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Sales Tax Systems In India: A P ro file

ORISSA

Sales Tax was introduced in Orissa with the enactment


of

Orissa

Sa l es

extensive

Ta x

amendments

Orissa Motor Spirits


1977,

motor spirits

Act,

1947.

since

The

then.

Act

With

(Sales Taxation)

ha s

undergone

t he repeal of the

Act on

1st December,

were brought within the purview of the

Orissa Sales Tax Act. Apart from the Central Sales Tax Act,
the administration of sales tax in the State is governed by
the following enactments:

A. Orissa Sales Tax Act,

1947.

B. Central Sales Tax Act 1956.

A. ORISSA SALES TAX ACT, 1947


1. Structure
At present,
a year exceeds
the

Orissa

every dealer whose gross

R s . 1,00,000 becomes

Sales

Tax

Act,

1947.

liable to pay tax under CST Act


under the Orissa Sales Tax Act,

turnover during

liable to pay tax under

Further,
is also

a dealer
liable

irrespective

who

is

to pay tax

of the amount

of his turnover.

Point o f Levy: In Orissa,


th a n

those

specifically

last-point sales tax.


favour
about

of
255

the

initially,
exempted

Gradually,

first-point

commodities.

sales

all commodities other


were

subject

to

th e

a shift has taken place in


tax.

Purchase

which

tax

is

now

applies

levied

on

to
19

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Sales Tax Systems In India: A P ro file

commodities
products,
not

which

e.g.,

specified

are

mostly

agricultural

hides and skins,


elsewhere

are

gum,

lac,

subjected

or

etc.
to

animal

Commodities

the last-point

tax.

Rate Structure: As of now, there are six rates of sales tax


in the State, varying from 2 to 16 per cent,
rate of 12 per cent.
to aluminum,

with a general

The lowest rate of 2 per cent applies

chemical,

fertilizer,

pig iron and 4 per cent

all declared goods and several other commodities which are


either essential

goods

rate of 8 per cent


aluminium

or goods

applies

utensils,

scooters,

umbrella,

per cent,

besides,

to

largely used as inputs.

onl y

electric

etc.

ten

p u m p s e t s , motor

17 commodities,

the general

commodities

are

like

cycle,

taxed

at

rate of 12 per cent.

50 commodities consudered l m xu ri es

go od s

are

ta x e d

12

About
at

16

per cent.

Surcharge:
w.e.f.

Additional

has

been

replaced

by surcharge

1.7.1990 and this is payable by a dealer whose gross

turnover exceeds
the

tax

total

R s .10 lakh at the rate of 10 per

aount

of

tax

payable

by

hi m.

This

cent
is

on
not

collectable.

Works

Contract:

Tax

on

works

contract

was

introduced

in

Orissa with effect from 1.7.1984 by amending the definition


of

's al e'

to

include

transfer

of

property

in

goods

involved.

Exemptions: As in other States, tax exemptions are accorded


on various considerations.
th ree

su b- gr ou ps :

(i)

Conditional exemptions fall into

Sa l es

to

specified

international

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Sales Tax System s In India: A P ro file

organisations and philanthropic societies,


to

cooperative

societies

and

other big

(ii) Sales by or

organisations;

(iii) Sales to and by newly set up industries,


those

in

the

small-scale

sector..

and

particularly

Goods

enjoying

unconditional exemption may also be classified under three


sub-groups:
like

(i)

those

wheel-chairs

medicines,

(ii)

be e n c o u r a g e d

exempted

for

the

commodities
li k e

gobar

on h u m a n i t a r i a n

handicapped

and

the use of whic h


gas

plants,

exempted
nature,

on

administrative

gr o u n d s

or

specified

is sought

amber

manually operated agricultural instruments,

grounds,

charkha

to
and

and (iii) goods

because

of

thei r

i.e., basic or essential goods.

Taxation of Inputs: Inputs are taxed at a concessional rate


of 4 per cent when sold to a registered dealer for use in
the m a n u f a c t u r e

and

mining or generation
The concession

processing

of

goods

of electricity or

is allowed

against

for

any

sale

or

in

form of power.

declaration

furnished

by the producer in the prescribed form.

