribed particulars in the‑prescribed
form obtained from the prescribed authority, along with the evidence of despatch of such goods and if the dealer fails to furnish
such declaration, then, the movement of such goods shall be deemed for all
purposes of this Act to have been occasioned as a result of sale.
(2) If the assessing authority is satisfied
after making such inquiry as he may deem necessary that the particulars
contained in the declaration furnished by a dealer under sub‑section (1)
are true, he may, at the time of, or at any time before, the assessment of the
tax payable by the dealer under this Act, make an order to that effect and
thereupon the movement of goods to which the declaration relates shall be
deemed for the purpose of this Act to have been occasioned otherwise than as a
result of sale.
Explanation: In this
section, "assessing authority", in relation to a dealer, means the
authority for the time being competent to assess the tax payable by the dealer
under this Act.
(1) Every dealer liable to pay tax under this
Act shall, within such time as maybe prescribed for the purpose, make an
application for registration under this Act to such authority in the
appropriate State as the Central Government may, by general or special order,
specify, and every such application shall contain such particulars as may be
prescribed.
(2) Any dealer liable to pay tax under the sales
tax law of the appropriate State, or where there is no such law in force in the
appropriate State or any part thereof, any dealer having a place of business in
that State or part, as the case may be, may, notwithstanding that he is not
liable to pay tax under this Act, apply for registration under this Act to the
authority referred to in sub‑section (1), and every such application
shall contain such particulars as may be prescribed.
Explanation: For the
purposes of this sub‑section, a dealer shall be deemed to be liable to
pay tax under the sales tax law of the appropriate State notwithstanding that
under such law a sale or purchase made by him is exempt from tax or refund or
rebate of tax is admissible in respect thereof.
(2A) Where it appears necessary to the authority
to whom an application is made under sub‑section (1) or sub‑section
(2) so to do for the proper realisation of the tax
payable under this Act or for the proper custody and use of the forms referred
to in clause (a) of the first proviso to sub‑section (2) of section 6 or
sub‑section (1) of section 6A or clause (a) of sub‑section (4) of
section 8, he may, by an order in writing and for reasons to be recorded
therein, impose as a condition for the issue of a certificate of registration a
requirement that the dealer shall furnish in the prescribed manner and within
such time as may be specified in the order such security as may be so
specified, for all or any of the aforesaid purposes.
(3) If the authority to whom an application
under sub‑section (1) or sub‑section (2) is made is satisfied that
the application is in conformity with the provisions of this Act and the rules
made thereunder and the condition, if any, imposed
under sub‑section (2A), has been complied with, he shall register the
applicant and grant to him a certificate of registration in the prescribed form which shall specify the class or
classes of goods for the purposes of sub‑section (1) of section 8.
(3A) Where it appears necessary to the authority
granting a certificate of registration under this section so to do for the
proper realisation of tax payable under this Act or
for the proper custody and use of the forms referred to in sub‑section
(2A), he may, at any time while such certificate is in force, by an order in
writing and for reasons to be recorded therein, require the dealer, to whom the
certificate has been granted, to furnish within such time as may be specified
in the order and in the prescribed manner such security, or, if the dealer has
already furnished any security in pursuance of an order under this sub‑section
or sub‑section (2A), such additional security, as may be specified in the
order, for all or any of the aforesaid purposes.
(3B) No dealer shall be required to furnish any
security under sub‑section (2A) or any security or additional security
under sub‑section (3A) unless he has been given an opportunity of being
heard.
(3BB) The amount of
security which a dealer may be required to furnish under sub‑section (2A)
or sub‑section (3A) or the aggregate of the amount of such security and
the amount of additional security which he maybe required to furnish under sub‑section
(M), by the authority referred to therein, shall not exceed-
(a) in the case of a dealer other than a
dealer who has made an application, or who has been registered in pursuance of
an application, under sub‑section (2), a sum equal to the tax payable
under this Act, in accordance with the estimate of such authority, on the
turnover of such dealer for the year in which such security or, as the case may
be, additional security is required to be furnished; and
(b) in the case of a dealer who has made an
application, or who has been registered in pursuance of an application, under
sub‑section (2), a sum equal to the tax leviable
under this Act, in accordance with the estimate of such authority on the sales
to such dealer in the course of inter‑State trade or commerce in the year
in which such security or, as the case may be, additional security is required
to be furnished, had such dealer been not registered under this Act.
(3C) Where the security furnished by a dealer
under sub‑section (2A) or sub‑section (3A) is in the form of a
surety bond and the surety becomes insolvent or dies, the dealer shall, within
thirty days of the occurrence of any of the aforesaid events, inform the
authority granting the certificate of registration and shall within ninety days
of such occurrence furnish a fresh surety bond or furnish in the prescribed
manner other security for the amount of the bond.
(3D) The authority granting the certificate of
registration may by order and for good, and sufficient cause forfeit the whole
or any part of the security furnished by a dealer,-
(a) for realising
any amount of tax or penalty payable by the dealer;
(b) if the dealer is found to have misused
any of the forms referred to in sub‑section (2A) to have failed to keep
them in proper custody:
PROVIDED that no order
shall be passed under this sub‑section without giving the dealer an
opportunity of being heard.
(3E) Where by reason of an order under sub‑section
(M), the security furnished by any dealer is rendered insufficient, he shall
make up the deficiency in such manner and within such time as may be
prescribed.
(3F) The authority issuing the forms referred to
in sub‑section (2A) may refuse to issue such forms to a dealer who has
failed to comply with an order under that sub‑section or sub‑section
(M), or with the provisions of sub‑section (3C) or sub‑section
(3E), until the dealer has complied with such order or such provisions, as the
case may be.
(3G) The authority granting a certificate of
registration may, on application by the dealer to whom it has been granted,
order the refund of any amount or part thereof deposited by the dealer by way
of security under this section, if it is not required for the purposes of this
Act.
(3H) Any person aggrieved by an order passed
under sub‑section (2A), sub‑section (M), sub‑section (3D) or
sub‑section (3G) may, within thirty days of the service of the order on
him, but after furnishing the security, prefer, in such form and manner as may
be prescribed, an appeal against such order to such authority (hereafter in
this section referred to as the "appellate authority") as may be
prescribed:
PROVIDED that the appellate
authority may, for sufficient cause, permit such person to present the appeal,-
(a) after the expiry of the said period of thirty days; or
(b) without furnishing the whole or any part of such security.
(3I) The procedure to be followed in hearing any
appeal under sub‑section (3H), and the fees payable in respect of such
appeals shall be such as may be prescribed.
(3J) The order passed by the appellate authority
in any appeal under sub‑section (3H) shall be final.
(4) A certificate of registration granted under this section may-
(a) either on the application of the dealer
to whom it has been granted or, where no such application has been made, after
due notice to the dealer, be amended by the authority granting it if he is
satisfied that by reason of the registered dealer having changed the name,
place or nature of his business or the class or classes of goods in which he
carries on business or for any other reason the certificate of registration
granted to him requires to be amended; or
(b) be cancelled by the authority granting
it where he is satisfied, after due notice to the dealer to whom it has been
granted, that he has ceased to carry on business or has ceased to exist or has
failed without sufficient cause, to comply with an order under sub‑section
(3A) or with the provisions of sub‑section (3C) or sub‑section (3E)
or has failed to pay any tax or penalty payable under this Act, or in the case
of a dealer registered under sub‑section (2) has ceased to be liable to
pay tax under the sales tax law of the appropriate State or for any other
sufficient reason.
(5) A registered dealer may apply in the
prescribed manner not later than six months before the end of a year to the
authority which granted his certificate of registration for the cancellation of
such registration, and the authority shall, unless the dealer is liable to pay
tax under this Act, cancel the registration accordingly, and where he does so,
the cancellation shall take effect from the end of the year.
