The Tobacco Cess Act, 1975

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The Central Government legislation which was enacted with the short title as the Tobacco Cess Act, 1975 (Act no. 26 of 1975) and has received the assent of the President of India on 12th day of May, 1975. The Act makes provisions with the purpose, as has been remarked under its long title, to impose and collect the duty of excise on Virginia Tobacco and duty of Customs on Tobacco by way of Cess. And such imposition and collection of cess, is with the view to develop the Tobacco Industry. For the same development purpose another Act of Central Government was also enacted with the short title, the Tobacco Board Act, 1975, wherein a constitution of Board for development of such Industry is provided, which is subject to the control of Centre. The Indian Parliament has enacted in the 26th year of republic of India and extended its operation to the entire territories of India and the provisions whereof are brought into operation and given effect from 1st day of January, 1976 as per notification dated 17th December, 1975 published by the Central Government in its Official Gazette. The legislation is containing overall eleven sections categorized as below.

After specifying certain preliminary provisions including short titling, commencement and extension of the provisions of the Act, further, there are certain definition provided under section 2 of the Act, which are defining the terminologies used under the various provisions of this Act for determining the real meaning of thereof.

Further, the Act under its section 3 contemplates the provisions of levy and collection of duties of excise by way of cess on the Indian produced Virginia Tobacco which are sold at an auction platform. Such imposition and collection is as such as within the meaning of the Tobacco Board Act, 1975 (Act no. 4 of 1975). The rate is given at one paisa for each kilogram. Moreover, the Act has also made it clear that, the excise duty levied under this Act should be an additional to the what recoverable under other laws in realation to such Virginia tobacco. If such tobacco is sold out at the auction platform, in respect of which the excise duty under this Act is recoverable then such duty will be recovered from the seller of such tobacco to the authorized person in respect of such platform. Also whenever it is found that any such amount in relation to such duties under this Act is remained unpaid for the period specified time period, then the Central Government can recover such amount in the manner of recovery of arrear of land revenue.

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Moreover, the Act makes provisions as to imposition and collection of customs duties on Tobacco, by way of cess for the purpose of the aforesaid Tobacco Board Act, 1975. The rate at which such cess should be collected is maximum provided 1% ad valorem, as per the Central Government. The same customs duties are also to be imposed under this Act as in addition to the other duties impossible under the provisions of other laws. Further, for the purpose of refunds, exemptions from duty the provisions of the Customs Act, 1962 (Act no. 52 of 1962) and the Rules, Regulations which were made under that Act of 1962 will be applicable. Section 5 says that whatever amount recovered under this Act by way of collection of duties are at the first instance be credited to the Consolidated Fund of India and thereafter the Central Government can pay it to the Tobacco Board under the provisions of the Tobacco Board Act, 1975.

The evasion of such payment of excise duties which was required under this Act or even attempts thereof, entail liability under section 6 to punishment i.e. maximum imprisonment up to six months, or even with fine which is maximum 1000 rupees, even there can be both imprisonment and fine. Section 7 describes the offence by the Companies and the persons who should be held responsible thereof. Finally, the Act empowers the Central Government to provide for Rules with object to carry out the purpose of this Act and also on the various matters enumerated under section 11 of the Act. Similarly, the Government can also provide for penal provisions along with rules, in so far as the violation of such rules is concerned, subject to maximum imprisonment up to 6 months period or / and fines up to 1000 rupees and in case of continuing violation or breach the maximum additional fine is upto 50 rupees for every day in which the said violation continues.

The provisions of the Act were amended by the Cess Laws (Repealing and Amending) Act, 2006 (Act no. 24 of 2006). And recently, on 29th day of October, 2014, the 20th Law Commission of India has submitted its 250th report being ‘Obsolete Laws: Warranting Immediate Repeal- Third interim Report’ while doing it study on ‘Legal Enactments: Simplifications and Streamlining’ recommending the repeal of the present Act stating reason that the object to generate revenue for the purpose of development of the Tobacco Industry could not be satisfied as the proceeds of the Cess collectable under this Act are negligible compared to the amount spent in the administration of the cess. As such the commission suggested to the Central Government to repeal this enactment, the same recommendation were also made by the PC Jain Commission Report (Appendix A-1).

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by Faim Khalilkhan Pathan.