Page 201 - DCOM308_DCOM502_INDIRECT_TAX_LAWS
P. 201
Indirect Tax Laws
Notes Introduction
According to article 265 of the constitution of India no tax of any nature can be levied or collected
by the central or State Governments except by the authority of law. The constitution of India
vide entry no. 54 of the state list, gave power to the state legislature to levy sales tax on sale or
purchase of goods other than newspapers, which takes place within the state. However, at that
time the parliament was not empowered to levy any type of sales tax. Therefore, only state
legislature enacted state sales tax laws in their respective state for levy of sales tax on sale or
purchase of goods other than newspapers.
Although, the State Government were empowered to levy and collect tax on sales made within
its own territory but there was no specific provisions of levying tax on sale and purchase having
interstate composition. As a result, same goods came to be taxed by several states on the ground
that one or more ingredient of sale was present in their state. This led to multiple levy of tax.
Therefore central sales tax Act, 1956 was enacted by the Parliament and received the assent of the
president on 21.12.1956. Imposition of tax became effective from 01.07.1957.
12.1 Important Features of the Act
The following are the important features of the Act:
1. It extends to the whole of India.
2. Every dealer who makes an inter-state sale must be a registered dealer and a certificate of
registration has to be displayed at all places of his business.
3. There is no exemption limit of turnover for the levy of central sales tax.
4. Under this act, the goods have been classified as:
(a) Declared goods or goods of special importance in inter-state trade or commerce and
(b) Other goods.
The rates of tax on declared goods are lower as compared to the rate of tax on goods in the second
category. The tax is levied under this act by the Central Government but, it is Collected by that
state government from where the goods were sold. The tax thus collected is given to the same
state government which collected the tax. In case of union Territories the tax collected is deposited
in the consolidated fund of India.
The rules regarding submission of returns, payment of tax, appeals etc. are not given in the act.
For this purpose, the rules followed by a state in respect of its own sales tax law shall be
followed for purpose of this act also.
Even though the central sales tax has been framed by the central government but, the state
governments are allowed to frame such rules, subject to such notification and alteration as it
deem fit.
12.2 Important Definitions
Following are the important definitions under the Central Sales Tax.
196 LOVELY PROFESSIONAL UNIVERSITY
