2 MARKS QUESTION ANSWER

1. CESTAT is the 'Appellate Tribunal' [Section 2(aa)] and is mandated [Section 35B] to hear
appeals against orders passed by the Commissioners and Commissioners (Appeals).
Appeals can be filed in FORM EA 3 with enclosures. Revenue appeal under section 35B(2)
or 35B(1) can be filed in FORM EA 5.

2. Under the Central Excise Act, 1944, all excisable goods that are manufactured or
produced in India shall carry a central excise duty known as CENVAT. It should be noted
that this act is not applicable to items that are repaired or reconditioned.

3. Section 2(6) of the Chhattisgarh Excise Act, 1915 defines excise duty as any excise duty or
countervailing duty mentioned in entry 51 of list II in the Seventh Schedule to the
Constitution.

4. tari" means fermented or unfermented juice drawn from any kind of palm tree
5. Section 12 of the Customs Act, 1962 states that customs duties are levied on goods
imported into India at rates specified in the Customs Tariff Act, 1975 or other applicable
acts. The Customs Act, 1962 came into effect on February 1, 1963 and applies to the
whole of India.

6. The Original Adjudicating Authority (OAA) under the Customs Act, 1962 is the Additional
Commissioner of Customs. The OAA can pass orders or decisions under the Act, except
for the purposes of Chapter XV.

7. Provide for the levy, collection and distribution of taxes on sales of goods in the course of
inter-State.

8. 05.01. 1957

9. 01/07/2017

10. 14%
10 MARKS QUESTION ANSWER

1. Explain the key provisions of the Central Excise Act, 1944, pertaining to the
levy and collection of excise duty. Discuss the classification of goods under the
Act and the procedures involved in registration, valuation, and computation
of central excise duty.

ANS:-
The Central Excise Act, 1944, is a comprehensive legislation that governs the
levy and collection of excise duty in India. Here are the key provisions and
procedures related to the levy and collection of excise duty under the Act:

Key Provisions of the Central Excise Act, 1944

Levy of Excise Duty (Section 3):

Excise duty is levied on all excisable goods which are produced or manufactured
in India, as specified in the Central Excise Tariff Act, 1985.
The duty is collected at the rates prescribed by the Central Government in the
official gazette.
Classification of Goods:

Goods are classified under the Central Excise Tariff Act, 1985, which aligns with
the Harmonized System of Nomenclature (HSN).
Classification determines the applicable rate of duty, and it is crucial for
ensuring the correct levy and collection of excise duty.
Disputes regarding classification can be resolved by the Central Board of
Indirect Taxes and Customs (CBIC) and appellate authorities.
Registration:

Manufacturers of excisable goods are required to obtain registration under the

Central Excise Act before commencing production.
The registration process involves submitting an application to the jurisdictional
central excise office and obtaining a unique registration number.
Valuation of Goods (Section 4):

The value of goods for the purpose of excise duty is determined based on the
transaction value, which is the price actually paid or payable for the goods,
provided the buyer and seller are not related and the price is the sole
consideration.

If the transaction value cannot be determined, alternative valuation methods

such as the computed value or the value of similar goods may be used.

Computation of Central Excise Duty:

The duty is computed based on the assessable value (transaction value or

alternative valuation) and the applicable rate of duty as per the tariff schedule.

Manufacturers must maintain accurate records and periodically file returns to

declare the value of goods produced and the corresponding duty payable.

CENVAT Credit:

The Central Value Added Tax (CENVAT) scheme allows manufacturers to take
credit for excise duty paid on inputs and capital goods used in the production of
excisable goods.
This credit can be used to offset the excise duty payable on the final products,
thus avoiding the cascading effect of taxes.

Procedures Involved

Registration:
Apply for registration online through the Automation of Central Excise and
Service Tax (ACES) system.

Submit the necessary documents such as proof of business address, identity

proof of the proprietor/partners/directors, and details of the business activity.
Receive the registration certificate with a unique registration number.

Filing of Returns:

Periodically file excise returns (ER-1 for manufacturers, ER-2 for 100% EOUs,
etc.) detailing the production, removal, and value of excisable goods.
Returns must be filed monthly, by the 10th of the following month.

Payment of Duty:

Excise duty is to be paid by the 6th of the following month if paid electronically
or by the 5th if paid through other modes.
Use the prescribed challan (GAR-7) for duty payment.

Audit and Assessment:

The excise department conducts audits and assessments to verify the accuracy
of the declared value and duty payments.
Any discrepancies may lead to demand notices and penalties.

