Sales Tax Instructions

Sales Tax Instructions, 2009
particular class of persons. If there is no supply to a non-registered person, there is no question of
levy of further tax as contemplated in the amended provisions. Also the alleged variation in price
is cases of retailer is not well founded. Except for controlled items every other item has a different
rate keeping in view the locality of the shop, its good-will and the facilities provided to shoppers.
Again the chart prepared by the revenue to illustrate the end value of supply to the consumer also
controverts the submissions that there are likely to be two different rates of different items when
supplies are made to un-registered persons. Even if that be correct, it will be un-fair on the part of
the petitioners to plead the case of the non-registered persons who persistently refuse to join the
main stream of business and to refuse to share the burden of tax. The further tax as provided for in
the amended provision at the most requires that if a registered person becomes a privy to the
clandestine business dealings of another person, then he should realize from him what is due to
the state.
14. The contentions made for the beverage makers are equally mis-placed, No further tax
over and above the already fixed on them as supplies has been imposed. It is only in case of a
particular situation that they will ―collect‖ the tax. Like all other petitioners the incidence of
further tax contemplated by the amended clause does not fall on any of the suppliers as they act
only as an agent of the revenue to collect a further tax which in fact was to be paid by the unregistered
persons. There is no contradiction between the provisions of sub-section (1-A) and subclause
(c) of section 3. After the amendment made by Finance Act, 1999 no ambiguity has been
left to suggest that additional tax is leviable only with reference to sub-section (1) of section 3
which provides for levy of sales tax on the basis of value only. The two provisions as these exist
today when read together do not even create a reasonable doubt in favour of the proposition. The
liability created by the amended provision is relatable not only to the kind of supply which of
course will be taxable supply but also to the nature of recepient. If he is not a registered person
when the supplier is obliged to add to the price the prescribed amount and pay it to the state.
Therefore, the additional levy has nothing to do with the fact if a person is making supplies of
goods which are subject to sales tax on value basis of retail basis, it is only the specified class of
persons as receivers which will determine the application of the provision. It is equally
impertinent to suggest that a contradiction has emerged in as much as the additional tax will also
hit the supplies of exempted goods. The further tax as rightly pointed out by the learned counsel
for the revenue is not part of the main tax but it is levied only in a particular situation. That
situation being ―taxable supplies‖ to a person other than a register person. Therefore, I will agree
that in view of presence of non-absente clause in section 13(1) providing for exemptions the levy
of additional tax under section 3(1-A) shall not be applicable to supplies which are exempted from
tax. It is correct that the use of word ―further‖ in the amended clause can be interpreted both
ways as extention of the sales tax or something over and above sales tax. However, in cases of
exempted goods the suppliers even if they are registered persons are not required to keep records
as provided for in section 22. In absence of accounts no purpose will be served by asking them to
collect further tax on supplies to non-registered persons. Therefore, I do not see any contradiction
between the amended provision and section 13 of the Sales Tax Act, 1990. Accordingly it will not
be correct to say that sales tax has indirectly been introduced in the guise of additional tax. The
submissions made in this regard are of academic interest only as none of the petitioners is
engaged in making exempt supplies. It will, however, be noted that while granting exemption the
Board can make a reservation that notwithstanding the grant of exemption under section 13 the
supplies of exempted goods made to non-registered person shall be subject to the provisions of
section 3(1-A) of the Act. Such a condition would be competent because of the definition of tax as
given in section 2(34) of the Act providing for all the stated concepts alongwith any sum
―payable‖ as tax. Of course, a tax is payable on all taxable supplies but for the exemption
granted.