 thb central sales tax (amendljlenr) bill, 1969 l-tg b§1m introduced id lok sabha 71 page 1, line 6,-for "(f)" ~ "(j)" 2 page 2, line 28,-m "shal" ~ "shall" 3 page 2, iide 35,-read after "" , 4 page 2, line 38,-"1 966: " 5 for "1 969- n read , paer\ 6, line 14,-{ ,for "daddalam" ~ "y add alam" 6 rage 13, ~1ne 7,-1:2£ "for" ~ "or" 7 correct line number on page 3 ~sadha 31 ,891 (saka)  buino 63 of m9 the central sales tax (amendment) bill, 1969 a billfurther to amend the central sales tax acta 1956 and to provide for certain other matters be it enacted by parliament in the twentieth year of the republic of india as tollows:-1 this act may be called the central sales tax (amendment) act, shon 1969 tiue amendment of section 2 74 of 19~6 5 2 in section 2 of the central sales tax act, 1956 (hereinafter referred to as the principal act), in clause (f), for the words "and determined in the prescribed manner", the words "and determined in accordance with the provisions of this act and the rules made thereunder" shall be, and shall be deemed always to have been, substituted 10  3 in section 6 of the principal act,-amendment" section 6 (a) after sub-section (1), the following sub-section shall be, and shall be deemed always to have been, inserted, namely:-, "(la) a dealer shall be liable to pay tax under this act cn a sale of any goods effected by him in the cou1'l@ of tnterstate trade or commerce notwithstanding that no tax would have been leviable (whether on the seher or the purchaser) under the sales tax law of the appropriate state if that sale had taken place inside that state"; (b) in sub-section (2), for the word, brackets and figure "sub- 5 section (i)", the words, brackets, figures and letter "sub-section (1) or sub-section (la)" shall be, and shall be deemed to have been, substituted with effect from the 1st day of october, 1958 amedd-1jmiit of sectjon 8 4 in section 8 of the principal act, in sub-section (2a) , for the words, brackets and figures "notwithstanding anything contained in sub-section 10 (1) or sub-section (2)", the words, brackets, figures and letter "notwithstanding anything contained in sub-section (i a) of section 6 or in sub-st:ction (1) or sub-section (2) of this section" shall be, and shall be det!med to have been, substituted with effect from the 1st day of october, 1958 5 after section 8 of the principal act, the following section shall be, 15 and shall be deemed always to have been, inserted, namely:-ldaenlon otnew aection 8a "sa (1) in determining the turnover of a dealer for the purpol'es of this act, the following deductions shall be made from the aggregate of the salle prices, namely:-determination or turnovea: (a) the amount arrived at by applying the following formula 20 rate of tax x aggregate of sale prices ·100--plus rate-or tax 4-0 provided that no deduction on the basis of the above formula shall be made if the amount by way of tax collected by a registered dealer, in accordance with the provisions of this act, has 25 been otherwise deducted from the aggregate of sale prices exp~nation-where the turnover of a dealer is taxable at different rates, the aforesaid formula shal be appjied separately in respect of each part of the turnover liable to a different rate of tu; ~ (b) the sale price of all goods returned to the dealer by the purchasers of such goods,-(i) within a period of three months from the date of delivery of the goods, in the case of goods returned before the 14th day of mry, 1966: 35 (ii) within a period of six months from the date of delivery of the goods, in the case of goods returned on or after the 14th day of may, 1969; provided that satisfactory evidence of such return of goods and of refund or adjustment in accounts of the sale price thereoi 40 is produced before the authority competent to assess or, as th· case may be, re-assess the tax payable by the dealer under this act; and (c) such other deductions as the central government may, having regard to the prevalent market codciitions, facility of trade 45 and interests of consumers, prescribe (2) save as otherwise provided in sub-section (1), in deter"'~injng the turnover of a dealer for the purposes of this act, no deduction shall be made from the aggregate of the sale prices" 6 for section 9 of the principal act, the following section shall be, and subatttu-5 shall be deemed always to have been, substituted, namely: -tion of newaec_ tion for seetioll 9 a levy and coll«tiun of tax and penalties 10 "9 (1) the tax payable by any dealer under this act on sales of goods effected by him in the course of inter-state trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the government of india and the tax so levied shall be collected by that government in accordance with the provisions of sub-section (2), in the st3te from which the movement of the goads commenced: provided that, in the case of a sale of goods during their move· ment from one state to another, being a sale subsequent to the fir~t 15 sale in respect of the same goods, the tax shall, where such sale do~s not fall within sub-section (2) of section 6, be levied and collected in the state from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form prescribed for the purposes of clause' (a) of sub-section (4) of section 20 8 in connection with the purchase of such goods (2) subject to the other provisions of this act and the rules made  thereunder, the authorities for the time being empowered to assess, re-assess, collect and enforce paymen~ of any tax under the general sales tax law of the appropriate state shall on behalf of the govern-, 5 ment of india, assess,· re-assess, collect and enforce payment of tax, including any penalty, payable by a dealer under this act as if the tax or penalty payable by such a dealer under this act is a tax or penalty payable under the general bales tax law of the state; and for