Conclusion

The Central Excise Act, 1944, lays down a detailed framework for the levy and
collection of excise duty in India. Key aspects include the classification of goods,
registration of manufacturers, valuation of goods, computation of duty, and the
filing of returns. The Act ensures a structured approach to taxing manufactured
goods while providing mechanisms for dispute resolution and the availing of
credits to prevent tax cascading.
2. Discuss the historical background and objectives of the Chhattisgarh
Excise Duty. Explain the regulatory framework governing the import,
export, and transport of excisable goods in Chhattisgarh.

ANS:-
Historical Background and Objectives of Chhattisgarh Excise Duty

Historical Background

The Chhattisgarh Excise Duty traces its origins back to the British colonial period
when excise duties were levied to generate revenue from the manufacture and
sale of alcoholic beverages. After India gained independence in 1947, state
governments were given the authority to regulate and tax alcohol, leading to
the establishment of excise departments across states. When Chhattisgarh was
carved out of Madhya Pradesh and became a separate state in 2000, it inherited
the excise policies and regulatory framework from Madhya Pradesh.

Over the years, Chhattisgarh developed its own excise policies to cater to its
specific socio-economic context. The state excise department is responsible for
the regulation, control, and taxation of alcoholic beverages within the state.

Objectives

The primary objectives of the Chhattisgarh Excise Duty include:

Revenue Generation: Excise duties on alcohol are a significant source of

revenue for the state. This revenue is crucial for funding various developmental
projects and public welfare schemes.

Regulation of Alcohol Production and Consumption: By controlling the

production, distribution, and sale of alcoholic beverages, the state aims to
minimize illegal production and ensure that alcohol consumption is within
socially acceptable limits.
Public Health and Safety: The excise policy aims to reduce the harmful effects of
alcohol consumption on public health and safety by regulating the quality and
availability of alcoholic beverages.

Employment Generation: The alcoholic beverage industry creates numerous

employment opportunities in production, distribution, retail, and ancillary
sectors.

Regulatory Framework Governing the Import, Export, and Transport of Excisable

Goods in Chhattisgarh.

The regulatory framework for excisable goods in Chhattisgarh is governed by

the Chhattisgarh Excise Act and the rules framed under it. Key aspects of this
regulatory framework include:

1. Licensing System
Manufacturing Licenses: Required for the production of alcoholic beverages.
Manufacturers must comply with specific production standards and quality
controls.
Wholesale and Retail Licenses: Wholesalers and retailers must obtain licenses to
distribute and sell alcoholic beverages. These licenses are subject to renewal
and compliance with state regulations.

2. Import and Export Regulations

Import: The import of excisable goods into Chhattisgarh requires prior
permission from the state excise department. The importer must ensure that
the goods comply with state quality standards and tax requirements.
Export: Exporting excisable goods out of Chhattisgarh also requires a permit.
The exporter must provide details of the consignment and ensure that all duties
and taxes are paid.

3. Transport Regulations
 Transport Permits: To transport excisable goods within the state, transporters
must obtain permits from the excise department. These permits specify the
quantity, type of goods, and the route to be followed.

Documentation and Checks: During transport, the consignment must be

accompanied by proper documentation, including transport permits and
invoices. The excise department conducts regular checks to prevent illegal
transport and smuggling of alcoholic beverages.

4. Taxation and Duty Structure

Excise Duty Rates: The state government periodically revises the rates of excise
duty on various categories of alcoholic beverages. These rates are published in
the state gazette and are applicable at the point of manufacture or import.

Compliance and Audits: Manufacturers, importers, and sellers are required to

maintain detailed records of production, sales, and tax payments. The excise
department conducts audits and inspections to ensure compliance with the
regulations.

5. Enforcement and Penalties

Enforcement: The excise department has the authority to enforce the
regulations through inspections, raids, and seizures. Special excise police units
are often involved in preventing illegal activities.

Penalties: Violations of excise laws, such as illegal production, smuggling, or

evasion of duties, attract severe penalties including fines, imprisonment, and
cancellation of licenses.
Overall, the Chhattisgarh Excise Duty system is designed to regulate the alcohol
industry effectively, balancing the objectives of revenue generation, public
health, and safety, while ensuring compliance with legal standards.

3. Discuss the key provisions of the Customs Duty Act, 1962, with a focus on the
levy, collection, and exemptions from customs duties. Explain the process of
determining customs duty and tariff valuation under the Act, highlighting any
relevant exemptions.

