Business Tax Laws Note

The Essential Commodities Act, 1955. Act No.10 of 1955. The Essential Commodities Act, 1955 is a Central Act. It gives powers to control production, supply, distribution etc. of commodities for maintaining or increasing supplies and for securing their equitable distribution and availability at fair prices. Under this Act, a number of Control Orders have been issued by the Govt. of India and State Governments for regulating production, distribution, quality aspects, movement etc. pertaining to the commodities such as food grains, edible oils, pulses, kerosene, sugar etc. which are essential and administered by them. The Central Government monitors the action taken by the State Governments to implement the Act. The control Orders issued under this Act provide for action - (1) to confiscate the stock seized; 2) to suspend/cancel licences, if any and 3) impose punishments like imprisonment. Definitions: The classes of commodities declared as "essential commodities" are defined broadly. They are: (a)"essential commodity" means any of the following classes of commodities :(i) cattle fodder, including oilcakes and other concentrates (ii) coal including coke and other derivatives; (iii) component parts and accessories of automobiles; (iv) cotton and woollen textiles; (iva) drugs; Explanation.—In this sub-clause,"drugs" has the meaning assigned to it in clause (b) of section 3 of the Drugs and Cosmetics Act, 1940 (23 of 1940) (v) foodstuffs, including edible oilseeds and oils; (vi) iron and steel, including manufactured products of iron and steel;

(vii) paper, including newsprint, paperboard and straw board; (viii) petroleum and petroleum products; (ix) raw cotton, whether ginned or unginned, and cotton seed; (x) raw jute; The Central Government, under section 3, State Govt., / Central Govt., will issue orders for maintaining or increasing supplies of any essential commodities or for securing their equitable distribution and availability at fair prices, issue orders for regulating or production, supply and distribution thereof. Delegation of powers: Under Section 5, the Central Government may, by notified order delegate powers to Officers and authorities of the Central Government or subordinate to the State Government. Section 6A provides for confiscation of the essential commodity or any property like package, animal, vehicle, vessel or other conveyance by the Collector/Joint Collector. Before passing an order of confiscation of the stocks, packages, vehicles, vessels, animals etc. by the Collector/Joint Collector a notice under Section 6B should be issued to the party from whom stocks have been seized and he should be given an opportunity for making his representation in writing. He should also be afforded an opportunity of being heard in person or through his counsel. No order of confiscation of the vehicle or animal vessel etc., shall be passed if the owner or his agent proves to the satisfaction of the Collector/Joint Collector that the vehicle, vessel, animal etc had been used without their knowledge or connivance. In respect of animal, vehicle or other conveyance shall be given the to pay in view of its confiscation, a fine not exceeding the market price at the date of seizure of the essential commodity sought to be carried by such animal, vehicle, vessel etc. Appeal against orders of confiscation by the party aggrieved by the Order lies to the judicial authority viz. the District & Sessions Courts authorized by the State Government within 30 days from the date of communication to him.

Order of confiscation shall not prevent infliction of punishment to which the person affected is liable under the Act. Penalties: If any person contravenes any order made under Section 3, he shall be punishable 1.With imprisonment upto one year and fine for contraventions pertaining to violations in respect of information or statistics maintenance and production of books and accounts and records of their business for inspection 2.With imprisonment not less than three months but extend upto seven years and fine. However, for a punishment less than three months the court may mention adequate and special reasons in the judgment. 3.Any property in respect of which order have been contravened shall be forfeited. Any packing covering or receptacle in which the property was found or the animal, vehicle, vessel or other conveyance used for carrying the commodity shall be forfeited. If any person contravening the direction given by the authorized controller for complying the undertaking or any part of such undertaking regarding the production and supply of the commodity shall be liable for imprisonment with not less than three months but which may extend up to seven years and fine. If a person is convicted for an offence again under the same provision, he shall be punishable with imprisonment for the second and for every subsequent offence for a term of not less than six months and extend up to 7 years and fine. However, for a punishment less than six months, the court may mention adequate and special reasons in the judgment. If a person is liable to pay any amount in pursuance of an order issued under Section 3 of the EC Act, it shall be recoverable as arrears of land revenue or as a public demand. Any person who attempts to contravene the order made under Section 3 of the EC Act is deemed to have contravened that Order. Offences to be cognizable and bailable: All the offences are cognizable and bailable. The list of commodities under the Essential Commodities Act, 1955. Declared under Clause (a) of Section 2 of the Act

1. Cattle fodder, including oilcakes and other concentrates. 2. Coal, including coke and other derivatives. 3. Component parts and accessories of automobiles. 4. Cotton and woolen textiles. 5. Drugs. 6. Foodstuffs, including edible oilseeds and Oils. 7. Iron and Steel, including manufactured products of Iron & Steel. 8. Paper, including newsprint, paperboard and strawboard. 9. Petroleum and Petroleum products. 10. Raw Cotton, either ginned or unginned and cotton seeds. 11. Raw Jute. Declared under sub-clause (xi) of clause (a) of Section 2 of the Act 12. Jute textiles. 13. Fertilizers, whether inorganic, organic or mixed. 14. Yarn made wholly from cotton. 15. i) seeds of food crops and seeds of fruits and vegetables, ii) seeds of cattle fodder and iii) jute seeds. THE PREVENTION OF BLACKMARKETING AND MAINTENANCE SUPPLIES OF ESSENTIAL COMMODITIES ACT, 1980

In order to prevent unethical trade practices like hoarding and blackmarketing etc., the Prevention of Blackmarketing of Supplies of Essential Commodities, Act, 1980 is implemented by the State Governments to detain persons whose activities are found to be prejudicial to the maintenance of supplies of commodities essential to the community.

