Introduction

1.     About Arunachal Pradesh

Arunachal Pradesh (the Land of the dawn-lit mountains) is located in the extreme north-eastern corner of India. It is bordered by Bhutan, on the west, China (Tibet) on the north and north-east, Myanmar) on the east, with total international border of 1863 km and south-east and the States of Assam and Nagaland to its south. Earlier known as NEFA, Arunachal Pradesh came into existence in 1972 as a Union Territory. Full fledged Statehood was granted on 20th February, 1987. There is very little flat land and entire area is covered by mountains offering variety of topography, vegetation and wildlife.

Arunachal Pradesh at   a glance (2001 census)		All India (2001 census)
Area sq.km	83,743	3,287,263
Population (in lakhs)	10.98	10287.37
Density of population per sq.km.	13.11	324.85
Decennial growth rate of population	27%	21.34%
Percentage of urban population	20.75%	27.78%
Sex ratio(per thousand)	893	933
Literacy rate	54.34%	65.38%
BPL   population	33.47% Rural (40.04%) Urban (7.47%)	26.2% Rural (27.01%) Urban (23.62%)

                Source: Eleventh Five Year plan documents

Arunachal Pradesh consisting of 16 districts occupies an area of 83,743 sq. km., which is about 2.55 per cent of India’s land area and a third of the area of North-East India (32.83 per cent excluding Sikkim). The largest State in North-East India, Arunachal’s area is more than that of Assam. Almost 80.93 percent of the geographical area of the State is covered with forests. Forests are the most important wealth of the State.

Arunachal has a ‘highly precipitous and varied terrain’. Elevations range from 300 metres above MSL on the edge of Assam to above 7,000 metres above MSL on its northern borders (highest peak is Kangte in Tawang district). The state capital Itanagar is at 530 meter above MSL. The high mountains in northern edge remain snow-clad almost throughout the year.

As per 2001 population Census, the total population of Arunachal Pradesh is 10, 97,968 of which 5, 79,941 are male and 5, 18,027 are female. The State has registered growth rate of population by 27% during the last decade of 1991 - 2001. The sex ratio is 893 per 1000 male as per 2001 Census as compared to 933 of all India average. However sex ratio of the ST population is 1003 in 2001 as per State Development Report, Arunachal Pradesh. The broken Hindi and Assamese serve as linguafranca. English is the official language of the State.

Arunachal is home to 27 major tribes and more than 100 sub-tribes. The ST population constitutes 64.22 per cent and non-ST 35.78 percent of the population as per census 2001 with some districts like Kurung Kumey have an extremely high concentration of the Scheduled Tribe population (97.89 per cent).

Arunachal Pradesh, though strategically very important, is one of the most backward States in the country in the traditional sense of economic parameters. Arunachal Pradesh suffers from several constraints such as those of historically weak revenue base, lack of adequate private investment, long border area, remoteness from markets, connectivity problems, land locked terrain, harsh climate and inadequate infrastructure, all of which constrains the generation and augmentation of state’s own resources. In the case of Arunachal Pradesh, hydel power and forests are two sources which could have been important instruments to generate additional resources. While the efforts to generate resources from hydel power will start bearing fruit in years to come, the State continues to be deprived of its legitimate share of revenues from scientific forest exploitation.

The State's inhospitable topography, challenging climatic conditions and communication bottle-necks make the cost of creation and maintenance of infrastructure extremely high. It is estimated that unit cost of service provisioning in the hilly is 2.5 times more than the plain area (State Development Report, Arunachal Pradesh). The cost of construction is escalated not only because of high transportation expenses but also due to non-availability of local skilled and un-skilled manpower. Road blockages caused by frequent slips and slides also result in an unwarranted delay in execution of works. Moreover, being a highly precipitated area, the working season is restricted only for 6 months i.e. from October to March every year. Inadequacy of own resources and insufficient central assistance after independence, despite liberal treatment, coupled with high cost per unit of development, have been important factors for the backwardness of the state.   

The degree of backwardness of the State could also be judged from the estimation of HDI. The first ever National Human Development Report (NHDR), 2001 brought out by the Planning Commission estimated the value of Human Development Index (HDI) for Arunachal Pradesh at 0.242 and 0.328 for 1981 and 1991 respectively. The findings of the report reveal that Arunachal Pradesh ranked at 28 and 27 respectively during the aforesaid period. Amongst the North-Eastern States, Mizoram has the highest HDI and Arunachal Pradesh the lowest.

Arunachal Pradesh has been a late starter in the development process. The State, being one of the Special Category States, is solely dependent on Central Assistance for Plan investment because of poor resource base. Unlike other States of the country, Arunachal Pradesh is not fortunate enough to inherit some semblance of infrastructure at the time of independence. The State falls behind in most of the parameters of economic development in comparison to other States. Over the last few decades of planning process in Arunachal Pradesh, the State has intensified its efforts for its economic development.

