Contents |
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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 |
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Genesis, and points referred to the Commission |
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Scope of the Report |
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Constitutional position |
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Limitations on States' powers |
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Intro-5 |
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The object of constitutional restrictions |
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The matters under reference |
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Points enumerated |
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Policy matters outside the inquiry |
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Analysis of the Central Sales Tax Act |
Chapter 1 |
The Scope for The Levy of Sales Tax by State Governments |
1.1 |
Introductory |
2. |
Absence of element of passing of property or consensual element |
3. |
Definition of Sale in the Sale of Goods Act |
4. |
Power of States to levy tax on sale-meaning attributed to sale |
5. |
Narrow concept of sale |
6. |
No property passed in hire-purchase and building contracts |
7. |
Certain transactions not to be regarded as sale |
8. |
Definition of 'sale' in the Central Sales Tax Act |
9. |
Should the scope of "sale be widened"? |
Chapter IA |
Taxability of works Contracts |
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Introductory |
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Building Contracts |
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Difference between "Works and Sale" |
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Position in Some other Countries |
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Passing of Property |
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Tests Adopted |
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Whether Amendment Needed |
Chapter 1B |
Hire-Purchase Transactions |
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Introductory |
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Nature of Hire-Purchase |
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Taxability of Hire-Purchase Transactions - Position In States |
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Position under The Central Sales Tax Act |
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Position in Union Territories-delhi |
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Need for Amendment |
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Financial |
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Constitutional Dichotomy |
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Hire-purchase not resulting in sale |
Chapter 1C |
Sale of Controlled Commodities |
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Sale of controlled commodities |
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Case law as showing a fluid position |
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Difficulty of applying the test |
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Effect of judicial decisions |
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Case relating to sugarcane-a recent illustration |
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Recommendation to cover sales of controlled commodities |
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One alternative-Explanation to be added to State List, entry 54 |
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Another alternative-amendment of State List, entry 54 |
Chapter 1D |
Sale by Associations to Members |
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Sale by associations to members |
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Co-operative societies |
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Unincorporated associations |
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Supply by club to members not 'sale' |
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No 'sale' in such circumstances in England |
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General observations |
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Amendment of Constitution not needed |
Chapter 1E |
Some General Observations as to Taxation on Sale |
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General observations as to "sale" |
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The basic draw back of the present scheme |
Chapter 2 |
Evasion of Central Sales Tax by Means of Transfer of Goods from one State to another, on what Purports to be Consignment Transfer or a Transfer to another branch of The Same Institution |
2.1 |
Ingredients of Sale |
2. |
Consignment transfers |
3,4. |
Fifth Finance Commission's recommendations |
5. |
Section 6A |
6. |
Criticism of section 6A |
7. |
Bona fide consignments and sham consignments |
8 to 11. |
Telco case decided by the Supreme Court |
12. |
Question of amendment considered |
13. |
Taxation on consignment not within present Act |
14. |
Constitutional difficulty in widening the scope of sale-Consignment transactions |
15. |
Tax why justifiable |
16. |
The Problem of large-scale tax evasion |
17. |
Two alternatives |
18. |
Alternative one-a separate Act - Alternative two-broadening the scale of "sale" in the Act |
19. |
The question of manner of levy |
20. |
Legislative devices |
21. |
What should be the limitations |
22. |
Definition of "sale" should cover transfers other than by sales |
23. |
Recommendation |
24. |
The complex nature of the problem |
25. |
The amendment will cover all consignments |
26. |
Constitutional amendment also needed |
27. |
"Sale of goods"-a composite expression |
28. |
Metaphorical use of sale |
