Report No. 61
2.21. What should be the limitations.-
We shall now consider the question whether all consignments should be covered by the extended tax, or whether any limitations in that respect are desirable. There can be no dispute that the tax should extend only to consignments made in the course of business1, i.e. to consignments made by a dealer in the business of buying or selling goods. But a person who carries on the business of buying selling goods2, may be a manufacturer, an importer, a distributor, a wholesaler or- a retailer or may possibly fall under some other category.
From the point of view of principles of economics, the State where the goods are manufactured or imported from outside India for the first time, and from which the goods are then consigned (without sale) to other States in the course of business, can legitimately claim that it should not lose, on such 'non-sale' consignments the tax which would have been earned if there had been an inter-State sale proper.
The resources of the State would, to a large extent, have been employed in facilitating the manufacture or import of the goods. When one comes to the stage of the wholesaler who is not himself a manufacturer or importer, this ground of justification does not, perhaps, apply with the same force. Therefore, as a matter of abstract logic some distinction could be made between manufacturers and importers (on the one hand) and wholesalers etc. on the other hand. However, it is possible that such distinctions might lead to an increase in administrative work, and we are not inclined to recommend any such distinctions.
1. Compare section 2(b), definition of "dealer".
2. Section 2(b), definition of "dealer".