8. Rates of tax on sales in the course of
inter‑State trade or commerce
(1) Every
dealer, who in the course of inter‑State trade or commerce,-
(a) sells to the government any goods; or
(b) sells to a registered dealer other than
the government goods of the description referred to in sub‑section (3);
shall be liable to pay tax
under this Act, with effect from such date as may be notified by the Central
Government in the Official Gazette for this purpose, which shall be two per
cent. of his turnover or at the rate applicable to the sale or purchase of such
goods inside the appropriate State under the sales tax law of that State, or,
as the case may be, under any enactment of that State imposing value added tax,
whichever is lower:
PROVIDED that the rate of
tax payable under this sub‑section by a dealer shall continue to be four
per cent. of his turnover, until the rate of two per cent. takes effect under
this sub‑section.
(2) The tax payable by any dealer on his
turnover insofar as the turnover or any part thereof relates to the sale of
goods in the course of inter‑State trade or commerce not falling within
sub‑section (1)-
(a) in the case of declared goods, shall be
calculated at twice the rate applicable to the sale or purchase of such goods
inside the appropriate State;
(b) in the case of goods other than declared
goods, shall be calculated at the rate of ten per cent or at the rate
applicable to the sale or purchase of such goods inside the appropriate State,
whichever is higher.
(c) in the case of goods, the sale or, as
the case may be, the purchase of which is, under the sales tax law of the
appropriate State, exempt from tax generally shall be nil,
and for the purpose of
making any such calculation under clause (a) or clause (b), any such dealer
shall be deemed to be a dealer liable to pay tax under the sales tax law of the
appropriate State, notwithstanding that he, in fact, may not be so liable under
that law.
Explanation: For the
purposes of this sub‑section a sale or purchase of any goods shall not be
deemed to be exempt from tax generally under the sales tax law of the
appropriate State if under that law the sale or purchase of such goods is
exempt only in specified circumstances or under specified conditions or the tax
is levied on the sale or purchase of such goods at specified stages or
otherwise than with reference to the turnover of the goods.
[(2A) x x x]
(3) The goods referred to in clause (b) of sub‑section (l)
[* * *]
(b) [* * *] are goods of the class or
classes specified in the certificate of registration of the registered dealer
purchasing the goods as being intended for re‑sale by him or subject to
any rules made by the Central Government in this behalf, for use by him in the
manufacture or processing of goods for sale or 21 in the communications network
or in mining or in the generation or distribution of electricity or any other
form of power;
(c) are containers or other materials
specified in the certificate of registration of the registered dealer
purchasing the goods, being containers or materials intended for being used for
the packing of goods for sale;
(d) are containers or other materials used
for the packing of any goods or classes of goods specified in the certificate
of registration referred to in [* * *] clause (b) or for the packing of any
containers or other materials specified in the certificate of registration
referred to in clause (c).
(4) The provisions of sub‑section (1)
shall not apply to any sale in the course of inter‑State trade or
commerce unless the dealer selling the goods furnishes to the prescribed
authority in the prescribed manner,-
(a) a declaration duly filled and signed by
the registered dealer to whom the goods are sold containing the prescribed
particulars in a prescribed form obtained from the prescribed authority; or
(b) if the goods are sold to the government,
not being a registered dealer, a certificate in the prescribed form duly filled
and signed by a duly authorised officer of the
government:
PROVIDED that the
declaration referred to in clause (a) is furnished within the prescribed time
or within such further time as that authority may, for sufficient cause,
permit.
(5) Notwithstanding anything contained in
this section, 'the State Government' may on the fulfilment
of the requirements laid down in sub‑section (4) by the dealer if it is
satisfied that it is necessary so to do in the public interest, by notification
in the Official Gazette, and subject to such conditions as may be specified
therein, direct,-
(a) that no tax under this Act shall be
payable by any dealer having his place of business in the State in respect of
the sales by him, in the course of inter‑State trade or commerce, to a
registered dealer or the Government from any such place of business of any such
goods or classes of goods as may be specified in the notification, or that the tax on such sales
shall be calculated at such lower rates than those specified in sub‑section
(1) or sub‑section (2) as may be mentioned in the notification;
(b) that in respect of all sales of goods or
sales of such classes of goods as may be specified in the notification, which
are made, in the course of inter‑State trade or commerce, to a registered
dealer or the Government by any dealer having his place of business in the
State or by any class of such dealers as may be specified in the notification
to any person or to such class of persons as may be specified in the
notification, no tax under this Act shall be payable or the tax on such sales
shall be calculated at such lower rates than those specified in sub‑section
(1) or sub‑section (2) as may be mentioned in the notification.
(6) Notwithstanding anything contained in
this section, no tax under this Act shall be payable by any dealer in respect
of sale of any goods made by such dealer, in the course of inter‑State
trade or commerce to a registered dealer for the purpose of setting up,
operation, maintenance, manufacture, trading, production, processing,
assembling, repairing, reconditioning, re‑engineering, packaging or for
use as packing material or packing accessories in an unit located in any
special economic zone or for development, operation and maintenance of special
economic zone by the developer of the special economic zone, if such registered
dealer has been authorised to establish such unit or
to develop, operate and maintain such special economic zone by the authority
specified by the Central Government in this behalf.
(7) The goods referred to in sub‑section
(6) shall be the goods of such class or classes of goods as specified in the
certificate of registration of the registered dealer referred to in that sub‑section.
(8) The provisions of sub‑sections (6)
and (7) shall not apply to any sale of goods made in the course of inter‑State
trade or commerce unless the dealer selling such goods furnishes to the
prescribed authority referred to in sub‑section (4) a declaration in the
prescribed manner on the prescribed form obtained from the authority specified
by the Central Government under sub‑section (6) duly filled in and signed
by the registered dealer to whom such goods are sold.
Explanation: For the
purposes of sub‑section (6), the expression "special economic
zone" has the meaning assigned to it in clause (iii) to Explanation 2 to
the proviso to section 3 of the Central Excise Act, 1944 (1 of 1944).
Clause 118 of the Finance
(No. 2) Act, 2004, amended section 8 to extend the benefit of exemption from
payment of Central Sales Tax to individual units in special economic zones for
setting up, operation and maintenance of such units and also to developers of
special economic zones who develop, operate and maintain such special economic
zones.
What is required for
determination of goods for the purposes of s. 8(1) is that they should have
been specified in the registration certificate. Such registration ensures for
the purposes of s. 8(3)(b) and (4) for purchasing the goods from any other
dealer registered under the Act, who is liable to pay tax under the Act for the
purpose of securing the benefit of s. 8(1). Therefore, when the liability to
change under the Act by a person seeking registration under the Act is not an
essential ingredient for securing registration, the question of subsequent
intended sale attracting the provisions of the Act does not remain germane
while considering the application under s. 7 either for the grant of
registration certificate or for seeking amendment of it for including certain
goods to be specified in the certificate of registration as purchasing goods
intended to be resold or used in the manufacture or process of the goods for
sale.‑N.J, Devani Builders (P) Ltd. v. STO 1995
(99) STC 506.
In order that a commodity
be deemed to be exempt from tax generally, such an exemption must be enjoyed by
it unconditionally. An exemption which is conditional or subject to the
existence of any specified circumstances does not by reason of the Explanation
to s. 8 amount to an exemption of a general character so as to exempt the inter‑State
sales of any such product from the levy of Central Sales Tax.‑Manish
Plastics v. CCT 1995 (99) STC 293,
The terms "specified
circumstances" and "specified conditions" referred to in the
explanation to s. 8(2A) should relate to the transaction of the sale of the
goods and not the identification of the dealer or the commodity for which the
exemption was claimed.‑Pine Chemicals Ltd. v. Assessing Authority 1992
(85) STC 432.
In order to claim exemption
under s. 8(2A), it must be satisfied that the turnover of the sale of goods in
question is exempted under the appropriate State Act and the grant of exemption
under the State Act is not under any specified circumstances or specified
conditions. In other words, it is only when an exemption is granted under the
State law without specifying any circumstances or conditions that exemption can
be claimed under sub‑s. (2A) of s. 8.‑PinaAdni Seeds v. State of A.