this purpose they may exercise all or any of the powers they have 30 under the general sales tax law of the state; and the provisions of such law, including provisions relating to returns, provisional assess,· ment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of 35 liability of any firm or hindu undivided family to pay tax· in th(l event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, penalties, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply 40 accordingly: provided that i·f in any state or part thereof there is no ,cneral sales tax law in force, the central government may, b)" ndes made in this behalf, make necessary provision for all or any or the matters specified in this sub-section 45 (3) the proceeds in any financial year of any tax, including any penalty, levied and collected under this act in any state (other than a union territory) on behalf of the government of india shah be assigned to that state and shall be retained by it; and the proceeds attributable to union territories shall form part of the consolidated fund of india" amend ment of aeetlon loa 7 section loa of the principal act shall be, and shall be deem(!d to have been, renumbered with effect· from the 1st day of october, 1958 as sub--section (1) of that section and after the said sub-section (1) the 5 ,ohowing sub-section shall be and shall be deemed to have beer, inserted with effect from the said day, namely:-"(2) the penalty imposed upon any dealer under sub-se'ction (1) shall be collected by the government of india in the manner provided in sub-section (2) of section 9-10 (a) in the case of an offence falling under clause (b) or clause (d) of section 10, in the state in which the person purchasing the goods obtained the form prescribed for the purposes of clause (a) of sub·section (4) of section 8 in connection with the purchase of such goods; is (l:t) in the case of an offence falling under clause (c) (if section 10, in the state in which the person purchasing the goods should have registered himself if the offence had not been committed" amend  ident of section 13 8 in section 13 of the principal act, in clause (f) of sub-section (1), for the word, brackets and figure "sub-section (3) ", the word" brackets ~o and figure "sub-section (2)" shall be, and shall be deemed always to have been, substituted validation of &siessments, etc: t (1) notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, re-assessment, levy or collection of any tax made or purporting to have 25 heen made any action or thing taken or done in relation to such assessment, re-assessment, levy or collection under the provisions of the principal act before the 9th day of june, 1969, shall be deemed to be as valid and effective as if such assessment, re-assessment, levy or collection 01' aetion or thing had been made, taken or done under the principal act 30 as amended by this act and accordingly-(a) all acts, proceedings or things done or taken by the government or by any officer of the government or by any other authority in connedion with the assessment, re-assessment, levy or coljection of such tax shall, for all purposes, be deemed to be, and to have 35 always been, done or taken in accordance with law; (b) do suit or other proceedings shall be maintained or continued in any court or before any authority for the refund of any such tax; and (c) no court shall enforce any decree or order directin~ the re- 40 fund of 2ny such tax (2) for the removal of doubts, it is hereby declared that nothing in sub-set!tjon (1) shall be construed as preventing any person-(a) from questioning in accordance with the provisions of the principal act, as amended by this act, any assessment, re-assessment,4s levy or collection of tax referred to in sub-section (1), or (b) from claiming refund of any tax paid by him in excess of the amount due from him by way of tax under the princlpal act as amended by this act exemption from liability to pay taxm certain case~ 10 (1) where any sale of goods in the course of inter-state trade or commerce has been effected during the period between the 10th day of november, 1964 and the 9th day of june, 1969, and the dealer effecting such foiajehas not collected any tax under the principal act on the ground 5 that no such tax could have been levied or collected in respect of such sale or any portion of the turnover relating to such sale and no ·such tax could have been levied or collected if the amendments made in the principal act- by this act had not been made, then, notwithstanding anything eolltained in section 9 or the said amendments, the dealer shall not be 10 hl!lble ,to pay any tax under the principal act, as amended by thif act, in respect of such sale or such part of the turnover relating to such sale (2) for the purposes of sub-section (1) the burden of proving that no tax was collected under the principal act in respect of any sale referred to in,sub-section (1) or in respect of any portion of the turnover relating 15 to such sale shall be on the dealer effecting such sale "of 1969 11 (1) the central sales tax (amendment) ordinance, 1969, is hereby repeal repealed and silv_ ing (2) notwithstanding such repeal, anything done or any actipn taken under the principal act as amended by the said ordinance shall be d ~emed 20 to have been done or taken under the principal act as amended by this act as if this act had come into force on the 9th day of june, 1969 the levy of tax on inter-state sales under the central sales tax act, 1956, commenced from the 1st july, 1957 the scheme of the act as originally intended was that while matters of a substantive nature, such as the incidence of tax, the point of levy, the determination of turnover for purposes of calculation of tax including exemptions which should be allowed in detennlnlng such turnover, should be regulated by the provisions made