Consider the following statements regarding the taxation in India:
Statement I: Tobacco is outside the realm of GST and is instead subject to excise duty.
Statement II: Ad valorem taxes are less effective than specific excise taxes as they are tied to product prices, which the industry can manipulate.
Which one of the following is correct in respect of the above statements?
1
Both Statement I and Statement II are correct, and Statement II is the correct explanation for Statement I.
2
Both Statement I and Statement II are correct, but Statement II is not the correct explanation for Statement I.
3
Statement I is correct, but Statement II is incorrect.
4
Statement I is incorrect, but Statement II is correct.