{"id":1162,"date":"2022-05-04T07:19:09","date_gmt":"2022-05-04T07:19:09","guid":{"rendered":"http:\/\/localhost\/theme_powerlegal\/?p=1162"},"modified":"2025-09-08T13:38:42","modified_gmt":"2025-09-08T13:38:42","slug":"ray-of-hope-to-impement-national-vat-after-ammendment-in-central-sales-tax-with-central-purchase-tax","status":"publish","type":"post","link":"https:\/\/snmtechnologies.in\/sharnam\/ray-of-hope-to-impement-national-vat-after-ammendment-in-central-sales-tax-with-central-purchase-tax\/","title":{"rendered":"RAY OF HOPE TO IMPEMENT NATIONAL VAT AFTER AMMENDMENT IN CENTRAL SALES TAX WITH CENTRAL PURCHASE TAX"},"content":{"rendered":"

By: MUKUL GUPTA, Tax Advocate<\/strong><\/p>\n

R-13\/24, Raj Nagar, Ghaziabad<\/strong><\/p>\n

Tel :0120-2820380,2820407<\/strong><\/p>\n

E-mail: mukuladv@hotmail.com<\/strong><\/p>\n

Although, the stage has now been set for implementation of VAT at the State level from 1st April 2002, but this concept of State VAT does not fulfill the objects and advantages of implementation of VAT system of taxation in India. The State VAT is an easy and middle path adopted as an adjustment and interim measure with the decision to bring the rate of tax in Central Sales Tax as Zero in phased manner. My apprehension as supported by various states is that the loss of resource generation by phasing out Central Sales Tax will play a role to distract the states as the need of more and more revenue cannot be met out by already resource crunched National Government. Needs and expectations of people at large from the state are increasing leaps and bounds, which needs precious finance for developmental work. To my mind abolition of Central Sales Tax or phasing out of Central Sales Tax and bring it to a rate at zero is not a feasible solution in the present political and socio economic scenario.<\/p>\n

The National VAT which is in true sense is needed in our country cannot be effectively implemented unless the taxation on interstate transactions is reformed. Some of the States including the State of Maharashtra, have prayed for amendments in the Constitution of India, but it seems a difficult preposition due to multi party national alliance ruling the country as well as regional political parties of different ideologies ruling the states, which may not agree to the constitutional amendments on this issue.<\/p>\n

1. In my view, it is sufficient to carry out amendments in the Central Sales Tax Act 1956, for the reasons stated below:<\/p>\n

i) Article 246 (1) of the Constitution of India empowers the Parliament to make laws with respect to taxes on the sales as well as the purchase of goods taking place in the course of interstate trade or commerce and also on the interstate<\/p>\n

consignment of the goods vide Entry No. 92A and 92B of Seventh Schedule to the Constitution.<\/p>\n

ii) Article 269 (1) authorises the Government of India to levy and collect taxes on the interstate sale as well as interstate purchases goods.<\/p>\n

iii) The same article further authorises to levy and collect tax on interstate consignments.<\/p>\n

iv) Clause (3) of Article 269 permits the parliament to frame a law formulating the principles as regards the determination of interstate sales as well as the interstate purchases and also the interstate consignments.<\/p>\n

v) Article 286 (2) authorises the Parliament to formulate the principles for determining when a sale as well as the purchase of goods takes place outside the State or in the course of Import or in the course of export outside the territory of India.<\/p>\n

vi) Clause (3) of Article 286 empowers the Parliament to frame the laws enacting the restrictions and conditions in regard to the system of levy rates and other<\/p>\n

incidents of taxes by the State with respect to the sale as well as purchases of declared goods and also the deemed sales.<\/p>\n

vii) The definition of clause 29(A) of Article 366 also includes therein the tax on the sale as well as purchases of goods.<\/p>\n

2. In view of this position following amendments can be carried out to the Central Sales Tax Act 1956.<\/p>\n

i) The preamble of the CST Act 1956 may be amended so as to provide for the levy, collection and distribution of taxes on sales as well as purchases of goods in the course of interstate trade and commerce.<\/p>\n

ii) The definition of \u2018sale\u2019 is amended to include the words \u2018sell\u2019 \u2018buy\u2019 and \u2018purchase\u2019 so as to be construed with their grammatical variations and cognate expression accordingly.<\/p>\n

iii) The definition of \u2018purchase price\u2019 is provided and the definition of \u2018turnover\u2019 be amended to include the aggregate of purchase prices received or receivable.<\/p>\n

iv) Section 6 of the Central Sales tax Act 1956 be amended to include tax on interstate purchase as it levies tax on sales.<\/p>\n