P. 1995 (98) STC 144.
Where the exemption is only
in specified circumstances or under specified conditions, it will not fall under
the category of exemption from the tax generally where the exemption is not in
specified circumstances or not under specified conditions, it will be a case of
exemption from tax generally.‑Mahavir Coke
Industries v. Commissioner of Taxes 1995 (97) STC 186.
Sec. 8A(l)(b) contemplates
the deduction of the price of all goods returned. A sales return means a return
of the very goods purchased by the buyer in while or in part. It is a reversal
of the sale as if the sale had not taken place in respect of the returned goods
and therefore contemplates a return before the goods are appropriated and used
by the buyer. A return of the left overs after use
cannot be equated with a sales return. The return should be of goods of the
same nature and quality as those supplied.‑Grasim
Industries Ltd. v. State of Kerala 1995 (96) STC 285.
The idea behind sub‑s.
(2A) of s. 8, is to exempt the sale/purchase of goods from the Central Sales
Tax where the sale or purchase of such goods is exempt generally under the
State sales tax law. Sub‑s. (2A) of s. 8 specifically requires that such
exemption must be a general exemption and not an exemption operative in
specified circumstances or under specified conditions.‑CST v. Pine
Chemicals Ltd. 1995 (96) STC 355,
The expression "goods"
occurs on four occasions in s. 8(3)(b). On the first three occasions, there is
no doubt, it has to be understood in the sense it is defined in cl. (d) of s. 2. Indeed when s. 8(1)(b) speaks of goods, it
is really referring to goods referred to in the first half of s. 8(3)(b) i.e.
on first three occasions. It is only when s. 8(3)(b) uses the expression
"goods" in the second half of the clause i.e. on the fourth occasion
that it does not and cannot be understood in the sense it is defined in s.
2(d). In other words, the "goods" referred in the first half of cl. (b) in s. 8(3) refers to what may generally be referred
it as raw material. Sec. 2 which defines certain expressions occurring in the
Act opens with the words "in this Act, unless the context otherwise
requires". This shows that wherever the word "goods" occurs in
the enactment, it is not mandatory that one should mechanically attribute to
the said expression the meaning assigned to it in cl.
(d). Ordinarily that is so. But where the context requires otherwise, the
meaning assigned to it in the said definition need not be applied.‑Printers
(Mysore) Ltd. v. Asstt. CTO
1994 (93) STC 95.
Goods in question must be
one specified in the certificate of registration of the registered dealer and
must be intended for use by him either in the manufacture or processing of
goods on in mining or in generation or distribution of electricity or any other
form of power. The expression "in mining" cannot be construed
disjunctively and ~s controlled by the expression "by him" when goods
are purchased by a registered dealer and the goods are mentioned in the
certificate of registration and are used in mining, not by him but some other
registered dealer, then it would be a contravention of s. 8(3)(b).‑Dy. Chief Mining Engineer v. State of Orissa
1993 (9) STC 372.
The levy of surcharge is
also part of and partakes the character of a levy of sales tax on the turnover
relating to sale of goods. The mere fact that the measure or computation of the
tax has been declared to be made with reference to a particular percentage of
the tax payable by a dealer or of a percentage of the taxable turnover does not
alter the character of the levy and make it any the less a levy of sales tax on
the turnover relating to sale or purchase of goods. The words "sales tax
law" of the appropriate State will encompass any law providing for the
levy of sales tax and not necessarily the general sales tax law only.‑Engine
Valves Ltd. v. UOI 1993 (90) STC 84.
The stress in s. 8(3)(b) is
not on the question of manufacture of a distinct commercial product, but on the
fact that the use put to by the dealer of the raw materials in the manufacture
of goods for safe.‑Indian Aluminium Co. Ltd. v.
STO 1993 (90) STC 410.
The dealer is entitled to
keep a separate account of inter‑State sales tax collected by him on the
sales. If he does so, he is entitled to deduct the total amount of sales tax
from the aggregate of "sale price" which included that total tax
amount. But it the dealer fails to keep a separate account of inter‑State
sales tax collected by him, the formula given in cf. (a) of sub‑s. (1) of
s. 8A will have to be applied to fulfil the object.‑State
of Orissa v. Ghewarchand Kamal Kumar 1993 (89) STC 32.
(1) In determining the turnover of a dealer
for the purpose of this Act, the following deductions shall be made from the
aggregate of the sale prices, namely:-
(a) the amount arrived at by applying the following formula-
rate of tax x aggregate of sale prices:
100 + rate of tax
PROVIDED that no deduction
on the basis of the above formula shall be made if the amount by way of tax
collected by a registered dealer, in accordance with the provisions of this
Act, has been otherwise deducted from the aggregate of sale prices.
Explanation: Where the
turnover of a dealer is taxable at different rates, the aforesaid formula shall
be applied separately in respect of each part of the turnover liable to a
different rate of tax;
(b) the sale price of all goods returned to
the dealer by the purchasers of such goods,-
(i)
within a period of three months
from the date of delivery of the goods, in the case of goods returned before
the 14th day of May, 1966;
(ii) within a period of six months from the
date of delivery of the goods, in the case of goods returned on or after the
14th day of May, 1966:
PROVIDED that satisfactory
evidence of such return of goods and of refund or adjustment in accounts of the
sale price thereof is produced before the authority competent to assess or, as
the case may be, reassess the tax payable by the dealer under this Act; and
(c) such other deductions as the Central
Government may, having regard to the prevalent market conditions, facility of
trade and interests of consumers, prescribe.
(2) Save as otherwise provided in sub‑section
(1), in determining the turnover of a dealer for the purposes of this Act, no
deduction shall be made from the aggregate of the sale prices.
9. Levy and collection of tax and penalties
(1) The tax payable by any dealer under this
Acton sales of goods effected by him in the course of inter‑State trade
or commerce, whether such sales fall within clause (a) or clause (b) of section
3, shall be levied by the Government of India and the tax so levied shall be
collected by that Government in accordance with the provisions of sub‑section
(2), in the State from which the movement of the goods commenced:
PROVIDED that, in the case
of a sale of goods during their movement from one State to another, being a
sale subsequent to the first sale in respect of the same goods and being also a
sale which does not fall within sub‑section (2) of section 6, the tax
shall be levied and collected-
(a) where such subsequent sale has been
effected by a registered dealer in the State from which the registered dealer
obtained or, as the case may be, could have obtained, the form prescribed for
the purposes of clause (a) of sub‑section (4) of section 8 in connection with
the purchase of such goods, and
(b) where such subsequent sale has been
effected by an unregistered dealer in the State from which such subsequent sale
has been effected.
(2) Subject to the other provisions of this
Act and the rules made thereunder, the authorities
for the time being empowered to assess, reassess, collect and enforce payment
of any tax under general sales tax law of the appropriate State shall, on
behalf of the Government of India, assess, reassess, collect and enforce
payment of tax, including any' interest or penalty, payable by a dealer under
this Act as if the tax or interest or penalty payable by such a dealer under
this Act is a tax or interest or penalty payable under the general sales tax
law of the State; and for this purpose they may exercise all or any of the
powers they have under the general sales tax law of the State; and the
provisions of such law, including provisions relating to returns, provisional
assessment, advance payment of tax, registration of the transferee of any
business, imposition of the tax liability of a person carrying on business on
the transferee of, or successor to, such business, transfer of liability of any
firm or Hindu undivided family to pay tax in the event of the dissolution of
such firm or partition of such family, recovery of tax from third parties,
appeals, reviews, revisions, references, refunds, rebates, penalties charging
or payment of interest compounding of offences and treatment of documents
furnished by a dealer as confidential, shall apply accordingly:
PROVIDED that if in any
State or part thereof there is no general sales tax law in force, the Central
Government may, by rules made in this behalf make necessary provision for all
or any of the matters specified in this sub‑section.
