Sales Tax Systems In India : A F m flle MIZORAM Mizoram has agriculture as the mainstay of the majority of its population. Handloom, handicrafts are its cottage industries. Rice milling, oil and flour milling, mechanised carpentry workshops, raw milling, brick making and furniture workshops are small scale industries. Ginger oil oleoresin extraction plant has recently been established. In this backdrop, to make an addition to its revenues it was considered expedient to impose a tax on the sale of goods. Hence, The Mizoram Sales Tax Act, 1989 was enacted w.e.f. 1.4.1990 vide Mizoram Act No. 8 of 1989 and notification No. TXT 136/86/140 dated 1.2.1990. Sales of petroleum and petroleum products, however, are separately taxed under the Mizoram (Sales of Petroleum and Petroleum products, including Motor Spirit and Lubricants), Taxation Act 1973 (amended upto date). 1. Structure Every dealer whose gross turnover from sales, other than sales of notified goods involved in the execution of works contract, in Mizoram exceeded R s.20,000, the taxable quantum during the twelve months immediately preceding the effective date, are liable to pay tax on such other sales. Contractors (dealers) whose gross turnover from sales which have taken place in Mizoram by transfer, by separate agreement and for money consideration of goods involved in the execution of a works contract, whether as goods or in some other form, during the twelve months immediately 171
Sales Tax Systems In India: A P ro file preceding the date of commencement of the Act exceeded Rs.2 lakh are liable to pay tax on the contractual transfer price'. The contractual transfer price will mean the cost of the goods involved in the execution of works contract including the cost of delivery of the goods at the site of execution of the contract. Point of Levy: A majority of goods, numbering 97, as listed in notification No. TXT. 136/86/141 dated 1.2.1990, have been subjected to tax at first stage of sale in Mizoram (Section 4(3)). Luxury items, consumer durables, come under this category. Rate Structure: As per Schedule II, declared goods are taxable at 2 per cent and the rate of tax in respect of many goods, garments made of non-synthetic yarn are taxable at the rate of 2 per cent; special goods, mentioned generally in Section 2(15), and 22 goods specifically mentioned in Schedule I are taxable at 5 per cent. Works Contract, Hire-purchase, Leasing: Although, the definition of 'sale' has been enlarged in Section 2(12) of the Act, to cover sale of goods involved in the execution of works contract, whether as goods or in some other form, and 'sale-price' has been defined in Section 2(13)(b) as the amount payable to dealer as valuable consideration for the carrying out of any contract less such fraction of such amount as represents the prescribed proportion of the cost of labour used in carrying out such contract, at the rate of 5 per cent. However, works contract has been defined as any agreement for carrying out for cash or deferred payment or other valuable consideration, whether as goods or in 172
Sales Tax Systeus In India : A P ro file some other form, (a) the preparation, construction, fitting out, improvement or repair of any moveable property, or of any building, road, bridge or other immoveable property. Leasing: In the case of transfer of the right to use any goods i.e. leasing, no specific extension of the definition of 'sale' has been provided but in the list of notified goods subject to first point levy under the Mizoram Sales Tax Act, 1989 in notification No. TXT 136/86/141 dated 1.2.1990, at serial 93, leasing has been mentioned as 'goods'. The expression transfer of the right to use any goods including video cassette recorders, video cameras (whether or not for a specified period) for cash, deferred payment or other valuable consideration does find place 'The definition of sale-price' has not been specifically extended to cover the lease rentals. The taxable event and rate of t&x too in this context have not been spelt out but by implication it can be construed that 'sale' takes place inside the state. The rate of tax on this would be 5 per cent. E x e m p t i o n s : Schedule III to the Act, lists 60 items exempted from tax which include all cereals and pulses, bread, cotton, fertilizers, oil cakes, fish, ghee, flour, gur and molasses, anti-malaria drugs, mustard oil etc. and Mizoram State Khadi and Village Industries Board, goods exported to Bhutan/Sikkim (on the strength of certificate of the competent authority or land customs receipt), gifts to armed forces by manufacturers, purchases by U.N.I.C.E.F, gobar gas plants etc. 173
Sales Tax Systems la India: A P ro file 2. Registration C o m p u l s o r y : registered. Every liable dealer is required to get Voluntary: Voluntary registration to any dealer whose total gross turnover during a year amounts to or exceeds the taxable quantum may apply for registration even though ordinarily he may not be liable to tax. 3. Assessment R eturns: Ordinarily every registered dealer has to file returns in respect of goods taxed at source vide notification No. TXT 136/86/141 dated 1.2.1990 as under: i. For the four quarters of 1990-91 within 31st August, 1990, 30th November, 1990, 31st January, 1991, 30th April, 1991 respectively ii. For other subsequent quarterly returns within 30th April, 31st July, 31st October, 31st January respectively. Payment of Tax: Tax is to be paid by the registered dealer, prior to the furnishing of the return, into the Government Treasury and the treasury receipt is to be enclosed along with the return. Rebate of Tax: Rebate of 1 per cent of tax is given only on fulfilment of certain prescribed conditions. 174
