Sales Tax, the most important source of revenue to the State, was first introduced in the former State of Madhya Pradesh from June 1947. under the Central Provinces and Berar Sales Tax Act (XXI of 1947). The Act was amended by the State Legislature from time to time, the important amendments being those effected by the Amendment Act of 8th October, 1948, 11th April, 1949 and 1st December. 1953. The Act was repealed on 1ST January 1960 by the Bombay Sales Tax Act (LXXVY of 1959). Up to the end of November 1953. the Act provided for the levy of tax only on sales of goods excluding those mentioned in Schedule II appended to the Act. By the Amendment Act (XX of 1953), however, provision was made to tax the purchase price of the goods purchased on the strength of the declarations prescribed under Central Provinces and Berar Sales Tax Rules [26 (3) of 1947] and utilized for purposes other than those specified in the declaration, i.e., if resold, out of the former State of Madhya Pradesh or used unauthoritatively in the manufacture of goods.

Dealers liable to Pay Tax.

Under Sub-Section (v) of Section 4 of the Act, dealers whose  turnover of sales exceeded Rs. 25.000 (even though it be of taxfree goods) m a year were liable for registration and consequently were liable to pay tax in accordance with other provisions of the Act. The limit of such turnover for importers and manufacturers was Rs. 5.000 and Rs. 10,000, respectively: and the limit of turnover for societies registered under the Co-operative Societies Act (1912) dealing exclusively in goods produced or manufactured by society or its members without the aid of hired labour was at Rs. 2,500.

Classes of Tax.

Unlike the Bombay Sales Tax Act (1953), the Central: Provinces  and Berar Act (1947), provided levy of tax only at the point of  sale, i.e., it was a single point tax. The provisions of Section 4 (6) of the Act, which came into force from 1st December, 1953, do not actually amount to purchase tax but are only intended to seal off loopholes for evasion of sales tax on goods purchased on the strength of declarations.

NO tax was levied on goods specified in Schedule II which consisted of 43 entries. Goods specified in part I of Schedule I, were taxable at one anna in a rupee up to 7th April, 1957. This rate was changed to 7 paise, after the introduction of decimal coinage system. The goods specified in part II of Schedule I, were taxable at 3 pies in a rupee up to 7th April, 1957, and at 2 paise from 8th April, 1957, onwards. All other goods not covered by any of the entries of Schedule I or II were taxable at 6 pies in a rupee up to 7th April, 1957, and at 3 paise from 8th April 1957, onwards.

The scheme of the Act (1947) was such that no tax was imposed on the sale of goods made in the course of inter-State trade and commerce. Further, tax on a particular transaction was to be paid only once. Generally, the wholesalers or manufacturers were not required to pay tax, unless they sold their goods directly to unregistered dealers or customers. The goods directly required in the manufacture of articles for sale could also be purchased free of tax by manufacturers by giving a declaration in the prescribed form to the seller.

Current Sales Tax Act.

The Bombay Sales Tax Act, 1959, which came into force on 1st January 1960, is applicable to the entire State of Maharashtra. The new Act embodies the recommendations of the Sales Tax Enquiry Committee and has, by repealing and replacing various sales tax laws in force in different regions of the State, introduced absolute uniformity in five sales tax regions of the State.

In the initial stages a dealer who held goods purchased before 1st January, 1960, from a registered dealer in the old Bombay State area was, on the resale of those goods, liable to pay tax under the new Act subject to certain modifications and the benefit of Section 8 (a) of the Bombay Sales Tax Act, 1953, was denied to him. Similarly, exemptions granted under the earlier laws to certain classes of goods generally or conditionally were in some cases, withdrawn under the new law.

The Bombay Sales of Intoxicants Taxation Act, has now been repealed and spirituous medical preparations containing more than 12 per cent of alcohol by volume (but other than those declared by Government to be not capable of causing intoxication) are now taxed under the Bombay Sales Tax Act, 1959, at the rate of 30 paise in a rupee at the first stage only. Similarly, country liquor and foreign liquor brought in India including spirits, wines and fermented liquors are taxed at the rate of 45 paise in a rupee.

