Report No. 61

Intro.-8. Points enumerated.- The various points that arise for consideration from the letter of reference1 can be enumerated as follows:-

(i) The scope for the levy of sales tax by State Government, in respect of works contracts, hire-purchase transactions and also on the transfer of controlled commodities by virtue of statutory orders.

(ii) Evasion of Central Sales Tax by means of transfer of goods from one State to another, on what purports to be a consignment transfer or a transfer to another branch of the same institution.

(iii) Whether section 5 of the Central Sales Tax Act, as interpreted by the Supreme Court in K.G. Khosla's case, unduly restricts the taxing power of the States.

(iv) Conflicting decisions of the Courts as to the Central sales tax in regard to the scope of the penal provisions of that Act.

(v) Whether the provisions with regard to penalties for the evasion of the sales tax should not be amended, so as to do away with the concept of mens rea or to bring them in line with the recommendations made by the Law Commission with regard to offences under other fiscal laws.

(vi) Difficulties felt with regard to certain other matters, such as, the disposal of excess amounts collected by a dealer from a customer as sales tax.

(vii) Establishment of check-posts for preventing evasion and better collection of taxes on the sale of goods. We shall discuss them serially in due course.

1. Para. Intro. 4, supra.