Sales Tax System s In India : A P ro file Mode of Assessment: Ordinarily for a half-year period, or for a business closing during the half-year period, assessment is made by the assessing authority without calling for the evidence in support of the return, provided the return is correct and complete. If the assessing authority is not satisfied, the assessment is completed only after hearing the assessee. The best judgement assessment is resorted to, in case of non-furnishing of return, non-compliance of terras of the notice. The assessment has to be completed within four years from the end of the year under consideration for assessment. For fresh assessment, after cancellation of a best judgement assessment under certain conditions, or as a result of appellate order or revisional order, the period of limitation is four years from the date of the directive order. The best judgement assessment is made in case any liable dealer has failed to get himself registered, to file return as required in respect of any period or in case where taxable turnover has escaped assessment during any period or has been under assessed or assessed at a lower rate. The period of limitation in such cases of assessment is eight years of the end of period under consideration. 175
Sales Tax Systems in India: A P r o file 4. Penalty and Prosecution Penalty: If in the course of any proceedings, concealment of particulars of turnover or deliberate furnishing of inaccurate particulars of such turnover or evasion of tax liability is proved, penalty amounting to 1.5 times of the tax payable in addition to the tax is imposed against the defaulting dealer. Fine: For deliberate non-furnishing/late furnishing of return, non-compliance to assessment notice a fine of-rs.50 for each day of default will be imposed till the date of compliance. Prosecutions: For the following offences a penalty, on conviction, is imposed: i. Carrying on business without being registered as liable dealer or contravening provisions of the Act. ii. Unreasonable, delayed submission of return or submission of false return. iii. Falsely taking advantage of purchases of goods not mentioned in certificate of registration. iv. Unregistered dealer falsely taking advantage of purchases given to registered dealers. v. Failure to keep accounts or records of sales. vi. Failure to produce accounts, evidence, documents/furnish information. vii. Deliberate production of incorrect accounts, registers or documents/deliberate furnishing of in correct information. 176
Sales Tax Systems In India: A P rofile viii. Fraudulent/wilful evasion of payment of due tax, concealment of tax liability. ix. Failure to pay assessed tax/penalty within the time allowed. x. Prevention of, or obstruction to, inspection, entry of officers in discharge of duties, xi. Prevention of, or obstruction to, entry into, inspection, interception, detention or search of goods v ehicle by checkpost, barrier incharge. xii. Charging of sales tax on sales of goods exempted or of sales tax in excess of what is payable. The offenders in addition to tax or/and penalty due, are punishable with imprisonment upto 6 months or with fine upto Rs. 1,000 or with both and when the offence is a continuing one, with a daily fine upto Rs.50 during the period of continuance of the offence. For false statement in verification/declaration in connection with any proceeding, the offender is punishable with simple imprisonment upto 6 months or with fine upto Rs.1,000 or both. 5. Administrative Organisation The Secretary to the Government of Mizoram, Excise and Taxation Department has been appointed as the Commissioner of Taxes, Mizoram for carrying out the provisions of the Mizoram Sales Tax Act, 1989 with effect from 1.2.1990 vide notification No.TXT. 136/86/142 dated 1.2.1990. 177
Sales Tax Systems in India: A P ro file A team of Assistant Commissioners assist the Commissioner in the matter of registration, prevention of tax evasion, recovery of dues, refunds etc. There are Superintendents of Taxes at Aizwal, Circle I Aizwal, Circle II, Lunglei to look after compulsory registration, voluntary registration, returns, assessment, re-assessment after detection of tax evasion by dealers, escapement of turnover cases, penalties, recovery of dues, refunds, composition of offences, maintenance and preservation of accounts, insistence on production of accounts with powers to call for information, take evidences on oath etc. They are assisted by Inspectors of Taxes, who are not assessing authorities, in the matter of inspection of accounts, documents of dealers, entry, search and seizure etc. as also in the matter of taking evidence on oath etc. 6. Appeal/Revision (Remedial Measures) The first appellate authorities are the Assistant Commissioners (Appeals), who hear cases of objection against orders of assessment/penalty. The appeal is to be filed within 60 days of the service of the order objected to. The Commissioner has the powers of suo moto revision in cases where decisions of the lower authority are found to be prejudicial to the interests of the revenue. In other cases, not appealed against, he has revisional powers. The second appeal against the orders of Appellate Assistant Commissioners or against the suo moto revisional orders of 178
Sales Tax Systems in India: A P ro file the Commissioner lie before the Board of Revenue. Reference against the orders of the Board of Revenue only on questions of law lie before the High Court. There is a provision for rectification of mistakes apparent from the record and for the remaining difficulties as occasions may require, by issuing orders but not inconsistent with the purpose of the Act. 7. Checkposts A checkpost at vairengte has been set up with effect from 1.2.1990 with a view to prevent the evasion of tax payable under the Act. Every person transporting goods should, at any checkpost or barrier set up for the purpose of interception, detention and search of goods vehicle by the officer incharge of checkpost/barrier, file a correct and complete declaration of the goods in the prescribed form and manner before crossing the checkpost/barrier to enable the officer make proper checking of compliance to the relevant provision. 179