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Report No. 61

Point 10-Reference To State Sales Tax Law-section 9, Central Sales Tax Act

Section 9(2) of the Central Sales Tax Act applies the provisions of the general Sales Tax Law of the State for the specific purpose of the Central Sales Tax Act. The question has arisen whether the reference is to the State law as it existed in 1956 (when the Central Act was enacted) or whether amendments made in the State law after 1956 can be taken into account. There is also a doubt arising from the fact that an objection of undue delegation may .be raised with reference to section 9(2) of the Central Act. To remedy such a situation, there are, theoretically speaking, several courses open.

(i) First alternative.- In the first place, instead of the incorporating provision in section 9(2), the Union could frame its own self-contained code of provisions relating to assessment of tax levied under the Central Act. Whether or not the Union also appoints its own assessing authorities for the purpose, is immaterial. Instead of so appointing the assessing authorities, it could delegate the necessary powers to the State authorities. The only difference would be that State authorities will, then, be deriving that power not from the State law read with section 9(2), but from the Central Government.1

(ii) Second alternative.- The second alternative would be to amend the Constitution, and to provide there what is now contained in section 9(2) of the Central Sales Tax Act. For obvious reasons, this is not a very convenient method.

(iii) Third alternative.- The third alternative would be to insert, in section 9(2) a particular date, say, "as in force on the first day of April, 1974". Initially, this date could be inserted by adding the quoted words after the words "general sales tax law", wherever they occur in section 9(2) or elsewhere. Subsequently, every year, by a short amendment of the Central Sales Tax Act, the year then current (i.e. the year current at the time of each subsequent amendment) could be substituted.

This would mean that the Sales tax law in force in the State on the first April of the then current year would be attracted to the Central Sales Tax Act. No doubt, if, after the 1st April of one year and before the 1st April of the next year, a particular State legislature makes any amendments in its own Sales Tax Law, those amendments would not be attracted. This situation cannot, in theory, be avoided. The Union can, however, request the States, by a general letter, not to make amendment in the Sales Tax laws, during the middle of the year, as far as possible. As a short term measure, the third alternative should be adopted. In addition, as a long term measure, the first alternative should be adopted.

1. See also point 12, infra.

[Chapter 4]

Certain Problems connected with Powers of the States to Levy a Tax on the Sale of Goods and with the Central Sales Tax Act, 1956 Back

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