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A JOURNEY FROM SALES TAX TO GOODS &

SERVICE TAX
> Entry 48 of List II of 7th Schedule of Government Of India Act,
1935 empowered the States to levy Taxes on the sale of gods
and advertisement. For the first time a tax on retail sale of motor
spirits and lubricants was levied in 1938.UP also followed.
>In 1948 UP Sales Tax Act was legislated and was a multi-point
tax system.
>After the adoption of The Constitution of India in 1950, this Act
continued under Entry 54 of List II of 7th Schedule and Article 372
of The Constitution. Entry 54, which now reads Taxes on sale
or PURCHASE of goods other than newspaper, subject to
the provisions of entry 92-Aof List I.
> To regulate and define inter-State transactions of Sale and
purchase Parliament legislated C.S.T. Act in 1956.
> In 1970s system gradually switched over to single point
taxation, meaning thereby that the goods once taxed was not be
taxed again in the State. The points were: (i) M or I; (ii) First
Purchase; (iii) Sale to Consumer; (iv) Sale by Forest. In 70s
check- posts were established.
> By 46th Amendment in The Constitution of India in 1982,
following transactions, for the purposes of tax, were included in
the definition sale:
i- a transfer of property
in any goods for consideration without a contract ;
ii-a
transfer of property in goods (whether as goods or in some
other form)
involved in the execution of works contract;
iii- the delivery of goods on
hire purchase or any other system of payment by
installments;
iv- a transfer of THE RIGHT TO USE ANY GOODS for any
purpose (whether or not for a specified period )
for

consideration;
v- the supply
of goods by an association or body of persons (whether
incorporated or not) to a member thereof for consideration;
vi- the supply, by way of or as part of any
service or in any other manner whatsoever, of goods, being
food or any other article for human consumption or any
drink (whether or not intoxicating) where such supply or service is
for consideration.
>In 1995 Uttar Pradesh Sales Tax Act, 1948 was, w.e.f. 14-051994 , renamed as Uttar Pradesh Trade Tax Act, 1948
>W.e.f 01-01-2008 The Uttar Pradesh Value Added Tax Act,
2008 repealed
the old law and introduced multipoint
destination based taxation system which reduced multiple
rates of tax to 5 and removed cascading effect ensuring tax on
addition in value of goods at every link from origin to terminal
passing through chain of dealers. This is done by giving credit of
tax paid on the purchase of goods (defined as INPUT TAX ) when
such goods are resold; or used in manufacture of goods and such
manufactured goods are sold; or disposed of under the provisions
of S/13 of VAT Act.
What is GST ?
> VAT was a step ahead towards GST which successfully removed
the effect of tax on tax from the transactions made within the
State. GST shall remove this effect at Nation Level and unify the
whole Nation as one market to help India compete in Global
market.
> Service and sale of goods shall be re-demarcated to lessen
litigation.
> Many indirect taxes of Union and States shall be subsumated.
> CSTAct,1956 shall phase out and destination based tax system
shall be adhered.

> Dual GST i.e., Central GST (CGST) & State GST (SGST) shall
apply to the transactions of sales and services both.
> Rates of tax shall be reduced to 2.
> loss to States shall be compensated by the Centre.
Abhai Chandra
Retd. Dy. Commissioner, Com. Tax
M:9415770060