SALES TAX FUNCTIONS

SALES TAX FUNCTIONS

Maharashtra State is one of the leading state in India. Mumbai the capital city of state is internationally recognised as financial capital of India. State is rich with a long stretch of coastline, mountains, plains and full of natural resources. States progressive attitude has attracted national as well as international investors in a big way specially because of atmosphere conducive to the trade and commerce.
Sales Tax Department is a major revenue earning body for the state Government. Department’s share to the state exchequer is whopping 58%. Government has adopted a single point tax structure. Tax range is fixed between 1% to 20% depending on the commodity. Apart from Bombay Sales Tax Act 1959, Sales Tax Department is entrusted to implement some other Acts of Tax recovery.

HISTORICAL BACKGROUND AND BASIS OF COLLECTION IN MAHARASHTRA STATE
 Maharashtra, from 1.7.1981, adopted single point first stage taxation system.   It broadly means manufacturers/ importers in Maharashtra will be liable to pay taxes on their first sale in the state, while resellers are normally exempted from paying taxes.
Sales Tax in Maharashtra was introduced way back in 1946.  Bombay Sales Tax Act, which is, present enactment, came into existence w.e.f. 1-1-1960 as a first stage single point levy.  This Act has under gone major changes in 1981 and 1995 when VAT (Value Added Tax) was made applicable on resellers of all taxable commodities except declared goods on the basis of Annual Turnover of Sales.  As per recent amendment Turnover Tax Surcharge is levied i.e. while VAT is discontinued.
Introduction
Sales tax is a tax on sale of goods. The liability to pay sales tax arises on making sales of goods. In India, the law for levying sales tax is provided in the Central Sales Tax Act, 1966. This act was passed by the Parliament and applies to the entire country. The main objects of this act are :-
1. To formulate the principles for determining as to when sale or purchase of goods takes place (i) in the course of inter-state trade or commerce or (ii) outside a state or (iii) in the course of import into or export from India.
2. To provide for the levy, collection and distribution of taxes on sales of goods in the course of inter-state trade or commerce
3. To declare certain goods to be of special importance in interstate trade or commerce.
4. To specify the restrictions and conditions in respect of State laws which impose taxes on the sale or purchase of such goods of special importance.
The CST Act, being a Central Act passed by the Parliament regulates and provides for levy of sales tax on the sale and purchase of goods made in the course of inter-state trade or commerce. Sales and purchases made within a State are regulated by the sales tax law of each individual State. eg, in the State of Maharashtra, the Bombay Sales Tax Act, 1959 provides for the levy of sales tax on sales made within the State of Maharashtra. Similarly, other States will also have their own sales tax laws for levying sales tax on intra-state sales or purchases of goods. Generally the CST Act does not deal with sales made intra-state. However, in respect of certain declared goods oil seeds, sugar, pulses, crude oil, etc, the CST Act imposes restrictions on the powers of State Governments to levy sales tax even in respect of intra-state sales.
Accordingly, Sales can broadly be classified into 3 categories
• Intra-state sales i.e. sales within the state
• Sales during import and export
• Inter-state sales
The provisions of the CST Act apply only in respect of inter-state sales and not intra-state sales or import or export sales.
Definitions
It is essential to understand the meaning of certain terms used in the CST Act. For the purposes of the Act, certain terms have been defined in the Act itself and the meaning of these terms will be as per the definition only and not as per the ordinary meaning of the term. However, where a particular term has not been defined, it will have the same meaning as ordinarily understood.
Business includes :-
• Any trade, commerce, 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 out with the motive to make gain or profit and whether or not, any gain or profit accrues from such trade, commerce, manufacture, adventure or concern.
• Any transaction in connection with or incidental or ancillary to such trade, commerce, manufacture, adventure or concern.
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 for other valuable consideration and includes :-
• A local authority, body corporate, company, co-operative society or other society, club, firm, Hindu Undivided Family (HUF) or other Association of Persons (AOP) which carries on such business.
• A broker, commission agent or any other mercantile agent, by whatever name called and whether of the same description as herein before mentioned or not, who carries on the business of buying, selling, supplying or distributing goods belonging to any principal, whether disclosed or not. An auctioneer who carries on the business of selling or auctioning goods belonging to any principal, whether disclosed or not and whether offer of the intending purchaser is accepted by him or by the principal or by the nominee of the principal.
• A government, whether or not in the course of business buys, sells or 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 absolute or discarded machinery or parts or accessories thereof is deemed to be a dealer for the purposes of this Act.
Sale means any transfer of any property or goods from one person to another for cash or for deferred payment or for any other valuable consideration and includes the transfer of goods on hire-purchase or other system of payment by installments but does not include a mortgage or hypothecation or charge or pledge on goods.
Accordingly, consignments to agents or transfers of goods to branch or other offices does not amount to sale for the purposes of the CST Act. Sale Price means an amount payable to a dealer as consideration for the sale of any good less any sum allowed as cash discount according to the practices normally prevailing in the trade but inclusive of any
sum charged for anything done by the dealer in respect of goods at the time of or before the delivery thereof. However, it does not include freight or delivery cost or cost of installation where such cost is separately charged.
Declared Goods means goods declared under section 14 to be of special importance in inter-state trade or commerce. In section 14 there is a list of goods of special importance which are often called declared goods.

Written by ntnirale on July 11th, 2009 with comments disabled.
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