v) Sales against Form-C be done away with. The exporting state (The state from which the movement commences) should not levy tax on the interstate sales. Only the importing state (The State in which the movement ends) should be entitled to levy Central Purchase Tax on the interstate transactions. If the purchaser is registered under the Central Act the Central Purchase tax should be 4%. If he is not registered then such Purchase Tax would be levied at the local rate in the importing state. So far as the declared goods are concerned<\/p>\n

the rate of Central Purchase Tax can be 4% or less for the Registered dealers and double for unregistered dealers.<\/p>\n

vi) Alongwith Section 6 consequential amendments can be effected in Section 8 and 9<\/p>\n

vii) Suitable amendments can be made under the Central Act to tax the deemed sale as contemplated by sub-clause (b), (c) and (d) of clause (29A) of Article 366<\/p>\n

viii) The tax on consignment of goods should also be provided in the same enactment and the provisions discussed above should apply mutatis mutandis to interstate consignment transfers.<\/p>\n

ix) Central Sales tax Rules should be amended to provide full set-off of the Central Purchases tax, so paid if the goods purchased are resold or are used in manufacture in the importing state.<\/p>\n

I have taken care of the major amendments. After due consideration other incidental and ancillary amendments can be thought of.<\/p>\n

ADVANTAGES<\/p>\n

1. Even though the states have agreed to implement uniform floor rates, all of them may not adhere to the decision when it actually comes to implementation. Take the example of the State of Uttar Pradesh Or Maharashtra as well as many others, they had introduced floor rates, but with a sole intention to levy upward rates on the goods liable to lesser rate of tax and also to levy tax on the non taxable goods. Further, Article 246(3) confers exclusive powers on the state to enact laws with respect to matters enumerated in the State List. This may induce the state to revert back to the old single point system, if the VAT does not yield expected revenue to that particular state. Even if such contingency occurs the Central levy will remain unaffected.<\/p>\n

2. No amendments in the Constitution are required. It is enough to have national consensus, Article 246, 269,286,301,302,303,304 all remain unaffected. The state levies the tax on the matters enumerated in State List. The Union levies on the matters enumerated in Union List. The Constitution empowers the Union to levy only custom duty on the import from other countries under Entry No. 83 of the Union List. But, this need not be a problem. Imported finished goods when resold shall attract tax. Import of raw material may not be cost efficient.<\/p>\n

3. The all round amendments in Central Sales Tax Act 1956 shall put on end to all types of controversies including the taxation of interstate deemed sales. Further, I have<\/p>\n

recommended for addition of Central Purchase tax and not replacement of Central Sales Tax in appropriate cases, the Central Sales Tax can be levied on interstate sales.<\/p>\n

4. The Central Purchase Tax will be allowed as full set-off in the importing State if the goods purchased are resold or are used in manufacture. The burden of CST would, therefore, disappear.<\/p>\n

5. The 10th Finance Commission had recommended the devolution of 29% of the revenue from Central tax to State. The 11th Finance Commission has recommended 28% share. The union is free to decide on this count.<\/p>\n

I feel, this is the only way the National VAT can be implemented in its true perspective.<\/p>\n","protected":false},"excerpt":{"rendered":"

By: MUKUL GUPTA, Tax Advocate R-13\/24, Raj Nagar, Ghaziabad Tel :0120-2820380,2820407 E-mail: mukuladv@hotmail.com Although, the stage has now been set for implementation of VAT at the State level from 1st April 2002, but this concept of State VAT does not fulfill the objects and advantages of implementation of VAT system of taxation in India. The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"audio","meta":{"footnotes":""},"categories":[1],"tags":[6,7],"class_list":["post-1162","post","type-post","status-publish","format-audio","hentry","category-gst-customs-and-other-indirect-tax-laws-idt","tag-bankruptcy","tag-consumer","post_format-post-format-audio"],"_links":{"self":[{"href":"https:\/\/snmtechnologies.in\/sharnam\/wp-json\/wp\/v2\/posts\/1162","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/snmtechnologies.in\/sharnam\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/snmtechnologies.in\/sharnam\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/snmtechnologies.in\/sharnam\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/snmtechnologies.in\/sharnam\/wp-json\/wp\/v2\/comments?post=1162"}],"version-history":[{"count":5,"href":"https:\/\/snmtechnologies.in\/sharnam\/wp-json\/wp\/v2\/posts\/1162\/revisions"}],"predecessor-version":[{"id":11628,"href":"https:\/\/snmtechnologies.in\/sharnam\/wp-json\/wp\/v2\/posts\/1162\/revisions\/11628"}],"wp:attachment":[{"href":"https:\/\/snmtechnologies.in\/sharnam\/wp-json\/wp\/v2\/media?parent=1162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/snmtechnologies.in\/sharnam\/wp-json\/wp\/v2\/categories?post=1162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/snmtechnologies.in\/sharnam\/wp-json\/wp\/v2\/tags?post=1162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}