Withdraw amendment of VAT: Industry to Kerala

New Delhi, Apr 29: Through the letters to the Empowered Committee of State Finance Ministers on Value Added Tax (VAT), an industry body has sought its intervention by persuading the Government of Kerala to withdraw the amendment and restore status quo ante in the interests of revenue, trade and consumers in the State.

Industry body CII has written to Dr Asim Dasgupta, Convenor and Mr Satish Chandra, Member Secretary of the Empowered Committee of State Finance Ministers on VAT seeking intervention of the Empowered Committee to persuade the Government of Kerala to withdraw the proposed amendment of the Kerala VAT Act which provides for imposition of VAT on Maximum Retail price (MRP).

It has further stated in its letter, that at a time when the country is poised for a transition into Goods and Services Tax (GST), this recent amendment in Kerala is a retrograde step in the context of the ultimate shared goal of a unified tax system across the country.

''The recent amendment of MRP based first point tax does not benefit any stakeholder such as the State exchequer, trade or the consumers,'' the chamber has said in a statement.

This provision has been made optional. However, owing to various factors operating at the ground level, this option is more notional than real with the result that intense pressure is being brought upon the manufacturers/importers to pay the tax on the MRP.

This has led to an impasse in the State creating a stock out situation in the case of many goods.

The circular by Kerala Government dated 30th March 2007 introduces a provision in Kerala VAT Act, 2003 provides for payment of a first point tax calculated on MRP printed on the packaged commodities covered by the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.

Terming this proposed Amendment as 'going against the spirit of VAT', CII said that this does away with the concept of collecting tax at each point in the value chain, based on the value added at each point.

It threatens to cause undue hardship to both industry and trade, apart from violating the basic principles of a VAT, added CII.

UNI