(2A) All the provisions
relating to offences, interest and penalties (including provisions relating to penalties in
lieu of prosecution for an offence or in addition to the penalties or
punishment for an offence but excluding the provisions relating to matters
provided for in sections 10 and 10A) of the general sales tax law of each State
shall, with necessary modifications, apply in relation to the assessment,
reassessment, collection and the enforcement of payment of any tax required to
be collected under this Act in such State or in relation to any process
connected with such assessment, reassessment, collection or enforcement of
payment as if the tax under this Act were a tax under such sales tax law.
(2B) If the tax payable by any dealer under this Act
is not paid in time, the dealer shall be liable to pay interest for delayed
payment of such tax and all the provisions for delayed payment of such tax and
all the provisions relating to due date for payment of tax, rate of interest
for delayed payment of tax and assessment and collection of interest for
delayed payment of tax, of the general sales tax law of each State, shall apply
in relation to due date for payment of tax, rate of interest for delayed
payment of tax, and assessment and collection of interest for delayed payment
of tax under this Act in such States as if the tax and the interest payable
under this Act were a tax and an interest under such sales tax law.
(3) The proceeds in any financial year of any
tax, including any interest or penalty, levied and collected under this Act in
any State (other than a Union Territory) on behalf of the Government of India
shall be assigned to that State and shall be retained by it; and the proceeds
attributable to Union Territories shall form part of the Consolidated Fund of
India.
The power to collect the
Central Sales Tax has been specified in s. 9(l) and could be exercised by the
government in accordance with the provisions of sub‑s. (2) of s. 9. The
tax is leviable under the main clause by the
Government of India in the State from which the movement of the goods
commenced. After the movement of goods, if the assessee
makes subsequent inter‑State sale, then the proviso comes into picture.
The proviso to sub‑s. (1) of s. 9 provides that in the case of a sale of
goods during their movement from one State to another, being a sale subsequent
to the first sale in respect of the same goods, the tax shall, where such sale
does not fall within sub‑s. (2) of s. 6, be levied and collected in the
State form which the registered dealer effecting the subsequent sale obtained
or could have been obtained, the from prescribed for the purpose of cl. (a) of sub‑s. 4 of s. 8 in accordance with the
purchases of such goods.‑Rajendra Trading Co.
v. CTO 1994 (93) STC 71.
The liability under s. 9(2)
would have to be read along with the then existing State law and also along
with the subsequent amendments that would be made and that would come in
existence in future from time to time.‑A. Pareed
Pillay v. STO 1996 (101) STC 250.
No person who is not a
registered dealer shall collect in respect of any sale by him of goods in the
course of inter‑State trade or commerce any amount by way of tax under
this Act, and no registered dealer shall make any such collection except in
accordance with this Act and the rules made thereunder.
The amount of tax,
interest, penalty, fine or any other sum payable, and the amount of ref und
due, under the provisions of this Act shall be rounded off to the nearest rupee
and, for this purpose, where such amount contains a part of a rupee consisting
of paise, then, if such part is fifty paise or more it shall be increased to one rupee and if
such part is less than fifty paise, it shall be
ignored:
PROVIDED that nothing in
this section shall apply for the purpose of collection by a dealer of any
amount by way of tax under this Act in respect of any sale by him of goods in
the course of inter‑State trade or commerce.
If any person,-
(a) furnishes a certificate or declaration
under sub‑section (2) of section 6 or sub‑section (1) of section 6A
or sub‑section (4) or sub‑section (8) of section 8, which he knows,
or has reason to believe, to be false; or
(aa) fails to get himself registered as
required by section 7, or fails to comply with an order under sub‑section
(3A) or with the requirements of sub‑section (K) or sub‑section
(3E), of that section; or
(b) being a registered dealer, falsely represents
when purchasing any class of goods that goods of such class are covered by his
certificate of registration; or
(c) not being a registered dealer, falsely
represents when purchasing goods in the course of inter‑State trade or
commerce that he is a registered dealer.‑ or
(d) after purchasing any goods for any of
the purposes specified in clause (b) or clause (c) or clause (d) of sub‑section
(3) or sub‑section (6) of section 8 fails, without reasonable excuse, to
make use of the goods for any such purpose;
(e) has in his possession any form
prescribed for the purpose of sub‑section (4) or sub‑section (8) of
section 8 which has not been obtained by him or by his principal or by his
agent in accordance with the provisions of this Act or any rules made thereunder; or
(f) collects any amount by way of tax in
contravention of the provisions contained in section 9A,
he shall be punishable with
simple imprisonment which may extend to six months, or with fine or with both;
and when the offence is a continuing offence, with a daily fine which may
extend to fifty rupees for every day during which the offence continues.
Even where the
incorrectness of the return is claimed to be due to want of care on the part of
the assessee, for such want of care, the court may in
a given case, infer deliberateness and the return may be liable to be branded as a false return. Mens rea is an essential element
to prove offence under s. 1 0(b). The tax authorities have to establish that
representation was false to the knowledge of the assessee.
In the absence of mens rea
a dealer cannot be penalised for contravention as
prescribed in s. 10(b). In order to constitute an offence under s. 10(b), it
must be provided that the dealer made a representation that goods purchased were
covered by certificate of registration with the knowledge that they were not so
covered. The offence is committed only when goods are not covered under the
certificate of registration and there is a false representation that they are
so covered.‑Utkal Trading Co. v. STO 1994 (94)
STC 545.
If on examining the
certificate of registration, the goods which have been purchased by issuing
"C" form if found to be used for the purpose of generation or
distribution of electricity, then it cannot be said that there has been any use
other than the use for which they were purchased or mentioned in the
certificate of registration attracting s. 1(d). The Revenue had to establish
that goods had been used for purposes other than generation and distribution of
power,‑National Aluminium Co. Ltd. v. State of Orissa 1994 (93) STC 529.
The offence can be said to
have been committed when there is no reasonable excuse with the assessee. In other words, the mens
rea is the necessary ingredient of the offence and no
penalty can be levied if there is a bonafide belief
based on certain circumstances in which use was made or there is a reasonable
excuse.‑CTO v. Ajmer Zila
Dugadh Utpadak Sangh Ltd. 1993 (91) STC 234.
Imposition of penalty is
discretionary. Circumstances relevant to a decision to impose penalty have to
be considered. Consideration of circumstances relevant to the decision to
impose penalty is a necessary part of the quasi judicial function of the Sales
Tax Officer. The offences under cls. (b) and (d) of
s. 10 may be committed in varied circumstances. Every offence irrespective of
the circumstances of its commission, does not attract penalty or the same
penalty. Where the imposition of penalty is discretionary, discretion must be
exercised with in reasonable time. What is reasonable time depends upon the
circumstances of each case unless the authority is able to demonstrate that the
delay was occasioned by circumstances beyond its control or by insurmountable
difficulties, such delay is fatal to the order imposing the penalty.‑Tata Tea Ltd. v. Agrl. /T0 and
STO 1993 (91) STC 338.
(1) If any person purchasing goods is
guilty of an offence under clause (b) or clause (c) or clause (d) of section
10, the authority who granted to him or, as the case may be, is competent to
grant to him a certificate of registration under this Act may, after giving him
a reasonable opportunity of being heard, by order in writing, impose upon him
by way of penalty a sum not exceeding one‑and‑a‑half times
the tax which would have been levied under sub‑section (2) of section 8
in respect of the sale to him of the goods, if the sale had been a sale failing
within that sub‑section
PROVIDED that no
prosecution for an offence under section 10 shall be instituted in respect of
the same facts on which a penalty has been imposed under this section.
(2) The penalty imposed upon any dealer under
sub‑section (1) shall be collected by the Government of India in the
manner provided in sub‑section (2) of section 9,-
(a) in the case of an offence falling under
clause (b) or clause (it) of section 10, in the State in which the person
purchasing the goods obtained the form prescribed for the purposes of clause
(a) of sub‑section (4) of section 8 in connection with the purchase of
such goods;
(b) in the case of an offence falling under
clause (c) of section 10, in the State in which the person purchasing the goods
should have registered himself if the offence had not been committed.