Schedule 'A' of the Bombay Sales Tax Act, 1959, lists the exempted goods subject in some cases to conditions and Schedules B to E, the taxable goods. Taxable goods are broadly divided into five classes: (i) goods declared as important to inter-State  trade, taxable only at first stage (Schedule B, Part I); (ii) goods  declared as important to inter-State trade, taxable only on the  last sale (Schedule B, Part II); (iii) other classes of goods taxable  only at the first stage of sale (Schedule C); (iv) 9 classes taxable  only at the last stage of sale (Schedule D); and (v) 21 classes  specified and all other goods not specified elsewhere in any Schedule, taxable at the first stage and on the last sale and again to a very small incidence at the retail stage.

The tax at the first stage is called the 'Sales Tax ', on the last sale as the 'General Tax', and that at the retail stage, the ' Retail Sales Tax '. Sales Tax and the General Sales Tax, as the names imply, are payable on sales. However, when a registered dealer purchases goods from an unregistered dealer or from the Government, he pays purchase tax. On the resale of these goods the dealer has not to pay sales tax or general sales tax as the case may be. The registered dealer does not become liable to purchase tax if he resells the goods without alteration within three months and in that case, on such resale he pays in the routine way, sales tax or general sales tax or both, as may be due. The purchase tax is not a separate tax and is only intended to seal off loopholes for evasion.

Classes of Dealers.

The new Act creates five classes of dealers, viz.:-

(1) Registered Dealers:-Every dealer liable to pay tax must  obtain a registration and failure to do so is regarded as an offence.

(2) Licensed Dealers:-Every registered dealer who makes annual sales of over Rs. 50,000 to other registered dealers may obtain a licence, on the strength of which he can make purchases, free of general sales tax for resale within the State. Such licensed dealers will thus generally be the wholesalers or semi-wholesalers.

(3) Authorised Dealers:-Every registered dealer whose annual sales in inter-State or export trade are more than Rs. 30.000 worth of goods or who sells that quantity to another authorised dealer who resells it in inter-State trade or export may obtain an authorisation against which he can purchase goods free of all taxes (or at a reduced rate under certain circumstances) for inter-State or export resale either by himself or another authorised dealer to whom he sells them.

(4) Recognised Dealers:-Any registered dealer whose annual turnover of sales exceeds Rs. 25,000 of taxable goods manufactured by him may obtain a recognition against which he may make tax-free purchases of goods for use directly in manufacturing taxable goods for sale, save, generally speaking, for goods on which the tax is at the rate of two per cent or less and machinery.

(5) Permit-holders:-A registered dealer whose commission agency purchases on behalf of principals disclosed in his books exceed Rs. 30,000 per year, may obtain a permit, on the strength of which he may make purchases tax-free or at a reduced rate, in certain circumstances for his principals.

Under the new Act, the turnover limit requiring registration is RS. 10,000 for a manufacturer and Rs. 30,000 for every other dealer. Dealers who are not liable to registration because their turnover has not exceeded the limits specified under the Act but are registered under the Central Sales Tax Act, 1956, will be liable to pay tax under the Bombay Sales Tax Act, 1959, under conditions specified in the Act.

Care is taken to see that the tax, as far as possible, would not be recovered in excess of what is intended by the law. This is done by set-offs allowed under the law.

Administrative Organisation.

The Sales Tax Officer is the administrative head of the Sales Tax department at the district level and exercises powers delegated to him under the Bombay Sales Tax Act, and the rules made thereunder. His duties consist in registering, licensing and assessing the dealers irrespective of their turnover. He has to see that outstanding taxes are recovered and tax-evasion is detected. He is also empowered to compound certain offences under the Act.

Immediately above, the Sales Tax Officer is the Assistant Commissioner of Sales Tax, who is responsible for the general administration of the offices within his range. He is also the first appellate authority. He guides the Sales Tax Officer in complicated matters. Against the appellate order passed by the Assistant Commissioner of Sales Tax, second appeal could be made before the Deputy Commissioner of Sales Tax. Against the second appellate order, the dealer could either prefer revision before the Board of Revenue or the Commissioner of Sales Tax. In the latter case, however, the decision of the Commissioner is final whereas the order of the Board of Revenue is subject to reference on points of law before the High Court.

Statistics of Collection.

The following statement gives the amount of sales tax collect- ed during the period from 1957-58 to 1959-60: -


Amount Collected