ANS:-
The Customs Act, 1962, is a comprehensive legislation in India that governs the
imposition and collection of customs duties on goods imported into and
exported from India. Here are the key provisions concerning the levy, collection,
and exemptions from customs duties under the Act:

1. Levy of Customs Duty

Customs duty is imposed on goods that are imported into or exported from
India. The types of duties levied include:

Basic Customs Duty (BCD): A standard rate of duty imposed on the value of
goods.
Additional Customs Duty (Countervailing Duty, CVD): Equivalent to the excise
duty for goods produced within India.

Special Additional Duty (SAD): Levied to counterbalance sales tax, value-added

tax (VAT), etc.

Anti-Dumping Duty: Imposed on goods imported at below fair market value.

Safeguard Duty: Applied to protect the domestic industry from a surge in
imports.
Education Cess: An additional levy on the aggregate of customs duties.

2. Collection of Customs Duties

Customs duties are collected by the customs authorities at the port of entry (or
exit) of the goods. The process includes:
Submission of Bill of Entry/Shipping Bill: Importers/exporters must file these
documents to initiate the assessment of duty.

Assessment: Customs authorities assess the duty based on the value and nature
of goods.
Payment: Importers/exporters pay the assessed duty before clearance of the
goods.

3. Exemptions from Customs Duties

The Customs Act provides for various exemptions, which may be full or partial,
to encourage certain economic activities or provide relief in specific
circumstances. These exemptions are granted through:

Notifications by the Government: The Central Government can issue

notifications under Section 25 of the Customs Act to grant exemptions.

Preferential Trade Agreements: Goods imported from countries with which

India has trade agreements may enjoy concessional rates of duty.

Specific Situations: Exemptions may apply for goods imported for personal use,
charitable purposes, research and development, etc.

4. Determination of Customs Duty

The determination of customs duty involves several steps:

Classification of Goods: Goods are classified under specific headings of the

Customs Tariff Act, 1975, which determines the applicable duty rate.

Valuation: The value of goods for duty purposes is determined under Section 14
of the Customs Act, following the Customs Valuation (Determination of Value of
Imported Goods) Rules, 2007. The transaction value is the primary method,
with alternate methods applied sequentially if necessary.

5. Tariff Valuation

Tariff valuation involves determining the value of goods for the purpose of
calculating duty. Key principles include:

Transaction Value: The price actually paid or payable for the goods when sold
for export to India.

Inclusions in Value: Includes cost of transportation, insurance, and other related

costs up to the place of importation.
Alternate Methods: If the transaction value cannot be determined, other
methods such as identical goods value, similar goods value, deductive value,
computed value, or residual method are used in hierarchical order.

6. Relevant Exemptions and Concessions

Specific exemptions and concessions include:

Goods under Bond: Goods stored in a bonded warehouse can be deferred from
duty payment until they are cleared for home consumption.
Duty Drawback: Refund of duties paid on imported materials used in the
manufacture of exported goods.

Special Economic Zones (SEZs): Exemptions from customs duties for goods
imported into SEZs for manufacturing, trading, or services.
Project Imports: Concessional rates for certain projects, such as power, mining,
and industrial plants.

Conclusion
 The Customs Act, 1962, establishes a detailed framework for the levy,
collection, and exemption of customs duties in India. It aims to regulate
international trade, protect domestic industries, and generate revenue for the
government. The determination of customs duty and tariff valuation is a critical
aspect of this framework, ensuring fair and transparent assessment of duties on
imported and exported goods.

4. Discuss the key features and principles of the Central Sales Tax, 1956, with a
focus on its definitions, registration procedures, and computation of taxable
turnover. Explain the determination of tax liability under the Act and the
requirements for filing returns using various forms.

ANS:-
The Central Sales Tax Act, 1956, is a crucial legislation in India governing the
taxation of inter-state sales of goods. Here's a breakdown of its key features
and principles, focusing on definitions, registration procedures, computation of
taxable turnover, determination of tax liability, and requirements for filing
returns:

1. Definitions: The Act provides definitions for various terms used in the context
of inter-state sales, such as "dealer," "sale," "goods," "inter-state sale," etc.
These definitions lay down the scope and applicability of the Act.

2. Registration Procedures: Under the Act, dealers engaged in inter-state sales

exceeding a specified threshold are required to register themselves for Central
Sales Tax (CST). The registration process typically involves submitting an
application to the relevant tax authority along with necessary documents and
payment of the prescribed fee.