(1) No court shall take cognizance of any
offence punishable under this Act or the rules made thereunder
except with the previous sanction of the government within the local limits of
whose jurisdiction the offence has been committed or of such officer of that
government as it may by general or special order, specify in this behalf, and
no court inferior to that of a presidency magistrate or a magistrate of the
first class shall try any such offence.
(2)
All offences punishable under this Act shall be cognizable and bailable.
No suit, prosecution or
other legal proceeding shall lie against any officer of government for anything
which is in good faith done or intended to be done under this Act or the rules
made thereunder.
(1) The Central Government may, by
notification in the Official Gazette, make rules providing for-
(a) the manner in which applications for
registration may be made under this Act, the particulars to be contained
therein, the procedure for the grant of such registration, the circumstances in
which registration may be refused and the form in which the certificate of
registration may be given;
(aa) the manner of determination of the sale
price and the deductions from the total consideration for a works contract
under the proviso to clause (h) of section 2;
(ab) the form and the manner for furnishing
declaration under sub‑section (8) of section 8;
(b) the period of turnover, the manner in
which the turnover in relation to the sale of any goods under this Act shall be
determined, and the deductions which may be made under clause (c) of sub‑section
(1) of section 8A in the process of such determination;
(c) the cases and circumstances in which,
and the conditions subject to which, any registration granted tinder this Act
may be cancelled;
(d) the form in which and the particulars to
be contained in any declaration or certificate to be given under this Act the
State of origin of such form or certificate and the time within which any such
certificate or declaration shall be produced or furnished;
(e) the enumeration of goods or class of
goods used in the manufacture or processing of goods for sale or in mining or
in the generation or distribution of electricity or any other form of power;
(f) the matters in respect of which
provision may be made under the proviso to sub‑section (2) of section 9;
(g) the fees payable in respect of
applications under this Act,
(h) the proper functioning of the authority constituted under
section 19;
(i) the salaries and allowances payable to,
and the terms and conditions of service of, the Chairman and Members under sub‑section
(3) of section 19;
(j) any other matter as may be prescribed.
(2) Every rule made by the Central Government
under sub‑section (1) shall be laid, as soon as may be after it is made,
before each House of Parliament, while it is in session, for a total period of
thirty days which may be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately following the
session or the successive sessions aforesaid, both Houses agree in making any
modification in the rule or both Houses agree that the rule should not be made,
the rule shall thereafter have effect only in such modified form or be of no
effect, as the case may be; so, however, that any such modification or
annulment shall be without prejudice to the validity of anything previously
done under that rule.
(3) The State Government may make rules, not
inconsistent with the provisions of this Act and the rules made under sub‑section
(1), to carry out the purposes of this Act.
(4) In particular and without prejudice to
the powers conferred by sub‑section (3), the State Government may make
rules for all or any of the following purposes, namely:-
(a) the publication of lists of registered
dealers, of the amendments made in such lists from time to time, and the
particulars to be contained in such lists;
(aa) the manner in which security may be
furnished under sub‑section (2A) or sub‑section (3A) or sub‑section
(3C) of section 7 and the manner in which and the time within which any
deficiency may be made up under sub‑section (3E) of that section
(b) the form and manner in which accounts
relating to sales in the course of inter‑State trade or commerce shall be
kept by registered dealers;
(c) the furnishing of any information
relating to the stocks of goods of purchases, sales and deliveries of books by,
any dealer or any other information relating to his business as may be
necessary for the purposes of this Act;
(d) the inspection of any books, accounts or
documents required to be kept under this Act the entry into any premises at all
reasonable times for the purposes of searching for any such books, accounts or
documents kept or suspected to be kept in such premises and the seizure of such
books, accounts or documents;
(e) the authority from whom, the conditions
subject to which and the fees subject to payment of which any form of
certificate prescribed under clause (a) of the first proviso to sub‑section
(2) of section 6 or of declaration prescribed under sub‑section (1) of
section 6A or sub‑section (4) of section 8 may be obtained, the manner in
which such forms shall be kept in custody and records relating thereto
maintained and the manner in which any such form may be used and any such
certificate or declaration may be furnished;
(ee) the form and manner in which, and the
authority to whom, an appeal may be preferred under sub‑section (3H) of
section 7, the procedure to be followed in hearing such appeals and the fees
payable in respect of such appeals
(f) in the case of an Undivided Hindu
Family, association, club, society, firm or company or in the case of a person
who carried on business as a guardian or trustee or otherwise on behalf of
another person, the furnishing of a declaration stating the name of the person
who shall be deemed to be the manager in relation to the business of the dealer
in the State and the form in which such declaration may be given;
(g) the time within which, the manner in
which and the authorities to whom any change in the ownership of any business
or in the name, place or nature of any business carried on by any dealer shall
be furnished.
(5) In making any rule under this section,
the Central Government or, as the case may be, the State Government may direct
that a breach thereof shall be punishable with fine which may extend to five
hundred rupees and when the offence is a continuing offence, with a daily fine
which may extend to fifty rupees for every day during which the offence
continues.
GOODS OF SPECIAL IMPORTANCE
IN INTER‑STATE
TRADE
OR COMMERCE
14. Certain
goods to be of special importance in inter‑State trade or commerce
It is hereby declared that
the following goods are of special importance in inter State trade or
commerce:-
(i)
Cereals, that is to say,-
(i)
Paddy (Oryza
sativa L.);
(ii) Rice (Oryza sativa L.);
(iii) Wheat (Triticum
vulgare, T. compactum, T. sphaerococcum, T. durum, T. aestivum
L. T. dicoccum);
(iv)
Jowar or milo (Sorghum vulgare Pers);
(v)
Bazra (Pennisetum typhodeum L.);
(vi)
Maize (Zea mays
L.);
(vii) Ragi (Eleusine coracana Gaertn.);
(viii)
Kodon (Paspalum scrobiculatum L.);
(ix) Kutki (Panicum miliare L.);
(x) Barley (Hordeum vulgare
L.);
(ia) Coal, including coke in all its forms,
but excluding charcoal:
PROVIDED that during the
period commencing on the 23rd day of February, 1967 and ending with the date of
commencement of section 11 of the Central Sales Tax (Amendment) Act, 1972 (61
of 1972), this clause shall have effect subject to the modification that the
words "but excluding charcoal" shall be omitted
(ii) Cotton, that is to say, all kinds of
cotton (indigenous or imported) in its unmanufactured
state, whether ginned or unginned, baled, pressed or
otherwise, but not including cotton waste;
(iia)
Cotton fabrics covered under heading
Nos. 52.05, 52.06, 52.07, 52.08,
52.09,52.10,52.11,52.12,58.01,58.02,58.03,58.04,58.05,58.06,59.01,59.03,59.05,
59.06 and 60.01 of the Schedule to the Central Excise Tariff Act, 1985 (5 of
1986);
(iib)
Cotton yarn, but not including cotton
yam waste;
(iic)
Crude oil, that is to say, crude
petroleum oils and crude oils obtained from bituminous minerals (such as shale,
calcareous rock, sand), whatever their composition, whether obtained from
normal or condensation oil‑deposits or by the destructive distillation of
bituminous minerals and whether or not subjected to all or any of the following
processes:-
(1) Decantation;
(2) De‑salting;
(3) Dehydration;
(4) Stabilisation
in order to normalise the vapour
pressure;
(5) Elimination of very light fractions with
a view to returning them to the oil‑deposits in order to improve the
drainage and maintain the pressure;
(6) The addition of only those hydrocarbons
previously recovered by physical methods during the course of the above‑mentioned
processes;
(7) Any other minor process (including
addition of pour point depressants or flow improvers) which does not change the
essential character of the substance
(iid)
Aviation Turbine Fuel sold to a Turbo‑Prop
Aircraft.