Incentives to Industries: In order to promote the growth of


new

industries

in Orissa

exemption of tax to new


a period

of five years

purchase

of

raw

the

has

allowed
for

from the date of production on the

material

industries

government

industries manufacturing goods

which

composition of finished goods.


scale

State

set up on

directly

Further,

or upto

goes

into

the

to encourage small

1.4.1986

tax exemption

is allowed for a period of five years on the Sale of goods


produced
condition

by

suc h

that

small

the

scale

go od s

industries

manufactured

subject
are

sold

to

the

in

the

States or in the course of inter-State trade or commerce or


are exported out of India.

Similarly medium and large scale

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Sales Tax Systems in India: A P ro file

in d us tri es

can

exemption

of

materials

fo r

avail
raw

or

deferment

materials,

period

of

in

payment

spare

parts

years

from

of

and

tax

packi ng

the

date

of

commercial production in 10 districts and for a period of 5


years

in

3 di st ri cts .

From

1.12.1989,

earlier are further liberalised.


pu r c h a s e

of

m a te ri al s

raw

m a t er ia ls ,

allowed

medium and

large

for

scale

B.C and 7 years

For new SSI units tax free

sp ares

a p er io d

of

of

industries

in Zone A.

incentives allowed

it

ma chi ne s,

7 years.
is

pa ck in g

In

5 years

case
in

of

zones

Sales of finished products are

exempted in case of SSI units but in respect of medium and


large scale industries deferment scheme has been introduced
bu t

in

lieu

of

deferment

the

industries

ca n

exemption for a period of five years

in B,

years

products

in

zone

A.

Sale s

of

finished

opt

for

C zones and 7
of new SSI

units are exempted from tax for a period of 7 years in the


units of commercial

products on new medium and large scale

units are allowed deferment of sales tax collected on their


finished products for period of 7 years
years

in Zone A.

Such units

in

in Zone B and C, 9

lieu of deferment can opt

for exemption for a period of 5 years in Zone B and C and 7


years in Zone A.
are allowed

In case of pioneer units these incentives

for two year

more.

Incentives are allowed for

modernisation/diversification/expansion
Continuing

uni ts

of

1986

exemption from payment of

policy
tax on

additional period of 2 years.


of

1980

po l i c y

are

also

have

of

now

the
be e n

u ni ts .
allo wed

finished products

Further,

now a l l o w e d

for an

the continuing units


exemption of tax on

sale of finished products as admissible to new units.

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Sales Tax System s in India: A P rofile

2. Registration
Every

dealer

whose

annual

turnover

exceeds

R s.1,00,000 lakh is required to get himself registered. Any


dealer

whose

gross

turnover

exceeds

apply for registration v o l u n t a r i l y .


registration

is

available

to

R s . 10 ,0 00

B e si de s,

dealer

may

also

provisional

who

i nt end s

to

establish a business of manufacturing goods if the sale of


finished product

is expected to exceed

Rs .50,000 within a

the

Act,

year.

3. Assessment
R e t u r n s : Un d e r
required

to

Orissa

submit

Sal es

quarterly

Tax

r e t u r n s . The

dealer

returns

is
are

required to be filed for a liability under the Orissa Sales


Tax Act within a m o n t h
accompanied

by

may, however,

proof

from

of

the

payment

expiry
of

file

an

The

quarter,

Commissioner

require any dealer to file monthly return.

addition to the quarterly or monthly


to

tax.

of e a c h

annual

return

within

return,

30 days

of

a dealer
the

In
has

expiry

of

the year.

Mode of Assessment: Assessment may be completed without the


requirement

of

production

assessing authority

call

concerned

for

accounts

dealer.

accounts,

etc.

if

t he

is satisfied about the correctness and

completeness of the return.


fit,

of

Failure

The authority may,

and

other

to submit

if he thinks

evidences

from

these may result

th e
in a

best judgement assessment.

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Sales Tax System s In India: A P rofile

Assessment has to be c o m p l e t e d
Assessment

proceedings

five years

from

has

been

any

the

can

within

be reopened

expiry

of

the

under-assessment

th ree

within

relevant

years.

a period of

year

or e s c a p e m e n t

if

of

there

t ax abl e

turnover in respect of any registered dealer.

4. Penalty and Prosecution


Penalty: There are a number of provisions prescribing the
imposition

of

penalty

Or i ss a Sa l es
first

Ta x

getting

Act.

himself

for

defaults

Any

dealer

committed

realising

registered

or

under

tax

the

without

regi st ere d dealer

charging tax in excess of the due amount,

is liable to pay

penalty which may be equal to three times the amount of tax


realised.
by

Failure of a registered dealer to file any return

the due

date

without

reasonable

cause

al s o at tr a ct s

penalty not exceeding a sum equal to one-tenth per cent of


tax or Rs.10,
Pe n a l t y

is

whichever is higher,

also

leviable

for each day of default.

in ca se s

in w h i c h

any

tax has

escaped due to omission or failure on the part of a dealer.