3. Computation of Taxable Turnover: The taxable turnover for CST purposes is

computed by deducting certain sales from the total turnover. Exemptions and
deductions are provided for certain types of sales, such as sales to exporters,
sales in the course of import or export, etc.
 4. Determination of Tax Liability: The tax liability under the Central Sales Tax Act
is determined based on the applicable tax rate on the taxable turnover. The Act
provides for different tax rates for different categories of goods. Additionally,
certain transactions may be subject to concessional rates or exemptions.

5. Filing Returns: Dealers registered under the Act are required to file periodic
returns providing details of their inter-state sales transactions. The frequency
and format of returns may vary based on factors such as turnover, state-specific
regulations, etc. Various forms are prescribed for filing returns, such as Form C,
Form F, Form H, etc.

Form C: This form is used for sales to registered dealers in other states at
concessional rates.

Form F: It is used for providing details of stock transfers or branch transfers to

other states.

Form H: This form is utilized for sales to exporters at a concessional rate.

Other Forms: Depending on the nature of transactions and exemptions

availed, other forms may be prescribed for specific purposes.

In summary, the Central Sales Tax Act, 1956, establishes the framework for the
taxation of inter-state sales in India. It provides definitions, registration
procedures, rules for computation of taxable turnover, determination of tax
liability, and requirements for filing returns using various prescribed forms.
Compliance with the provisions of the Act is essential for dealers engaged in
inter-state trade to ensure proper adherence to tax regulations and avoid any
penalties or legal consequences.

5. Explain the core concepts and operational principles of Service Tax and Value
Added Tax (VAT). Furthermore, discuss the procedural aspects involved in the
determination of tax liability, valuation of taxable transactions, and the filing
of returns for both Service Tax and VAT.

ANS:-
Certainly! Let's delve into the core concepts and operational principles of
Service Tax and Value Added Tax (VAT), followed by a discussion on the
procedural aspects involved in determining tax liability, valuing taxable
transactions, and filing returns for both:

Service Tax:

Core Concepts:

1. Taxable Service: Service Tax is levied on the provision of taxable services.

Taxable services are defined under the Finance Act and cover a wide range of
services such as consulting, advertising, banking, telecommunications, etc.

2. Point of Taxation: The point at which service tax becomes payable is

determined by the point of taxation rules. It can be the date of invoice, receipt
of payment, or provision of service, depending on the circumstances.

3. Service Provider and Service Recipient: Service Tax is generally payable by the
service provider. However, in certain cases, the liability may be on the service
recipient, known as reverse charge mechanism.

Operational Principles:

1. Registration: Service providers whose turnover exceeds the threshold limit

prescribed by the government are required to register for Service Tax.

2. Tax Liability Determination: The tax liability is determined based on the

taxable value of services provided and the applicable service tax rate.
Exemptions and abatements may also apply in certain cases.
3. Valuation of Taxable Transactions: The value of taxable services is generally
the consideration received for the service. However, specific rules exist for
valuation in cases such as bundled services, discounts, free supplies, etc.

4. Filing of Returns: Service Tax returns are filed periodically, typically on a half-
yearly basis. The returns contain details of taxable services provided, tax
collected, and input tax credit availed.

Value Added Tax (VAT):

Core Concepts:

1. Taxable Event: VAT is levied on the value added at each stage of the
production and distribution chain. It is a multi-stage tax where the tax burden is
ultimately borne by the end consumer.

2. Input Tax Credit: VAT allows businesses to claim credit for the VAT paid on
inputs purchased for the production of goods or services. This helps avoid tax
cascading and ensures that tax is levied only on the value added at each stage.

3. Output Tax: The tax charged by a seller on the sale of goods or services is
referred to as output tax.

Operational Principles:

1. Registration: Businesses engaged in the sale of goods or services are required

to register for VAT if their turnover exceeds the threshold limit specified by the
state government.

2. Tax Liability Determination: VAT liability is calculated based on the value

added by the seller at each stage of the supply chain. The tax rate is applied to
the taxable value of goods or services sold.
3. Valuation of Taxable Transactions: The value of taxable transactions for VAT
purposes is typically the consideration received for the sale of goods or services.
Certain adjustments may be made for discounts, trade-in allowances, etc.

4. Filing of Returns: VAT returns are filed periodically, usually monthly or

quarterly, depending on the regulations of the respective state. The returns
contain details of sales, purchases, input tax credit availed, and output tax
payable.

In summary, both Service Tax and VAT are consumption-based taxes levied on
the provision of services and the sale of goods, respectively. They involve
registration, determination of tax liability based on the value of transactions,
valuation rules, and filing of periodic returns to the tax authorities. Compliance
with these procedural aspects is essential for businesses to ensure proper
adherence to tax regulations and avoid any penalties or legal consequences.