in that behalf in the act itself or in rules made under the act, matters of a procedural nature, such as the procedure for collecti~ of tax, the machinery for collection oj tax should be regulated by the provisions contained in the local sales tax law of the appropriate state however on the 10th november, 1964, the supreme court in the caf;e of the state of mysore vs yaddawm lakshminarasimhiah settll " sons (hereinafter referred to as the daddalam case) held that the pl'o\iisions of the act would have the effect of incorporating not only the procedural provisions of the local sales tax laws but also the substantive provisions thereof the court was concerned in this case with a factual situation which had arisen before the act was amended in 1958 and in arriving at its conclusion the court relied upon the wording of section 8(2) and section 9 (1) of the act as they stood before the act was amended in 1958 there was a conflict of opinion amongst the high courts as to whether the ruling of the supreme court in the aforementioned case held ~ood even with reference to the provision~ of the act as amended in 1958 in a series of decisions in 1968, the supreme court hem that its decision in yaddalam case applied with equal force even after the amendment of the act in 1958 the court also extended the scope of its ruling in yaddalam case and held that the provisions of the sales tax law of the appropriate state would apply not only in respect of point of levy of central sales tax but also in respect of deductions to be made in the determination of turnover for the purpolles of calculating the tax payable under the central sales tax act 2 thesp judgments, therefore went against the scheme which was sought to be given effect to' in the act and in accordance with which the act had been administered all along as a result of these judgments, the state governments would have been required to refund a substantial portion of tne taxes levied and collected umler the act it, therefore, became necessary to promulgate the central sales tax (amendment) ordinance, 1969 (4 of 1969) on the 9th june, 1969 3 the ordinaillce amended the central sales tax act, 1956 with retrospective effect to make it clear that t",x q'n an inter-state sale of goods would be payable notwithstanding th(~ fact that no tax would have been levied un'tier the sales tax law of t1' ~ appropriate state, had the sale token place inside such state at that point further, the ordinance provided that turnover for the purposes of assessment of tax would be "~, , ,' i : " j ,:(,' - -  , tietermined in accordance with the provisions of the act and the rules made the~tii1der the ordinance also validated the taxes imposed, assessed or ~'ol1ected by the state governments up to the date of commencement of the ordinance the ordinance made suitable provisions to safeguard the interests of dealers who, relying upon the supreme conurt judgment in yaddalam case, did not colect tax from their customers 4 this bill seeks to replace the ordinance, subject to certain changes of a consequential or clarifying nature, by an act of parliament the notes on clauses explain the provisions o"f the bill new delhi; p c sethi the 18th july, 1969  recommendation under articles 117 and 274 of the constitution of india[copy of letter no 8/24/69-st(2), dated the 18th july, 1969 from shri prakashchand b sethi, minister of state in the ministry of finance to the secretary, lok sabha] the vice-president acting as president having been apprised of the subject matter of the above bill, has been pleased to recommend, in pursuance of clauses (1) and (3) of article 117 and clause (1) (,f article 27" of the constitution of lndia~ the introduction and consideration of the bill in the lok sabha (;lause 2-thls clause' seeks to amend, with retrospective effect, the definition of the term "turnover" to make clear that the turnqver shall be determined in accordance with the provisions of the act and the rules made thereunder clause 3-this clause seeks to' insert with retrospective effect a new sub-section (la) in section 6 of the principal act new scirsection (ia) seeks to provide that tax on inter-state sale of any goods shall be payable notwithstantling the fact that no tax would have been levied under the sales tax law of the appropriate state if that sale had, taken place inside that state the other amendment which this clause seeks to make is of a consequential nature clause 4-this is of a consequential end clarifying nature clause 5-rrhis clause seeks to insert with retrospective effect a new section sa, in the principal act new section 8a provides for the deductions which should be allowed in determining the turnover of a dealer for the purposes of the act the de'ductians, provided in rule 11 (2) of the central sales tax (registration and turnover) rules, 1957, as amended from time to time, regarding the tax  element and the goods returned to a dealer, have been incorporated in the section to cover contingencies which may arise in future, power is als·(), being taken to prescribe other deductions having regard to the prevalent market con-'ciitions, facility of trade and interests of consumers clause ~-this cleuse seeks to substitute with retrospective effect section 9 of the principal act by a new section in respect of· ·first inter-state sale, tax will be payable in the state wherefrom the movement of the' goods commenced in the case of a second or subsequent sale not covered by sub-section (2) of section 6, the tax will be levied uld collected in the state where the registered dealer effecting the subsequent sale has his place of business power is also being taken by the central government to make, rules for the purpose of providing for the assessment, collection and enforcement of payment of tax under the act ;n any territory where there is no local sales tax law