Explanation: For the
purposes of this clause, "Turbo‑Prop Aircraft" means an
aircraft deriving thrust, mainly from propeller, which may be driven by either turbine
engine or piston engine
(iii) Hides and skins, whether in a raw or
dressed state;
(iv) Iron and steel, that is to say,-
(i) pig iron, sponge iron and cast iron
including ingot moulds, bottom plates, iron scrap, cast iron scrap, runner
scrap and iron skull scrap;
(ii) Steel semis (ingots, slabs, blooms and
billets of all qualities, shapes and sizes);
(iii) Skelp bars, tin
bars, sheet bars, hoe‑bars and sleeper bars
(iv) Steel bars (rounds, rods, squares, flats,
octagons and hexagons, plain and ribbed or twisted, in coil form as well as
straight lengths);
(v) Steel structurals
(angles, joists, channels, tees, sheet piling sections, Z sections or any other
rolled sections);
(vi) Sheets, hoops, strips and skelp, both black and galvanised,
hot and cold rolled, plain and corrugated, in all qualities, in straight
lengths and in coil form, as rolled and in rivetted
condition;
(vii) Plates both plain and chequered
in all qualities;
(viii) Discs, rings, forgings and steel castings;
(ix) Tool, alloy and special steels of any of
the above categories;
(x) Steel melting scrap in all forms
including steel skull, turnings and borings;
(xi) Steel tubes, both welded and seamless, of
all diameters and lengths, including tube fittings;
(xii) Tin‑plates, both hot dipped and
electrolytic and tinfree plates;
(xiii) Fish plate bars, bearing plate bars,
crossing sleeper bars, fish plates, bearing plates, crossing sleepers and
pressed steel sleepers‑heavy and light crane rails;
(xiv) Wheels, tyres,
axles and wheels sets;
(xv) Wire rods and wires‑rolled, drawn, galvanised, aluminised, tinned or
coated such as by copper;
(xvi)
Defectives, rejects, cuttings or end pieces of any of the above
categories
(v) Jute, that is to say, the fibre extracted from plants belonging to the species Corchorus capsularies and Corchorus olitorius and the fibre known as mesta or bimli extracted from plants of the species Hibiscus cannabinus and Hibiscus sabdariffa‑Var
alitissima and the fibre
known as Sunn or Sunn‑hemp
extracted from plants of the species Crotalaria juncea
whether baled or otherwise;
(vii)
Oilseeds, that is to say,-
(i)
Groundnut or peanut (Arachis hypogaea);
(ii)
Seasamum or Til (Sesamum orientale);
(iii)
Coftonseed.(Gossypium Spp);
(iv)
Soyabean (Glycine seja);
(v)
Rapeseed and mustard-
(1)
Torta (Brassica campestris var toria);
(2)
Rai (Brassica juncea);
(3)
Jamba‑Taramira (Eruca
sativa);
(4)
Sarson, yellow and brown (Brassica
campestris var sarson);
(5)
Banarsi Rai or True
Mustard (Brassica nigra);
(vi)
Linseed (Linum usitatissimum);
(vii) Castor (Ricinus communis);
(viii) Coconut (i.e. copra excluding tender
coconuts) (Cocosnucifera),
(ix) Sunflower
(Helianthus annus);
(x) Nigar seed (Guizotia abyssinica);
(xi) Neem, vepa (Azadirachta indica);
(xii) Mahua, illupai, Ippe (Madhuca indica M. latifolia, Bassia latifolia and Madhuca longifolia syn. M. longifolia);
(xiii)
Karanja, pongam, honga (Pongamia pinnata syn. P. Glabra);
(xiv)
Kusum (Schleichera oleosa, syn. S. trijuga);
(xv) Punna, undi (Calophyllum
inophyllum)
(xv)
Kokum (Carcinia indica);
(xvii) Sal
(Shorea robusta);
(xviii)
Tung (Aleurites fordii and A. montana);
(xix) Red palm (Elaeis guinensis);
(xx) Safflower
(Carthanus tinctorius)
(via) Pulses,
that is to say,-
(i)
Gram or gulab
gram (Cicerarietinum L.);
(ii) Tur or arhar (Cajanus cajan);
(iii) Moong or green
gram (Phaseolous aureus);
(iv) Mmasur or lentil
(Lens esculenta Moench,
Lens cuinarie Medic.);
(v) Urad or black gram (Phaseolus mungo);
(vi) Moth (Phaseolus aconitifolius Jacq);
(vii) Lakh or khesari (Lathyrus Sativus);
(Vii) Man‑made fabrics covered under
heading nos. 54.08, 54.09, 54.10, 54.11, 54.12, 55.07, 55.08, 55.09, 55.10,
55.11, 55.12, 58.01, 58.02, 58.03, 58.04, 58.05, 58.06,159.01, 59.02, 59.03,
59.05, 59.06 and 60.01 of the Schedule to the Central Excise Tariff Act, 1985 (5
of 1986);
(viii)
Sugar covered under sub‑heading nos. 1701.20, 1701.31, 1701.39
and 1702.11 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);
(ix) Unmanufactured
tobacco and tobacco refuse covered under sub‑heading no. 2401.00, cigars
and cheroots of tobacco covered under heading no. 24.02, cigarettes and
cigarillos of tobacco covered under sub‑heading nos. 2403.11, and
2403.11 and other manufactured tobacco covered under sub‑heading nos. 2404.11,
2404.12, 2404.13, 2404.19, 2404.21, 2404.29, 2404.31, 2404‑39,2404.41,2404.50and2404.60
of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)
(x) Woven fabrics of wool covered under
heading nos. 51.06,51.07,58.01, 58.02,58.03 and 58.05 of the Schedule to the Central
Excise Tariff Act, 1985 (5 of 1986)
[(xi)* * *]
COMMENTS
"Cast
iron casting" in its basic or rough form must be held to be "cast
iron”. But, if thereafter any machining or polishing or any other process is
done to the rough cast iron casting or produce things like pipes, man‑hole
covers or bends, these cannot be regarded as "cast iron casting" in
its primary or rough form, but products made out of cast iron castings. Such
product cannot be regarded as "cast iron" and cannot be treated as
"declared goods" under s. 14(iv) of the Central Sales Tax Act.‑
Vasantham Foundry v. Union of India 1995 (99) STC 87.
Sec. 15 of
Central Sales Tax Act, 1956 is a code in itself, the observance of which is
mandatory for the States while imposing tax on goods declared to be of special
importance in inter‑State trade or commerce under s. 14 of the Act. By a
combined reading of ss. 14 and 15 of the Central
Sales Tax Act, 1956, the restrictions imposed are‑(i)
in respect of declared goods a tax either on sale or purchase alone can be
levied; and it cannot be on both sale and purchase; (ii) the rate of tax should
not exceed 4 per cent; (iii) the tax can be levied only at one definite stage.
The essence of a single point fixation or one stage fixation consists of
fixation of that point. In other words, in respect of declared goods what is
left to the State's domain is to determine whether the tax is to be imposed at
the point of first sale or purchase or at any one of the successive points of
sale or purchase.‑Premier Steels v. Asstt.
Commissioner (Assessment) 1995 (97) STO 395.
When the commodity
purchased by the dealer and which has suffered tax, is transformed into another
distinct commercial commodity after purchase by the dealer and when it is used
in the execution of the works contract since the two goods, viz., the commodity
purchased by the dealer and the commodity used in the execution of works
contract are distinct and different commercial commodities falling under two
different sub‑items of an entry under s. 14 of the Central Sales Tax Act,
the question of levying sales tax at more than one stage on the same commodity
does not arise.‑Tamil Nadu Mosaic Manufacturers
Association v. State of Tamil Nadu 1995 (97) STC 503.
