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GOVERNMENT TRADING TAXATION ACT, 1926
3 of 1926
24th February, 1926
STATEMENT OF OBJECTS AND REASONS "One of the Resolutions of the Imperial Economic Conference, 1923, was to the elect that the several Parliaments of Great Britain, the Dominions and India should be invited to enact at the earliest opportunity a declaration that the general and particular provisions of its Acts or Ordinances imposing taxation shall be deemed to apply to any commercial or industrial enterprise carried on by or on behalf of any other such Government in the same manner in all respects as if it were carried on by or on behalf of a subject of the British Crown. This resolution has been accepted by the Government of India and the present Bill has been drawn up in order to give effect to it. The Bill follows, with suitable modifications, the wording of Section 35 of the British Finance Act, 1925
An Act to determine the liability of certain Governments to taxation
2[* * *] in respect of trading operations. WHEREAS it is expedient to determine the liability to taxation for the time being in force1[* * *] of the Government of any part of His Majesty's Dominions,2[* * *]3[* * *] in respect of any trade or business carried on by or on behalf of such Government; It is hereby enacted as follows :- The Act has been extended to the new Provinces and Merged States by theMerged States (Laws) Act, 1949 (59 of 1949), S. 3 (1-1-1950) and to the Union territories of Manipur and Tripura by theUnion Territories (Laws) Act, 1950 (30 of 1950), S. 3 (16-4-1950). Manipur and Tripura are now States (Act 81 of 1971) but Vindhya Pradesh to which this 'Act was also extended by Act 30 of 1950 is now a part of M. P. State - See Act 37 of 1956, Sec. 9(l)(e). It has been extended to all the Merged States by Taxation Laws (Extension to Merged States and Amendment) Act, 1949 (67 of 1949), S. 3 (31-12-1949). It has been extended to the Merged States in Punjab by Punj. Act 5 of 1950. This Act had been extended to the whole of India except the State of Jammu and Kashmir by the Opium and Revenue Laws (Extension of Application) Act, 1950(33 of 1950), S. 2 (18-4-1950). It has now been extended to the State of Jammu and Kashmir by theTaxation Laws (Extension to Jammu and Kashmir) Act, 1954 (41 of 1954), S. 2 (8-10-1954). The Act has been extended to the Union territories of Dadra and Nagar Haveli, Goa, Daman and Diu; and Pondicherry, with effect from 1 -4-1963 by theTaxation Laws (Extension to Union Territories) Regulation, 1963 (No. 3 of 1963).
SECTION 01: SHORT TITLE AND COMMENCEMENT
(1) This Act may be called the Government Trading Taxation Act, 1926.
(2) It shall come into force on such date4as the5[Central Government] may, by notification in the6[Official Gazette], appoint.
SECTION 02: LIABILITY OF CERTAIN GOVERNMENTS TO TAXATION IN RESPECT OF TRADING OPERATIONS
(1) Where a trade or business of any kind is carried on by or on behalf of the Government of any part of His Majesty's Dominions,7[* * *] that Government shall, in respect of the trade or business and of all operations connected therewith, all property occupied in8[India] and all goods owned in8[India] for the purposes thereof, and all income arising in connection therewith, be liable -
(a) to taxation under theIndian Income-tax Act, 1922, in the same manner and to the same extent as in the like case a company would be liable;
(b) to all other taxation for the time being in force in [India] in the same manner as in the like case any other person would be liable.
(2) For the purposes of the levy and collection of income-tax under theIndian Income-tax Act, 1922, in accordance with the provisions of sub-section (1), any Government to which that sub-section applies shall be deemed to be a company within the meaning of that Act, and the provisions of that Act shall apply accordingly.
(3) In this section the expression "His Majesty's Dominions" includes any territory which is under His Majesty's protection or in respect of which a mandate is being exercised by the Government of any part of His Majesty's Dominions10[ * * *].
SECTION 03: APPLICATION OF THE ACT TO EXISTING LIABILITY OF ACCEDING OR OTHER INDIAN STATES
Where any Acceding State or other Indian State was liable for any tax under this Act in respect of any period before the 26th day of January, 1950, and such liability has, after that date, devolved12[upon a Part B State], the provisions ofSection 2-shall apply in relation to that Part B State as they applied in relation to the corresponding Acceding State or other Indian States.]
Footnotes:
4. The Act came into force on 1-4-1926, see Gaz. of Ind., Extra., 1926, page 60.
5. Substituted for "Governor-General in Council" by A. O., 1937.
6. Substituted for "Gazette of India", Substituted for "Governor-General in Council" by A. O., 1937.
7. Words "exclusive of India" were omitted by A. L. O., 1950.
8. Substituted for "Part A States and Part C States" by Opium ad Revenue Laws (Extension of Application) Act, 1950 (33 of 1950), S. 2 and Sch. (18-4-1950).
9. Sub-section (1A) was omitted, Substituted for "Part A States and Part C States" by Opium ad Revenue Laws (Extension of Application) Act, 1950 (33 of 1950), S. 2 and Sch. (18-4-1950).
10. Words "and India" means the territory of India excluding the State of Jammu and Kashmir" were omitted by the Taxation Laws (Extension to Jammu and Kashmir) Act, 1954 (41 of 1954), S. 2 and Sch. (8-10-1954).
12. Substituted for "upon an Acceding State or other Indian State" by Opium and Revenue Laws (Extension of Application) Act, 1950 (33 of 1950), S. 2, Sch. (18-4-1950).
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