in force it has also been made clear that for the i>urp:)ses of assessment, collection 6l1'd payment of tax, the act will attrac~ the pl'o'cedural provisions relating to assessment, collection and payment of tax under the general sales tax law of the appropriate state clause 7-this clause seeks to transpose, without any change, the existing provisions regarding collection of p':'nalty contained in sub-sectian (2) of section 9 of the principal act to section 10 the transposition has become necessary as the other provisions of section 9 are being substituted with effect from the commencement of the principal act clctuse a-this is consequential clame 9-this clause provides for validation of past levies and collections of tax under the act up to the date of commencement of this act clause 10-this clauseseeks to exempt a dealer from liability to pay tax in respect of any sale effected by him during the perio'd between the loth day of november, 1964 (the date of the judgment of the supreme court in yaddalam case) and the 9th day of june, 1969 rthe date afcornmencement of central sales tax (amendment) ordinance, 1969j, or in respect of any portion of turnover relating to such sale if the dealer proves that he has, relying upon judicial pronouncements, not collectetl tax on such sale or such portion of turnover  chluse n-this clause seeks to repe$l the ce~tral sales tax (amendment) ordinance, 1969 and make the usual saving provision the central sales tax act, 1956 utilises the machinery in existence in states and union territories for collection of sales tax however, in the case of any state or part thereof in which local sales tax law is not in force, this would not be possible and accordinjly sub-section (3) of existing section 9 of the act confers powers on the central government to provide for such machinery in respect of such state or part thereof the proviso to sub-section (2) of new section 9, which clause 6 seeks to substitute for existing section 9, seeks to centinue these powers of the central government the need for utilising these powers has not been felt up till now however, it might become necessary to invoke this provision if at any stage, it is decided to cellect central sales tax in respect of inter-state sales emanating from a territory where there is - no local sales tax it is not possible to visualise clearly the expenditure that would be inv'olved on this account as there is no appreciable "olume of inter-state trade from such territories, only a small staff, if at all necessary, would be required and the expenditure likely to be involved on this account may not exceed rs 25,000 per annum  c ]j,"'ntral sales t iiithe central sales tax act, 1956 utilises the machinery in existence in states and union tjrritories fo~ collsction of sales tax however, in the case of any state or nart thereof in ,mich local sales tax law is not in force, this ,",ould not be possible and acc ordingly sub-section (3) of existing section 9 of t he act confers powers on the central government to provide for such machinery in respect of such state or part thereof the nroviso to sub-section (2) of new section 9, wl:11ch clause 6 seeks to substi tute for existing section 9, seel~s to c 0ntinue these po',rers of the central government the need for utiltsing these powers has not been felt up till novt ho'"ever, it might become necessary to invoke this provision if at an~r stage, it is decided to collect central sales tax in respect of inter-state sales em~nqting from a territory 'lthere there is no local sales tax it is not possible to visualise clearly the expenditure that ,",ould be involved on this account as there is ~o appreciable volume of inter-state trade from such territoriefj, only a small staff, if at all necessary, would be required ~nn the expen(hture li':ely to be involved on this account may not exceed r~25,ooo per annum the bi 11 does not involv0 any non-recurring 0xpenditure new delhi dated: 24/7/69 sn 1- pc s~thi minister in tie ministry of fini\nce  memorandum regarding delegated legislationclause 5 of the bill seeks to insert a new section sa in the principal act the new section provides expressly for certain deductions which may be allowed from the gross turnover of a dealer for the purposes of the act to provide for contingencies which may arise in future, the section seeks to authorise the central government to make rules providing for other deductions having regard to the prevalent market conditions, facility of trade and interests of consumers any such additional deductions would be to the advantage of the dealers ~ the section lays down clearly the guidelines for providing for such additional deductions the delegation of legislative power is of a normal character 2 clause 6 of the bill seeks to substitute a new section 9 for existing section 9 of the principal act the proviso to sub-aection (2) of the new sect jon [which merely re-enacts a similar provision contained in sub-section (3) of existing section 9] empowers the central government to make rules to provide for collection and enforcement of payment f tax under the act in a state or part thereof where there is no l()('al sales tax law as the matters in respect of which rules can be made under ~e proviso pertain to matters of administrative detail and procedure, the delegation of legislative power is of a normal character   extracts from the central sales tax act, 1956 (74 of 1956)-  , '" '" '" 2 in this act unless the context otherwiserequires,-~flni­tions '" '" '" '" '" (j) i'tumover" used in relation to any dealer liable to tax under this act means the aggregate of the sale prices ·received and receivable by him inrespeet of sales of any goods in the course of inter-state trade or commerce made during any prescribed period and determined!n the prescribed manner; '" '" '" '" '" chapter iii  inter-state sales