Friends!
Any law dealing in tax levy involves three essential stages. These
stages are:
1. Declaration of tax levy;
2. Assessment of tax levy; and
3. Recovery of tax levied.
If levy is invalid, tax neither can be
assessed nor can be collected. Tax levied with a possible contingency of refund
is not a valid levy. In case of an indirect tax, declaration of levy involves
(i) declaration of tax incidence; (ii) tax measure i.e. the measure upon which the assessment or determination of tax liability is
based.; (iii) period
for assessment; (iv) person from whom tax will be collected; and (v) manner in
which tax leviable will be collected and paid.
In an Act, dealing
with levy of tax, there is one main section which describes declaration of tax
levy but there may be other provisions, in other sections, which may have some
exceptions not provided in the main section. These other provisions may provide
provisions for relief, exemptions or exceptions or sometimes such provisions
may provide alternate method of levy of tax. To encompass these provisions in
section related to levy and collection, in the beginning of the section, we add
the words "Subject to other provisions of this Act" or words
"Subject to other provisions contained in this Act".
In the Central
Goods and Services Tax Act, 2017, section 9 relates to declaration of tax levy.
Sub-section (1) and sub-section (2), of this section, run as follows:
9. (1)
Subject to the provisions of sub-section (2),
there shall be levied a tax called the central goods and services tax on all
intra-State supplies of goods or services or both, except on the supply of
alcoholic liquor for human consumption, on the value determined under section
15 and at such rates, not exceeding twenty per cent., as may be notified by the
Government on the recommendations of the Council and collected in such manner
as may be prescribed and shall be paid by the taxable person.
(2)
The central tax on the supply of petroleum crude, high speed diesel, motor
spirit (commonly known as petrol), natural gas and aviation turbine fuel shall
be levied with effect from such date as may be notified by the Government on
the recommendations of the Council.
If
we go through other provisions of the Act, we see that supply of certain goods
and services are to be kept exempt from levy of tax, section 10 provides
alternate method of levy of tax in form of composition levy, section 16, 17, 18
provide for allowing input tax credit, etc. But only sub-section (2) has been
given overriding effect over sub-section (1). In sub-section (1), in the
beginning, words "Subject to other provisions of this Act", should
have been added.
Period
of levy of tax has not been declared. Annual return is required to be
submitted. Such return is to be submitted for each financial year. Therefore,
period of levy of tax is financial year.
A
careful reading of section 40, with title "First Return", reveals
that a person shall be liable for payment of tax on supplies made by him on or
after the date on which he becomes liable for registration. In section 9
provision relating to this fact should have been incorporated.
MY QUEST IS: Whether declaration of tax
levy made in sub-section (1) of section 9 is complete and valid.
My
view is that tax levy clause, "sub-section (1) of section 9" is not
complete. It may be redrafted as follows:
9. (1)
Subject to other provisions of this Act, for each financial year, there shall
be levied a tax, called the central goods and services tax, on every
intra-State supply, made by a person in the capacity of a taxable person, of
goods or services or both, except on the supply of alcoholic liquor for human
consumption, on the value determined in accordance with provisions of section
15 and at such rates, not exceeding twenty per cent., as may be notified by the
Government on the recommendations of the Council and tax so levied shall be
collected and paid in the manner provided and as may be prescribed.
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