Shoe tips, heels, tip toes,
tip nails made of iron or steel are not plates both plain and chequered in all qualities within the meaning of sub‑s.
(vii) of cl. (iv) of s. 14 of the Central Sale Tax
Act, 1956.‑Jai Shakti Traders v. State of U.P.
1995 (97) STC 114.
A "wheel" must be
capable of resolving on an axle. The cycle rim is not capable of revolving on
an axle by itself without being fitted with spokes and hubs. In commercial
circles also the cycle rim is not shown to be understood as a wheel. Therefore,
cycle rims are not wheels within the meaning of s. 14(iv)(xiv) of the Central
Sales Tax Act, 1956.‑Dewan Enterprises v. CST 1995 (96) STC 232.
Parched or fried gram not
being declared goods, the restrictions under ss. 14
and 15 do not apply.‑Gopu Ram Gram Mill Co. v.
State of A. P. 1994 (95) STC 358.
The expression "that
is to say" is employed to make clear and fix the meaning of what is to be
explained or defined. Such words are not used as a rule to amplify a meaning
while removing a possible doubt for which purpose the word "includes"
is generally employed. In the content of single point sales tax, subject to
special conditions when imposed on separate categories of specified goods, the
expression is apparently meant to exhaustively enumerate the kinds of goods
given in a list. The purpose of an enumeration in a statute dealing with sales
tax at a single point in a series of sales would be to indicate the types of
goods each of which would constitute a saparate class
for a series of sales.‑Rajasthan Roller Flour Mills Association v. State
of Rajasthan 1993 (9 1) STC 408.
It is not permissible for
the State Legislature to impose a tax on goods declared to be of special
importance in inter‑State trade or commerce under s. 14 except in
accordance with the restrictions and conditions contained in s. 15 of the
Central Sales Tax Act. The state legislature cannot so frame its law as to
convert an outside sale or a sale in the course of import and export into a
sale inside the state.‑Larsen and Toubro Ltd.
v. State of TN. 1993 (88) STC 289.
Every sales tax law of a
State shall, insofar as it imposes or authorises the
imposition of a tax on the sale or purchase of declared goods, be subject to the
following restrictions and conditions, namely:-
(a) the tax payable under that law in
respect of any sale or purchase of such goods inside the State shall not exceed
four per cent of the sale or purchase price thereof,
(b) where a tax has been levied under that
law in respect of the sale or purchase inside the State of any declared goods
and such goods are sold in the course of inter‑State trade or commerce,
and tax has been paid under this Act in respect of the sale of such goods in
the course of inter‑State trade or commerce, the tax levied under such
law shall be reimbursed to the person making such sale in the course of inter‑State
trade or commerce in such manner and subject to such conditions as may be
provided in any law in force in that State;
(c) where a tax has been levied under that
law in respect of the sale or purchase inside the State of any paddy referred
to in sub‑clause (i) of clause (i) of section 14, the tax leviable
on rice procured out of such paddy shall be reduced by the amount of tax levied
on such paddy;
(ca) where a tax on sale or purchase of paddy
referred to in sub‑clause (i) of clause (i) of section 14 is leviable
under the law and the rice procured out of such paddy is exported out of India,
then, for the purposes of sub‑section (3) of section 5, the paddy and
rice shall be treated as a single commodity
(d) each of the pulses referred to in clause
(via) of section 14, whether whole or separated, and whether with or without
husk, shall be treated as a single commodity for the purposes of levy of tax
under that law.
Sec. 15(a) of the Central
Sales Tax Act, 1956, prescribes certain restrictions upon the system of levy to
be followed and the rate of tax to be imposed by a State while taxing declared
goods. The section is a code in itself, the observance of which is mandatory
for the states while imposing tax on goods declared to be of special importance
in inter‑state Trade of Commerce under s. 14. By a combined reading of ss. 14 and 15 of the Central Sales Tax Act, the restrictions
that imposed are‑(i) in respect of declared
goods a tax either on sale or purchase alone can be levied and it cannot be on
both sale and purchase; (ii) the rate of tax should not exceed 4 per cent;
(iii) the tax can be levied only at one definite stage. The essence of a single
point fixation or one stage fixation consists of fixation of that point. In
other words, in respect of declared goods, what is left to the State's domain
is to determine whether the tax is to be imposed at the point of first sale or
purchase or at any one of the successive points of sale or purchase.‑Premier
Steels v. Asstt. Commissioner (Assessment) 1995 (97)
STC 395.
Whenever a commercial
commodity which has suffered sales tax is transformed into another distinct
commercial commodity, it becomes a separate and distinct commercial commodity
for the purpose of levy of sales tax and it can be taxed again. In such a case
s. 15(a) of the Central Sales Tax Act will have no application. When the goods
used by the dealer in the execution of the works contract are commercially
different from the goods purchased by the dealer, falling under different sub‑items
of an entry under s, 14, the question of contravention of s. 15(a) of the Act,
which prohibits levy of sales tax on declared goods at more than one stage does
not arise.‑Tamil Nadu Mosaic Manufacturers
Association v. State of Tamil Nadu 1995 (97) STC 503.
Sec. 15 of the Central
Sales Tax Act, 1956, only places certain restrictions on the rate of tax and
the stages of tax and the State law cannot place a larger burden on the tax
payers, but the categorisation of the commodity
concerned under the State law is relevant for determining the category under
which the commodity falls. If under the State law, the rate of tax for the
commodity is lower than four per cent, then the lower rate will have to be
charged. If the state law levies tax at several stages of sales than in terms
of s. 15 of the Act, in respect of declared goods, tax will have to be
restricted only to one stage.‑Dewan Enterprises
v. CST 1995 (96) STC 232.
Since s. 15(d) specifically
amplifies the content of that sub item only to pulses referred to therein
“Whether whole or separate and with or without husk” it is not permissible to
read it as applicable to gram which has been parched or fried. Parched or fried
gram not being declared goods, the restrictions and ss.
14 and 15 do not apply.‑Gopuram Gram Mill Co.
Ltd. v. State of A. F 1994 (95) STC 358.
It is not possible for the
State Legislature to impose a tax on goods declared to be of special importance
in inter‑State trade or commerce under s. 14 of the Central Sales Tax Act
except in accordance with the restrictions and conditions contained in s. 15 of
the Act. The State legislature cannot so form it law as to convert an outside
sale or a sale in the course of import and export into a sale inside the state.‑Larsen
and Toubro Ltd. v. State of Tamil Nadu
1993 (88) STO 289.
In this Chapter,-
(a) "appropriate authority", in relation
to a company, means the authority competent to assess tax on the company;
(b) "company" and "private
company" have the meanings respectively assigned to them by clauses (i) and (iii) of sub‑section (1) of section 3 of the
Companies Act, 1956 (1 of 1956),
(1) Every
person,-
(a) who is the liquidator of any company
which is being wound up, whether under the orders of a court or otherwise; or
(b) who has been appointed the receiver of
any assets of a company (hereinafter referred to as the liquidator) shall,
within thirty days after he has become such liquidator, give notice of his
appointment as such to the appropriate authority.
(2) The appropriate authority shall, after
making such inquiry or calling for such information is it may deem fit, notify
to the liquidator within three months from the date on which he receives notice
of the appointment of the liquidator the amount which, in the opinion of the
appropriate authority would be sufficient to provide for any tax which is then,
or is likely thereafter to become payable by the company.
(3) The liquidator shall not part with any of
the assets of the company or the properties in his hands until he has been
notified by the appropriate authority under sub‑section (2) and on being
so notified, shall set aside an amount equal to the amount notified and, until
he so sets aside such amount, shall not part with any of the assets of the
company or the properties in his hands:
PROVIDED that nothing
contained in this sub‑section shall debar the liquidator from parting
with such assets or properties in compliance with any order of a court or for
the purpose of the payment of the tax payable by the company under this Act or
for making any payment to secured creditors whose debts are entitled under law
to priority of payment over debts due to government on the date of liquidation
or for meeting such costs and expenses of the winding up of the company as are
in the opinion of the appropriate authority reasonable.