taxliability to tax on inter-state sales 6 (1) subject to the other provisions contained in this act, every dealer shall, with effect from such date as the central government may, by notification in the official gazette, appoint, not being earlier than thirty days from the date of such notification be liable to pay tax under this act on all sales effected by him in the course of inter-state trade or commerce during any year on and from the date so notified (2) notwithstanding anything contained in sub-section (1), where a sale in the course of inter-state trade or commerce of goods of the description referred to in sub-section (3) of section 8-(a) has occasioned the movement of such goods from one state to another; or (b) has been effected by a transfer of documents of title to such goods during their movement from one state to another; any subsequent sale to a registered dealer during such movement effected by a transfer of documents of title to such goods shall not be subject to tax under this act: provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescril,>ed authority in the prescribed manner a certificate duly filled and signed by the registered dealer from whom the goods were purchased, containing the prescribed particulars '" '" '" 8 (1) '" '" (2a) notwithstanding anything contained in sub-section (1) or subsection (2), if under the sales tax law of the appropriate state the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent (whether called a tax or fee or by any other name), the tax payable under this act on his turnover in so far as the j2 ratellol the course state commerce turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate explanation-for the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate state if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which the tax is levied at specified stages for otherwise than with reference to the turnover of the goods  - - - - - levy and collection of tax and penalties 9 (1) the tax payable by any dealer under this act on sales of goods effected by him in the course of inter-state trade or commerce [whether such sales fall within clause (a) or clause (b) of section 3] sh~ll be levied and collected by the government of india in the manner provided in sub-section (3) in the state from which the movement of the goods commenced: provided that, in the case of a sale of goods during their mo lement from one state to another being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within sub-section (2) of section 6, be levied and collected in the state from which the registered dealer effecting the subsequent sale obtained the form prescribed for the purposes of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods (2) the penalty imposed upon any dealer under section loa shall be collected by the government of india in the manner provided in sub-section (3)-(a) in the case of an offence falling under clause (b) or clause (d) of section 10, in the state in which the person purchasing the goods obtained the form prescribed for the purposes of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods; (b) in the case of an offence falling under clause (c) of section 10, in the state in which the person purchasing the goods should have registered himself if the offence had not been committed (3) the authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate state shall, on behalf of the government of india and subject to any rules made under this act, assess, collect and enforce payment of any tax, including any penalty, payable by a dealer under this act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the state is assessed, paid and collected; and for this purpose they may exercise all or any qf the powers they have under the general sales tax law of the state; and the ~)rovisions of such law, including provisions relating to returns, appeals, reviews, revisions, references, penalties and compounding of offences, shall apply accordingly: provided that if in any state or part thereof there is no genpral sales tax law in force, the central government may, by rules made in this bchau, make necessary provision for all or any of the matters specified in this sub-section, and such rules may provide that a breach of any r~ shall be punishable with fine which may extend to five hundred rupees; and where the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues (4) the proceeds in any financial year of any tax, including any penalty, leyied and collected under this act in any state (other than a union territory) on behalf of the government of india shall be assigned to that state and shall be retained by it; and the proceeds attributable to union territories shall form part of the consolidated fund of india - - - - - imposition of penalty in lleuot prosecution loa if any person purchasing goods is guilty of an offence under clause (b) or clause (c) or clause (d) of section 10, the authority who granted to him or, as the case may be, is competent to grant to him a certificate of registration under this act may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one-and-a-half times the tax which would have been levied under this act in respect of the sale to him of the goods if the offence had not been committed: provided that no prosecution for an offence under section 10 shall be instituted in respect of the same facts on which a penalty has been imposed under this section - - - - - powertc make ruin 13 (1) the central government may, by notification in the official gazette, make rules providing for-- - - - - (f) the matters in respect of which provision may be made under the proviso to sub-section (3) of section 9; - - - - -  lok sabhaa bill further to amend the central sates tax act, 1956 and to provide for certain other mattt:rs (shri prakashchand b sethi, minister of state i1z the ministry of finance) 