Prosecution:

Section

enumerates various

25,

of

the

Orissa

Sales

Tax

Act

offences which are punishable with fine

or with imprisonment or with both.

Business
himself

carried

registered

on

by

person

though

he

is

liable

who

has

not

to

pay

tax,

punishable with imprisonment upto six months.


upto

two

years

or

fine

or b o t h

submission of incorrect ac cou nts


false

return

punishable

with

or

failure

imprisonment

to

hav e
or

file

got
is

Imprisonment

been prescribed for

documents.
return

for six months

are

Filing

of

o ff en c es

or with fine.

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Sales Tax Systems In India - A P ro file

The Com missioner

ha s

power

to

receipt of composition money,

compound

offences

against

which in most cases does not

exceed R s . 3,000.

5. Administrative Organisation
Th e

Commissioner

Department.

He

is

of

assisted

Assistant Commissioners,
In Or i ssa ,
Orissa

t he

Orissa Sales Tax A c t

statistical

by

also
wing

Ta x

is

the

Additional

He a d

of

the

Commissioners,

Sales Tax Officers and Inspectors.

Commissioner

Entertainment

headquarters

Sa l e s

Tax
and

has

Act,

also
1946

to a d m i n i s t e r
in

the C e n t r a l

includes
which

deals

addition

Sales

taxation,
with

the

to

the

Tax Act.

The

research

and

the

statistical

information relating to the department.

The State has been divided


zones, namely,

north,

into three administrative

south and c e n t r a l . Each zone has been

placed under the charge of one Additional


assists

the Commissioner

comprises

of

administered
There

are

a
by

an

in all

Commissioner

number

also

in discharging his duties.


of

ranges,

Assistant

nine

ranges

hears

sales

tax

each

Commissioner
in

the

State.

appeals

assessment passed by the STOs and


the

Commissioner who

administration

The

Assistant

orders

in overall
the

being

of Sales Tax.

against

is
of

range

A zone

range

charge

of
of

including

collection of tax.

A
are

the

Each of

range

is

primary

divided

into

a number

a d m i n i s t r a t i v e uni ts

of
of

this is under the charge of an STO,

27 commercial

tax circles

in the State.

The

circles,

which

the Department.
CTO.

There arc-

Commercial Tax

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Sales Tax Systens in India: A P ro file

Officer
circle

is in charge
including

powers

as

STO

undertakes

of

the

the

collection

vested

assessment

in
of

after ancillary matters.


of

wards

which

overall

ar e

of

him

administration
tax.

under

dealers

Commercial Tax Officers.

the

the

also exercises

the

Statute

and

in a d d i t i o n to looking

Each circle

under

He

of

consists

charge

of a number

of

Additional

A ward normally contains about 200

d ea le rs .

The
which

State

is

thr ee

headed

(Intelligence).
nine

has

by

an

Intelligence
Assistant

There are thre e

investigation

Ranges,

units

consisting

and one

of

one

intelligence

circles

and

functioning

under

the

Additional

Commercial

including

12 unified checkposts

A mobile

Tax Officer

Inspector is attached to each range.

checkposts

of

Commissioner

administrative control of the intelligence range.


squad

ea c h

There are

38

(involving some

other departments also) along the State border.

6. Appeal/Revision
T he
penalty

or

dealer,

a g g r i e v e d by th e o r d e r o f as ses sm en t,

interest

may

appeal

against

Assistant Commissioner of Sales Tax.


appeal

order

second

appeal

matters

either

the

before

the

be

order

to

the

But against the first

State or the dealer may go for a


Sales

Tax

not related to assessment,

revision petition may

such

Tribunal.
penalty or

However,

on

interest,

filed before the Commissioner of

Sales Tax.

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Sales Tax System s in India: A P ro file

7. Checkposts
Checkposts are manned by one or more STOs along with
ot he r

auxiliary

staff.

checkposts

for

prescribed

form),

challan,

If these

are not

documents.

scrutiny

Goods
of

are

dealers'
bills
found

intercepted
declarations
and

at

the

(in the

other

relevant

satisfactory,

the Sales

Tax Officer is empowered to collect tax on the goods,

after

allowing due opportunity to the concerned person.

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