29 |
How far legal concept extended |
30. |
The meaning of "sale" laid dawn in Simpson v. Conolly |
31. |
Wider definitions |
32,33. |
Essential concept-transfer of property |
34 to 36. |
The need to clarify the constitutional basis |
37. |
Past interpretation not a sure guide |
38. |
The common notion is different |
39. |
Recommendation to amend the Constitution |
Chapter 3 |
Sales in The Course of Import-khosla's Case |
3.1 |
Scope of the Chapter |
2. |
Position before the Constitution |
3,4. |
Section 2(g) C.P. and Berar Sales Tax Act, 1947 and its construction by the Supreme Court |
5. |
Other decisions of the Supreme Court |
6,7. |
Position under the Constitution |
8. |
Importance of the Constitutional prohibition |
9,10. |
Question of sale in the course of import |
11,12. |
Suggestions noted in earlier Report |
13. |
Background of the problem |
14. |
Article 286-width of |
15,16. |
First Travancore case |
17. |
Second Travancore case |
18. |
Word 'occasion' not intended to give a precise definition |
19,20. |
Effect of judgment in second Travancore case and Taxation Enquiry Commission |
21. |
Constitutional Amendment |
22 to 25. |
2nd Report of the Law Commission and Act of 1936 |
26. |
Law Commission's earlier Report (2nd Report) |
27. |
Section 5 of the Central Sales Tax Act, 1956 implemented the law enunciated in the Travancore-Cochin case |
28. |
Wide meaning of 'occasion' |
29. |
Intention of majority in the second Travancore case |
30,31. |
Distinction between domestic sales and export sales |
32 to 35. |
Some pre-Khosla cases |
36. |
Distinction between "for export" and "in the course of export" |
37. |
Ben Gorm case |
38. |
The ratio in Ben Gorm case |
39. |
Knowledge of export does not make it an integral part |
40. |
The tests which were found inapplicable in Ben Gorm case |
41 to 45. |
Khosla's case-facts of |
46. |
Khosla's case summarised |
47. |
Case decided exclusively on section 5 |
48,49. |
30th Report |
50. |
Decisions after Khosla's case-import sales |
51. |
Application of Khosla's case to export sales |
52. |
Application of the principle to inter-State sales-a Kerala case |
53. |
Patna cases relating to inter-State sales |
54. |
A border line case |
55 to 57. |
Binani Brothers' case |
58. |
Two interpretations possible on the word 'occasion' |
59 to 61. |
'Occasion' and 'cause' |
62,63. |
Selection of cause implicit |
64. |
Direct cause nearest to legislative intention in section |
65 to 67. |
Sale after import intended to be excluded by Parliament |
68. |
Two propositions which will have to be given effect to |
69,70. |
Power to formulate a wide one |
71,72. |
Substitution of another word for the word "occasion" not possible |
73. |
Summary of The Principal Points Discussed In This Chapter |
Chapter 4 |
Conflicting Decisions of The Courts as to The Central Sales Tax In Regard to The Scope of The Penal Provisions of That Act |
4.1 |
The close relationship with State laws under section 9(2) |
2. |
The resulting complexity |
3. |
Legislation by reference |
4,5. |
The question of applicability of State amendments |
6. |
Madras view |
7. |
The view of the majority of High Courts bound to prevail |
8. |
Desirability of amendment as regards construction of section 9(2) |
9. |
Constitutional position considered |
10 to 12. |
The principle in Shama Rao's case |
13. |
An analysis of the doctrine |
14. |
Three types of provisions in section 9(2) |
15. |
Alternatives for remedying the situation |
16. |
Recommendation for amendment of section 9(2) to insert date |
17. |
How far offences not listed in the Central Act covered |
18. |
Recommendation to add "offences" in section 9(2) |
19. |
Penalty under State law how far attracted-Calcutta case |
20. |
The principal considerations |
21. |
Insufficient importance attached to the word "penalties" |
22. |
Question of equality |
23 to 25. |
Observations of Supreme Court in N.K. Nataraja Mudaliar's case |
26. |
Express provision as to penalty desirable |
27. |
Recommendation |
28. |
Whole Act should be self-contained |
Chapter 5 |
Punishment for Evasion of Sales Tax |
5.1 |
The question of mens rea with regard to offences |
2. |
Recommendations in Law Commission's 47th Report |
3,4. |
Amendment on above matters not recommended in taxation law |
5,6. |
Court decisions emphasise need for mens rea |
7. |
Provisions of direct tax laws considered |
8. |
The question of higher punishment for certain offences |
9. |
Recommendation to amend section 10, as to insert minimum punishment |
10. |
Adequacy of punishment-a Gujarat case |
11,12. |
Abetment |
13. |
Punishment of Corporations |
14. |
Recommendation to insert section 10C regarding Corporations |
15. |
Section 10D-Publication of names of convicted individuals |
Chapter 6 |
Disposal of Excess Amounts Collected by a Dealer from a Customer as Sales Tax |
6.1 |
Collection of excess amount by dealers-No legislative competence in States |
2. |
Provisions for penalty held void in absence of procedural safeguard |
3. |
Case relating to U.P. Act |
4. |
Earlier cases relied on |
5. |
A case from Bihar |
6. |
Three aspects considered |
7. |
Liability of State |
8. |
Liability of the dealer |
9. |
Three parties involved |
10. |
State to secure restoration to citizen |
11. |
Constitutional position |
12. |
Parliament's power under the residuary power entry |
13. |
Precedent adopted in the Income-Tax Act and State Acts considered |
14. |
No need to provide administrative penalties |
15. |
Recommendation to enact separate law regarding amount illegally collected as taxes |
16. |
Criminal liability for overcharging tax |
17. |
Offence of cheating constituted by over-charging |
18. |
Overcharging whether amounts to a representation |
19. |
Representation as to a matter of law |
20. |
Significance of the "deceiving" |
21. |
Adequacy of law a desideratum |
22. |
Doubt as in provisions in State laws as to overcharging |