 

  Arunachal Pradesh Government is conscious of the need to further increase tax and non tax revenues so as to improve the fiscal situation of the State. VAT has been introduced in the State w.e.f. 1st April, 2005 and as a result of introduction of VAT, revenue from VAT increased during 2005-06 to Rs. 47.69 crore as compared to Sales Tax revenue of Rs. 28.25 crore during 2004-05 only. Revenue from VAT has increased progressively from Rs. 47.69 crore during 2005-06 to Rs. 61.74 crore during 2006-07, to Rs. 77.06 crore during 2007-08 and Rs. 105 crores in 2008-09.

To sum up :

Arunachal Pradesh has been a late starter in the development process. Arunachal Pradesh, though strategically very important, is one of the most backward States in the country in the traditional sense of economic parameters. The State's inhospitable topography, challenging climatic conditions and communication bottle-necks make the cost of creation and maintenance of infrastructure extremely high.

Introduction to Department

 

1.1.    Organization Structure

 

The Department is headed by the Commissioner (Tax & Excise) in the Directorate Level assisted by 1 (one) Joint Commissioner , 2 (two) Deputy Commissioners, 3(three) Assistant Commissioners, 3 (three) Superintendents and few Inspectors/Assistant Inspectors in carrying out the departmental functions. The District Establishment is headed by the Superintendent (T&E) and assisted by Inspector/Assistant Inspector, Assistant, UDC, LDC/Data Entry Operator.

 

1.2.    Functions & Services of the Department

 

The Department of Tax & Excise, Arunachal Pradesh basically comprises of two departments and looks after the activities of the following departments:

1.         Tax.

2.         Excise.

The Department also looks after Narcotics and Society Registration activities.

Excise department is presently administering Excise Act and Rules and primarily deal with activities like grant of license of IMFL/Beer etc., issue of import permit, collections of excise duty and import fees, brand and label registration etc. in all the district offices.

Tax :   Tax department is presently administering Value Added Tax (VAT) w.e.f. 01/04/2005 and primarily deal with activities like registration of dealers, collections of taxes, filing of returns etc. in all the district offices.

There are approximately 3,000 dealers in this state. The whole state is divided into 20 Circle/Field offices. The Circle offices are numbered based on the geographical locations and are based in the various districts. The traders have to register in the jurisdiction of their respective Circle/Field Office.

 

In addition, the department has set-up 17 Border Facilitation Counters (BFC) commonly known as Check Posts to monitor the movement of incoming and outgoing vehicles and collect entry tax. The BFC’s are headed by Superintendent of Tax & Excise/Inspectors.

1.3.    Services of the Department

Following are the services of the department categorized among G2B/G2C (for dealers/ businesses and consumers) and G2G services:

Sl.	Service	Description
Citizen / Dealer services (G2C / G2B)
1.	Information Dissemination	This service involves providing information to citizens and dealers regarding the VAT laws, procedures, rate, calculation of VAT and any other information related to the payment of taxes
2.	Registration/ de-registration of dealers	This service facilitates dealers to register/ de-register with the tax dept. through various sub-offices. This would facilitate them to avail Tax & Excise Department services
3.	Payment of Taxes	This services allows registered dealers to pay taxes
4.	Filing & Processing of returns	This service facilitates dealers to file their tax returnss
5.	Issue and collection of statutory forms	This service facilitates dealers to collect and submit various statutory forms related to payment of taxes
6.	Claiming refunds	This service facilitates dealers to collect tax refunds incase if they have paid additional tax than what is required
7.	Auditing of self-assessments	This service ensures that assessments done by dealers are authentic and adhere to the Tax guidelines
8.	Issuing demand notice or debt management	This service facilitates dealers to get demand notices for unpaid tax
Government Services (G2G)
9.	Revenue reconciliation	This service facilitates the T&ED to ensure that all tax collected is reconciled with the amount deposited in bank and treasury unit
10.	Check-post administration & goods monitoring	This service facilitates the T&ED to manage and operate all the check posts and their operations

 

1.4.    Vat Revenue over the Years

                                                                            ( Amount in crores)

Items	2005-06	2006-07	2007-08	2008-09	2009-10
VAT	47.69	61.74	77.06	105.42	121 *

 

As can be seen from the table above, revenue from VAT has increased steadily over the years.

1.5.    Vat computerisation

 

The Dept. of Tax and Excise has taken up ambitious project for computerization of VAT to provide e-Services to the dealers registered in Arunachal Pradesh. The project is being funded by centre and state in 90:10 ratio. The NIC-Karnataka VATSoft software solution is being customized and shall be implemented. The project consultant is M/s Wipro Ltd who will guide the department in overall implementation of the project.