THE EXPENDITURE TAX ACT, 1987

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Taxation laws play an important role in the accumulation of revenue of a country. There are several laws that deals with various type of tax collection form different fields. A citizen of a country is obliged to pay the tax for the development of the country. The Expenditure Tax Act was enacted to impose or levy tax form particular class of hotels. The act specifies all the circumstances and provisions under which the collection of tax is possible from the specified class of hotels. According to the act a hotel which provides accommodation and food with an object to extract monetary benefits in the form of business is subject to pay the expenditure tax. The room charges scheduled for a hotel is subject to the prescribed rate of expenditure tax. The person who is liable to pay the tax is termed as an assessee.

An assessing officer who is not satisfied by the statement of accounts to be paid as tax made by the assessee before him shall after properly scrutinizing all the relevant accounts shall direct the assessee to pay the exact sum payable. The direction shall be in writing as it should specify the exact amount to be paid. Section 10 of the act states the assessing officer’s power to give an appropriate direction in writing. Section 20 deals with the issuance of demand notice by the assessing officer to the assessee for the sum payable towards the expenditure tax. The chargeable tax or the expenditure tax of the sum payable shall be specified in accordance with section 19 of the act. The Assessee can approach the Commissioner for any prejudiced direction given by the assessing officer for the payment of chargeable tax to the sum payable. Necessary enquiry can be taken up by the commissioner for revision of such order produced by the assessing officer. Before initiating any steps for the revision of such order, the assessee shall be given a reasonable opportunity to be heard.

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Any illegal attempt of any person to avoid the tax through commission of fraud or through any irregular mode, the person is liable to be prosecuted and subject to punishment. The evasion of payment of tax, chargeable tax or any prescribed penalty is subject to rigorous imprisonment for a term of three years that may extend to seven years imprisonment and fine. Anyone who maintains false account statements, false entries, willfully omitting important statements or accounts is strictly liable to punishment of rigorous imprisonment. Any deliberate negligence to furnish the statement of returns is also for an imprisonment of three months that may extend to seven years and fine. Anyone who makes such willful conduct to evade tax due shall be subject to punishment only with the prior sanction from the commissioner. The previous sanction is mandatory in the case of appeals before the Court of Commissioner and in the institution of the proceedings the commissioner can compound the offenses. Any offense committed under section 26, 27, 28 that willfully attempts to evade the tax due are non cognizable offense not withstanding anything contained in the Code of Criminal Procedure. Any abetment done to commit any offense specified in section 26, 27 are liable to punishment as prescribed for the commission of offense. The Central Government is powered to make appropriate official gazette notification to remove any difficulty or in consistencies of the provisions in the act.

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Any act done with fraudulent intention to evade from the prescribed tax is an offense where the revenue of the country is adversely affected. With the proper implementation of taxation laws the practice of such irregularities can be controlled to a great extent.