Sales Tax Instructions

Sales Tax Instructions, 2009
continue to be exempt from payment of sales tax. (A new entry added at S.No. 50
of the Sixth Schedule).
(B)
LEGAL AND PROCEDURAL MEAUSRES
2. The self-assessment based sales tax system, introduced in the budget
1996-97 provided un-fettered freedom to the taxpayers. Procedures were modified to
ensure non-interference by the tax officials to the desired level. Inventory controls and
physical supervision were abolished. Forms and procedures were simplified to the
optimum degree. It is, however, regretted to note that the gesture has not been
reciprocated. In view of this, the following amendments are being made in the Sales Tax
Act, 1990.---
(i) Omission of Replacement Invoice.--- The provision of Replacement
Invoice is being repealed in favour of full fledged tax invoice and registration of
all importers. (clause (26) and (42) of section 2 omitted).
(ii) Restriction on input tax credit.--- Credit of input tax on stocks
acquired before registration is being disallowed. (Section 59 of the
Act omitted).
(iii) Rationalization of refund procedure.--- The law and procedure relating to
refund is being streamlined. Now only 50% of the claim will be sanctioned
provisionally within 30 days of filing of refund claim. The remaining 50%
will be sanctioned after verification/audit of the amount which refund is
claimed but not later than 90 days from the date of filing of the claim. To
give effect to the measure the time limit for allowing refund is being
enhanced from 30 days to 90 days. (Section 10 has been amended and Sales
Tax Refund Rules 1996 will be amended in due course).
(iv) Strengthening of tax compliance.--- To Strengthen the tax compliance by
way of providing adequate legal deterrent, relevant provision of law are
being amended to provide for prosecution of tax officials as well as tax
evaders involved in tax fraud. Failure to pay self-assessed tax, nonregistration,
refusal to access to records and non-filing of returns and
violation of embargo placed on clearances for recovery of tax arrears would
be liable to prosecution in terms of section 37A of the Sales Tax Act.
(Section 37C added to the Act).
(v) Enhancement of additional tax.--- A uniform rate of 5% per month as
additional tax for defaulters shall be charged instead of two rates i.e. 5% for
first three months and 2% for succeeding months currently charged. (Subsection
(1) of section 34 amended).
(vi) Zero-rating of supplies of EPZ.--- Supplies of raw materials and
components to Export Processing Zones are being zero-rated. (A new entry
added at S.No. 5 of the Fifth Schedule).
(vii) Streamlining the quasi-judicial system.--- All appeals relating to the
Sales Tax Act, 1951, pending before the Income Tax Appellate Tribunal
shall stand transferred for disposal to the Customs, Central Excise and Sales