The history of Sales tax in India begins from 1938. During the pre-independence days the Provinces in British India were empowered under the Government of India Act, 1935 to levy taxes on the sale of goods and on the advertisements, as per Entry 48 in list II of the VIIth Schedule of the Act. At the same time the Princely State had sovereign legislative powers to promulgate their own laws for the levy of tax on the transaction of sale of goods. The first Province in India to levy a tax on sale of goods by exercising powers of the Government of India Act 1935, was Central Provinces and Berar (renamed Madhya Pradesh after Independence), which in 1938 levied a tax on the retail sale of motor spirit and lubricants. This levy however was only a selective Sales tax. The Province of Madras was the poineer province in India in the matter of introducing a scheme of General Sales tax. Madras introduced a General Sales tax in 1939 on multipoint system. In 1941 Bengal followed a single point system. In the same year Punjab commenced General Sales tax on multi point system.
Shortly after this, almost all the Provinces and some of the Princely States introduced Sales tax in one form or other.
Shortly after this, almost all the Provinces and some of the Princely States introduced Sales tax in one form or other.
2. Though the State of Kerala itself was formed only on 1-11-1956 by the integration of the Malabar District and the Kasaragod Taluk of the South Kanara District of the Madras State with the Travancore Cochin State (excepting the areas transferred to the Madras State), which itself was the result of an earlier integration of the two princely state of Travancore and Cochin on 1-7-1949 Sales tax was introduced in the component parts of the State on much earlier dates. In the erstwhile Cochin State, Sales tax was introduced on the first day of Chingam 1122 corresponding to the 17th day of August 1946 by the Cochin Sales Tax Act (Act XV of 1121). In the erstwhile Travancore State the introduction of Sales tax was on 1-10-1124 M E by the Travancore General Sales Tax Act 1124 (Act XVIII of 1124). So far as the erstwhile Malabar District and the Kasaragod Taluk are concerned, the Madras General Sales tax Act, 1939 (Act IX of 1939) the Madras Sales of Motor Spirit Taxation Act, 1939 (Act VI of 1939) and the Madras Tobacco (Taxation of Sales and Registration) Act, 1953 (Act IV of 1953 were in force at the time of the integration on 1-11-1956. Soon after the integration of Travancore and Cochin states, a unified Act for the newly formed United States of Travancore and Cochin as the new state was then called was promulgated in 1950 under the title "The United State of Travancore and Cochin General Sales Tax Act 1125 (Act XI of 1125)". This Act received the assent of His Highness the Raj Pramukh on 5th January 1950 corresponding to 21st Dhanu 1125 and as per Government Notification No S R 1-353 A /49/RD dated 29-5-1950 the Act came into force on 30th May 1950. The scheme of taxation was, in general, a multi point one at the rate of there paisa for every Indian rupee on the total turnover with additional tax at rates ranging from 3 pies to 9 pies per rupee at specified single points in respect of certain specified classes of goods and exemption in respect of some others. At the same time in respect of a few items of goods, the scheme of taxation was single point one. The assessable limit was fixed as net turnover of Rs. 10,000. The Travancore General Sales tax Act 1124 (Act XVIII of 1124) and the Cochin Sales tax Act 1121 (Act XV of 1121) were repealed by Act XI of 1125. By the end of November 1950, the title of the Act was altered as The Travancore Cochin General Sales tax Act, 1125, by the Travancore Cochin Adaptation of Laws Act (Act XXIX of 1950) which was published in the Travancore Cochin Gazette of 28-11-1950 with immediate effect. After the formation of the Kerala State on 1-11-1956, the name of the Travancore Cochin General Sales tax Act, 1125 (Act XI of 1125) was changed as the General Sales tax Act 1125 (Act XI of 1125) and it was extended to the Malabar area with effect from 1-10-1957 by the Travancore Cochin General Sales tax (Amendment) Act 1957 (Act 12 of 1957). Till then, the pre integration Acts mentioned above continued to be in force in the respective areas. In respect of the financial year 1957, special provisions were made in the Amendment Act for taking into account the turnover under the Madras General Sales tax Act 1939 also while completing the assessment for that financial year. In 1963, the General Sales tax Act 1125 was repealed and re-enacted by the Kerala General Sales tax Act, 1963 (Act XV of 1963), which now continues to be in force.
The First Amendment of the new Act was in March 1963 by Act 21 of 1963. This Amendment Act raised the General rate of Sales tax from 2 per cent to 3 percent by amending clause (ii) of sub section (1) of Section 5 and sub section (4) of Section 5, and the rate of tax of items 12 to 21 in Schedule I from 7 percent to 10 percent by amending the First Schedule. An additional item “50 A aviation turfine fuel” taxable at the point of first sale in the state at 6 percent was also introduced by Act 21 of 1963. As this Amendment Act was given effect from 1-4-1963, actually,the Act XV of 1963 came into force in the amended form.
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| TAX TOWERS : The headquarters of state sales tax department @ 2016 |
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