(4) If the liquidator fails to give the
notice in accordance with sub‑section (1) or fails to set aside the
amount as required by, or parts with any of the assets of the company or the
properties in his hands in contravention of the provisions of sub‑section
(3), he shall be personally liable for the payment of the tax which the company
would be liable to pay:
PROVIDED that if the amount
of any tax payable by the company is notified under sub‑section (2), the
personal liability of the liquidator under this sub‑section shall be to
the extent of such amount.
(5) Where there are more liquidators than
one, the obligations and liabilities attached to the liquidator under this
section shall attach to all the liquidators jointly and severally.
(6) The provisions of this section shall have
effect notwithstanding anything to the contrary contained in any other law for
the time being in force.
18. Liability of directors of private company in liquidation
Notwithstanding anything
contained in the Companies Act, 1956 (1 of 1956), when any private company is
wound up after the commencement of this Act, and any tax assessed on the
company under this Act for any period, whether before or in the course of or
after its liquidation, cannot be recovered, then, every person who was a
director of the private company at any time during the period for which the tax
is due shall be jointly and severally liable for the payment of such tax unless
he proves that the non‑recovery ca ( to any gross neglect, misfeasance or
breach of duty on his part in relation to the affairs of the company.
AUTHORITY TO SETTLE
DISPUTES IN COURSE OF INTER‑STATE TRADE OR COMMERCE
19. Central Sales Tax Appellate Authority
(1) The Central Government shall constitute,
by notification in the official Gazette, an Authority to settle inter‑State
disputes falling under section 6A read with section 9 of this Act, to be known
as "the Central Sales Tax Appellate Authority (hereinafter referred to as
the Authority)".
(2) The Authority shall consist of the
following Members appointed by the Central Government, namely:-
(a) a Chairman, who is a retired Judge of
the Supreme Court, or a retired Chief Justice of a High Court;
(b) an officer of the Indian Legal Service
who is, or is qualified to be, an Additional Secretary to the Government of
India; and
(c) an officer of a State Government not
below the rank of Secretary or an officer of the Central Government not below
the rank of Additional Secretary, who is an expert in sales tax matters.
(3) The salaries and allowances payable to,
and the terms and conditions of service of, the Chairman and Members shall be
such as may be prescribed.
(4) The Central Government shall provide the
Authority with such officers and staff as may be necessary for the efficient
exercise of the powers of the Authority under this Act.
(1) The provisions of this Chapter shall
apply to appeals filed by the aggrieved dealer against any order of the
assessing authority made under section 6A read with section 9 of this Act,
which realtes to any dispute concerning the sale of
goods effected in the course of inter‑State trade or commerce.
(2) Notwithstanding anything contained in the
general sales tax laws, the Authority shall adjudicate an appeal filed by a
dealer aggrieved under sub‑section (1) within forty‑five days from
the date on which order referred to in that sub‑section is served on him:
PROVIDED that the Authority
may entertain any appeal after the expiry of the said period of forty‑five
days, but not later than sixty days, from the date of such service, if it is
satisfied that the appellant was prevented by sufficient cause from filing the
appeal in time.
Sec. 163 of the Finance
Act, 2003 has amended sec. 20 of the CST Act to enable a dealer to file appeal
to the Central Authority against any order of the assessing authority only
where an inter‑State dispute is involved. This should be done within
forty‑five days from the date of service of the order which may be
extended to sixty days if the appellant was prevented by sufficient cause from
filing the appeal.
[(3) x x
x]
(4) The application shall be made in
quadruplicate and be accompanied by a fee of five thousand rupees.
21. Procedure on receipt of application
(1) On receipt of an appeal, the Authority
shall cause a copy thereof to be forwarded to the assessing authority concerned
and to call upon it to furnish the relevant records:
PROVIDED that such records
shall, as soon as possible, be returned to the assessing authority.
(2) The Authority shall adjudicate and decide
upon the appeal filed against an order of the assessing authority.
(3) The Authority, after examining the appeal
and the records called for, by order, either allow or reject the appeal:
PROVIDED that no appeal
shall be rejected unless an opportunity has been given to the appellant of
being heard in person or through a duly authorised
representative, and '[also to each State Government] concerned with the appeal
of being heard:]
PROVIDED FURTHER that
whether an appeal is rejected or accepted, reasons for such rejection or
acceptance shall be given in the order.
(4) The Authority shall make an endeavour to pronounce its order in writing within six
months of the receipt of the appeal.
(5) A copy of every order made under sub‑section
(3) shall be sent to the appellant and to the assessing authority.
The Finance Act, 2003 vide
its clause 164 had amended sec. 21 of the CST Act, to enable the Authority also
to forward the copy of appeal to the concerned State Government and to call
upon it to furnish relevant records. The records furnished by the State
Government concerned shall be soon as possible be returned to it.
(1) The Authority shall have the same powers
as are vested in a court under the Code of Civil Procedure, 1908, while trying
a suit in respect of the following matters, namely:-
(a) enforcing the attendance of any person,
examining him on oath or affirmation;
(b) compelling the production of accounts
and documents;
(c) issuing commission for the examination
of witnesses;
(d) the reception of evidence on affidavits;
(e) any other matter which may be
prescribed.
(1A) The Authority may grant stay of the
operation of the order of the assessing authority against which the appeal is
filed before it or order the pre‑deposit of the tax before entertaining
the appeal and while granting such stay or making such order for the pre‑deposit
of the tax, the Authority shall have regard, if the assessee
has already made pre‑deposit of the tax under the general sales tax law
of the State concerned, to such pre‑deposit.
(2) Every proceeding before the Authority
shall be deemed to be a judicial proceeding within the meaning of sections 193
and 228 of the Indian Penal Code and the Authority shall be deemed to be a
civil court for the purposes of section 195 and Chapter XXVI of the Code of
Criminal Procedure, 1973.
The Authority shall,
subject to the provisions of this Chapter, have power to regulate its own
procedure in all matters arising out of the exercise of powers under this Act.
The Finance Act, 2003 has
amended section 23 of the CST Act to empower the Authority to regulate its
procedure in respect of the stay of recovery of any demand also.
24. Authority for Advance Rulings to function as Authority under
this Act.
(1) Notwithstanding anything contained in any
other law for the time being in force and in section 19 of this Act, the
Authority for Advance Rulings constituted under section 245‑Oof the
Income‑tax Act, 1961 shall be notified by the Central Government in the
Official Gazette, with such modifications as may be necessary, to make its
composition in conformity with section 19 of this Act, as the Authority under
this Act till such time an Authority is constituted under that section.
(2) On and from the date of the constitution
of the Authority in accordance with the provisions of section 19 of this Act,
the proceedings pending with the Authority for Advance Rulings shall stand
transferred to the Authority constituted under that section from the stage at
which such proceedings stood before the date of constitution of the said
Authority.
25. Transfer of pending proceedings
On and from the date when
the Authority is constituted under section 19, any proceeding arising out of
the provisions contained in this Chapter-
(i) which is pending immediately before the
constitution of such Authority before the appellate authority constituted under
the general sales tax law of a State or of the Union territory, as the case may
be; or
(ii) which would have been required to be
taken before such Appellate Authority,
shall stand transferred to such Authority on
the date on which it is established.
26. Applicability
of order passed
An order passed by the
Authority under this Chapter shall be binding on each State Government
concerned, the assessing authorities and other authorities created by or under any
law relating to general sales tax, in force for the time being in any State or
Union territory.
Clause 119 of the Finance
(No. 2) Act, 2004 amended Chapter VI as directed to be inserted by section 3 of
the CST (Amendment) Act, 2001, so as to restrict the jurisdiction of the
Authority only to settle the inter State dispute falling under section 6A read
with section 9 of the said Act. Amendment also confers power on Authority
relating to grant of stay in appeal, etc.