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Central Sales Tax (Du)

Central Sales Tax (Du)

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Published by: ashishjain18 on Jun 19, 2009
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12/10/2011

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LESSON – 22CENTRAL SALES TAX
Ms. Rupali Pebreja
STRUCTURE
22.0 Introduction22.1 Objectives22.2 Features of central sales-tax22.3 Definitions22.3.1 Appropriate state22.3.2 Business22.3.3 Dealer 22.3.4 Goods22.3.5 Place of Business22.3.6 Sale22.3.7 Sale Price22.3.8 Sales Tax Law.22.3.9 Turnover 22.3.10 Year 22.4 Principles for determining when a sale or purchase of goods takes place22.4.1 In the course of inter-state trade22.4.2 outside a State22.4.3 In the course of Import or Export22.5 Liability to Tax22.5.1 Rate of Tax22.5.2 Determination of Turnover 22.5.3 Transactions Exempt from Tax22.5.4 Collection of tax22.6 Registration of Dealers22.6.1 Compulsory registration22.6.2 Voluntary Registration22.6.3 Procedure for obtaining registration22.6.4 Amendment of certificate of Registration.22.6.5 Cancellation of certificate of Registration.22.7 Value Added Tax22.8 Let us Sum up22.9 Glossary22.10 Self Assessment Questions22.11 Further Readings
22.0 INTRODUCTION
According to the 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
 
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of law. The constitution of India vide entry no. 54 of the state list, gave power tothe state legislature to levy sales tax on sale or purchase of goods other thannewspapers, which takes place within the state. However, at that time the parliament was not empowered to levy any type of sales tax. Therefore, only statelegislature enacted state sales tax laws in their respective state for levy of sales taxon sale or purchase of goods other than newspapers.Although, the State Government were empowered to levy and collect tax on salesmade within its own territory but there was no specific provisions of levying taxon sale and purchase having interstate composition. As a result, same goods cameto 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. There for central sales taxAct 1956 was enacted by the Parliament and received the assent of the presidenton 21.12.1956. Imposition of tax became effective from 01.07.1957.
22.1
 
OBJECTIVE
The primary concern in this lesson has been to enable the students understand:
 
Concept of State, Dealer, Declared Goods
 
Principles for determining where sale or purchase of goods takes place
 
When sale or purchase in the course of import or export take place
 
Determination of taxable turnover 
 
Registration of dealers
 
How and when central sales tax is imposed
22.2 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 anda 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:
 
Declared goods or goods of special importance in inter-statetrade or commerce and
 
Other goods.The rates of tax on declared goods are lower as compared to the rate of taxon goods in the second category.5 The tax is levied under this act by the Central Government but, it isCollected by that state government from where the goods were sold. Thetax thus collected is given to the same state government which collectedthe tax. In case of union Territories the tax collected is deposited in theconsolidated fund of India.
 
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 6 The rules regarding submission of returns, payment of tax, appeals etc. arenot given in the act. For this purpose, the rules followed by a state inrespect of its own sales tax law shall be followed for purpose of this actalso.7 Even though the central sales tax has been framed by the centralgovernment but, the state governments are allowed to frame such rules,subject to such notification and alteration as it deem fit.
 __________________________________________ 22.3 IMPORTANT DEFINITIONS
Following are the important definitions under the Central Sales Tax.
22.3.1 APPROPRIATE STATE [SECTION 2 (A)]-
It means – (1) In relation to a dealer who has one or more place of businesssituated in the same state, that state, and(2) In relation to a dealer who has more than one place of businesssituated in different states, every such state with respect to the place or places of business situated within its territory
Illustration 22.1
Mr. X has one place of business at Faridabad and other at Sonepat, since both the cities are in the state of Haryana therefore, the appropriate statewill be Haryana.
 ________________________________________________ 
 
22.3.2 BUSINESS [SECTION 2 (AA)] – 
(a) Any trade, commerce or manufacture or any adventure or concernin the nature of trade, commerce or manufacture, whether or not itis carried on with a motive to make gain or profit and whether or not any profit or gain accrues from it, and(b) Any transaction in connection with or incidental or ancillary tosuch trade, commerce, manufacture, adventure or concern.According to the above definition – 
 
It is not necessary to have profit motive to call an activity a business.
 
Regularity of business is not essential.
 
Business may be legal or illegal.

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