Friday, July 2, 2010

Central Excise Series -1

ntroduction: Central Excise is basically tax on goods manufactured in India. The word excise is derived from dutch term "Acise" which means to tax.
Definitions:
According to Webster's New International Dictionary defines Excise duty as
a) any duty toll or tax
b) an inland duty or impost, levied upon the manufacture, sale or consumption of commodities, within the country
c) a tax upon the pursuit or following of certain sports, trades or occupation, usually taking in this case, the form of exactions of licences.
According to Hon'ble Supreme Court of India has defined Excise duty as " to tax on the production or manufacture of excisable goods produced or manufactured within the country. The definition was given while delivering judgment.
Before going into details of Central Excise levy, We can deliberate the following headings.
1) Tax
2) Constitutional power to levy
3) Types of taxes


Tax:Accroding to Black's Law Dictionary's definiton of tax “A tax is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" and is any contribution imposed by government whether under the name of toll,tribute, impost, duty, custom, excise, subsidy, aid, supply, or other name.”

Power to levy taxes: Article 265 of the Constitution provides that no tax shall be levied or collected except by authority of law. It means respective governments has a constitutional power to levy taxes. The Parliament or Legislature to approve the concerned levy of taxes. The levy of taxes are as follows

List I - Union List ( exclusive power to central government to levy taxes)
List II State List ( exclusive power to respective state government to levy taxes)
List III Concurrent List - Both central and state government has got power to levy taxes.

The levy of central excise levied in pursuance of Entry 45 of Central List in Government of India Act, 1935, as adopted by Entry 84 of List I of Seventh schedule of Constitution of India. The List I is called Union List where Union Government i.e Central Government exclusive powers to levy taxes. Some of the taxes are in List 1 are as follows.

Entry 82 Tax on income other than Agricultural income ( Direct Tax)
Entry 83 Customs duties including export duties
Entry 84 Excise duty other than alcoholic liquors, opium and narcotics
Entry 85 Corporation tax
Entry 92A Taxes on the sale or purchase of goods other than Newspapers i.e. sale and purchase take place inter state trade . ( sale and purchase take place from one state to another state )
Entry 92B Taxes on consignment of goods
Entry 92C Taxation of Services
Entry 97 Any other matters not included in List II and III and any tax not mentioned in List Ii and List III

List II it is called State list. The state government are having exclusive powers to levy taxes. The details of taxes are as follows

Entry no.46 Taxes on Agricultural Income
Entry no. 51 Excise duty on alcoholic liquors, opium and narcotics
Entry no.52 Octori
Entry No.54 Tax on sale and purchase of goods other than newspapers except tax on interstate sale or purchase ( Local sales i.e popularly called Value added Tax)

List III - Concurrent List The Union Government and of any State Government has also powers to make taxes with respect to any of the matters mentioned in List III in the Seventh Schedule to the Constitution.

Type of taxes

Direct Tax which includes
1) Income Tax
2) Wealth Tax
3) Gift Tax
4) Interest tax

Indirect Tax includes
1) Central Excise
2) Service Tax
3) Customs duty
4) Purchase Tax
5) Octroi

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