Essential Commodities Act, 1955 The Act is designed to ensure that essential commodities are made available to common man at reasonable prices and distribution of the essential commodities is equitable. The Act is given special protection by including it in 9th Schedule to our Constitution. Powers of Government - The powers of Government are as follows : (a) Power to issue orders u/s 3(1) for regulating or prohibiting production, supply and distribution of essential commodities. (b) Power to fix prices for sale to Government etc. u/s 3(3). (c) Power to fix prices for sale to control rise in prices and prevent hoarding u/s (3A) (i). (d) Fixing procurement price for food grains and edible oils u/s (3B). (e) Fixing price of sugar to be paid to producer u/s 3(3C). (f) Power to appoint Controller u/s 3(4). Power to issue orders - Central Government can issue orders for regulating or prohibiting production, supply and distribution of essential commodity or trade and commerce in essential commodity. Fixing of price to be paid - Various modes of fixing prices to be paid for Essential Commodities have been prescribed. Drugs (Price Control) Order, 1995 - As per Drugs Policy 1994, control over prices of drugs will be retained only if its total turnover exceeds Rs. 4 crore per annum. However, if there are at least five bulk drug producer or 10 formulators with none of them having more than 40% market share, these will be out of price control, even if turnover exceeds Rs. 4 crores (57 drugs are covered under this criteria). Further, if there is only a single manufacturer with 90% market share in bulk drug, it will be considered as a monopoly situation. Such drugs will be brought under price control even if its turnover exceeds Rs. 1 crore per annum (19 bulk drugs have been covered as per this criteria). Sugar - Manufacturers of sugar have to surrender fixed percentage of their production to Government for ‘public distribution system’ (PDS). Remaining sugar can be sold in open market. There is also control over movement of sugar, sugarcane etc.

Foreign Exchange Management Act, 1999 Foreign Exchange Management Act (FEMA), 1999 has been enacted as part of liberalisation process initiated by Government of India. The Act is implemented w.e.f. 1st June, 2000 . As per Statement of Objects to the FEMA Bill, the object of FEMA is to consolidate and amend the law relating to foreign exchange with the object of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange markets in India. - Reserve Bank of India is the overall controlling authority in respect of FEMA. SALIENT PROVISIONS OF FEMA - FEMA provides * Free transactions on current account subject to reasonable restrictions that may be imposed * RBI control over capital account transactions * Control over realisation of export proceeds * Dealing in foreign exchange through 'Authorised Persons' like Authorised Dealer /Money Changer / Off-shore banking unit * Adjudication of Offences * Appeal provisions including Special Director (Appeals) and Appellate Tribunal * Directorate of Enforcement.

Enforcement of FEMA - Though RBI exercises overall control over foreign exchange transactions, enforcement of FEMA has been entrusted to a separate ‘Directorate of Enforcement’ formed for this purpose. [section 36]. Overall scheme of FEMA - Basically, FEMA makes provisions in respect of dealings in foreign exchange. Broadly, all current account transactions are free. However, Central Government can impose reasonable instructions by issuing rules. [section 3 of FEMA]. Capital Account Transactions are permitted to the extent specified by RBI by issuing regulations. [section 6]. FEMA envisages that RBI will have a controlling role in management of foreign exchange. Since RBI cannot directly handle foreign exchange transactions, it authorises ‘Authorised Persons’ to deal in foreign exchange as per directions issued by RBI. [section 10 of FEMA]. RBI is empowered to issue directions to such ‘Authorised Persons’ u/s 11. These directions are issued through AP(DIR) circulars. FEMA also makes provisions for enforcement, penalties, adjudication and appeals. Person resident in India - Person resident in India is defined in section 2(v). Broadly, ‘person resident of India’ includes persons of India (except those staying abroad for work or business or other purpose) and foreign persons who come to India or stay in India for employment, carrying out business or other purpose. - - Person resident outside India - It means a person who is not resident in India. [section 2(w)]. Non-Resident Indian - 'Non Resident Indian (NRI)' means a person resident outside India who is a citizen of India or is a person of Indian origin. Permitted Currency/ Convertible currency/Hard Currency - As per regulation 2(v) of FEM (Manner and Receipt and Payment) Regulations, 2000, ‘permitted currency’ means a foreign currency which is freely convertible. Foreign Exchange- Section 2(n) states that foreign exchange means foreign currency and includes (i) deposits, credits, and balances payable in any foreign currency (ii) drafts, traveller’s cheques, letter of credit or bill of Exchange expressed or drawn in Indian currency but payable in foreign currency. (iii) drafts, traveller’s cheques, letter of credit or bill of Exchange drawn by banks, institutions or persons outside India, but payable in Indian currency. Authorised Persons - Section 2(c) states that 'authorised person' means an authorised dealer, money changer, off-shore banking unit or any other person authorised u/s 10(1) to deal in foreign exchange and foreign securities. These are authorised by RBI under section 10 of FEMA to deal in foreign exchange.