Chapter 7 |
Establishment of Check-Posts for Preventing Evasion and Ensuring Better Collection of Taxes on The Sale of Goods |
7.1 |
Introductory |
2. |
Legislative entries |
3. |
Amplitude of the entries |
4. |
Suggestion referred to |
5. |
Judicial decisions-Andhra case |
6. |
Parliament competent to set up check-post under the Central Act |
7. |
Check-posts under State Sales Tax laws |
8. |
State Legislatures competent to establish check-posts |
9. |
Constitutional amendment not appropriate |
10. |
Check-posts in inter-State transactions-Rule struck down as dealing with inter-State transactions |
11. |
No constitutional difficulty |
Chapter 8 |
Other Questions-definitions |
8.1 |
Introductory |
2. |
Meaning of "Customs frontiers" |
3. |
Position under the Customs Act, 1962 |
4. |
Difficulties caused by the present position |
5. |
Recommendations to define "crossing the customs frontiers" |
6. |
Expression used in the Customs Act, 1962 |
7. |
Section 5-Meaning of 'export' |
8. |
Case Law |
9. |
The question of modifying the position |
10. |
Reason justifying modification of the present interpretation of 'export' |
11,12. |
Other reasons |
13. |
Explanation regarding fuel |
14. |
Section 2(g)-'valuable consideration' in the definition of sale |
15. |
A Madras case |
16. |
Recommendation to amend section 2(g) |
Chapter 9 |
Section 8 and The Rate of Tax |
9.1,2. |
Introductory |
3 to 7. |
Section 8(2)(b) |
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Conclusion |
Chapter 10 |
Retrospective Restrictions Under Article 286(3) |
10.1 |
Question whether legislation under Article 286 can be retrospective |
2. |
Amendment regarding coal |
3. |
Select Committee's observations |
4. |
Amendment illustrative of doubt on the subject |
5,6. |
No scope for devising suitable mechanism |
Chapter 11 |
Conclusions |
11.1 |
Points dealt with |
2. |
Peculiarities of taxation and commodities |
Chapter 12 |
Summary of Conclusions and Recommendations |
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Point 1-definition of "Customs Frontiers" |
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Point 2-sale of Fuel to International Carrier |
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Point 3-section 2(0-definition of Sale and Element of Valuable Consideration |
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Point 4-works Contracts |
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Point 5-Hire-Purchase |
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Point 6-consignments |
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Point 7-sale of Controlled Commodities |
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Point 8-supply of Goods By Clubs Etc |
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Point 9-Import and Export-Khosia's Case |
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Point 10-Reference To State Sales Tax Law-section 9, Central Sales Tax Act |
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Point 11-Penalties-Section 9(2), Central Sales Tax Act |
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Point 12-Central Sales Tax Act To Be Self-Contained |
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Point 13-Punishment Under Section 10, Central Sales Tax Act |
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Point 14-minimum Punishment-Relaxation of |
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Point 15-Abetment-Proposer Section 10b, Central Sales Tax Act |
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Point 16-corporations: Proposed Section 10c,Central Sales Tax Act |
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Point 17-publication of Name of Convicted Individual |
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Point 18-separate Law Regarding Amount Illegally Collected as Taxes |
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Point 19-Check Posts |
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Note By Member, Shri S.P. Sen-Varma |
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Reference from the Government in April , 1973-Constitution (Sixth Amendment) Act, 1956 |
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Power of Parliament to formulate principles |
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No specific entry in the Constitution relating to taxes on sales or purchases in the course of export or import |
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Exact question to be decided |
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Importance of foreign trade in the interests of federal finance and of sales tax in the interests of State economy |
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The first Travancore case (1952) |
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The second Travancore case (1953) |
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Complexity of the subject |
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First reference to the Law Commission (1966) |
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Khosla's case (1966) |
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Second reference to the Law Commission (1966) |
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My disagreement with the view taken by the majority on Khosla's case |
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Difference between the effects of export and the effects import |
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Care necessary even in exports |
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Care to be taken in the use of language in legislative drafting |
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Dealing with a twilight zone whose boundaries should be defined with care |
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Suggestions for amendment of section |