From Our Special Correspondent
Daijiworld Media Network - Bangalore
Bangalore, Mar 16: Traders across the country are up in arms against State Governments for gross deviations in the Value Added Tax (VAT) regime and have threatened to move the Supreme Court to seek justice.
Confederation of All India Traders (CAIT) General Secretary Praveen Khandelwal has decried the tendency of a large number of State Governments over what he termed as their complete U-turn on the 21 points of list of convergence mutually agreed by all State Finance Ministers.
In a press release, he criticised the Centre’s offer to hold talks with State Governments at this stage as ``totally meaningless” as they have not kept their promises. Instead, they broke the agreement. ``We have no alternative but to take legal recourse and force the state governments to reverse the wrong decisions taken by them,” he said.
VAT was agreed by traders when all the States gave them a clear formula of how it will be implemented and their solemn promise that the taxation slabs will be changed only after holding consultations with all the traders. But these promises have not been kept, he explained.
"The increase in floor rates of VAT from 4% to 5% and 12.5% to 15% by various States was a big betrayal. They levy of a surcharge on VAT by the Haryana government was the last nail in the coffin,” he said pointing out that it had sent a wave of resentment and protest amongst the traders of the Country.
"It is an established fact that VAT and surcharge cannot go hand in hand,” he said wondering how the traders can trust the Centre and the States on the Goods and Services Tax (GST) system to be adopted soon in India.”
Khandelwal warned that the traders have been forced to give a rethink on GST as well and neither the Centre nor the State Governments have kept their promise.
When the VAT system was introduced in the country in 2005, the Centre and the Empowered Committee of State Finance Ministers had assured the Country about simpler taxation system based on certain basic fundamentals.
The White Paper on VAT released by the then Finance Minister P Chidambaram had specifically assured that with the introduction of VAT, there would be uniform rate of taxes on different commodities in all States across the Country and floor rate of tax will not be amended or altered by any State and all other taxes like surcharge, turnover tax and additional tax will go away, Khandelwal said.
CAIT National President B C Bhartia lamented that VAT Act was being subjected to various amendments by States within a short duration of 3 to 4 years and frequent amendments had completely altered the original promise held out in the White Paper by the Government.
He regretted that the State Governments were working in a free for all mode and taking unilateral decisions without consulting the stakeholders. The inordinate delays in refunds of traders and non-phasing out of Central Sales Tax (CST) were further examples of dictatorial attitude of the State Governments.
"The CST is yet to be completely done away with.. The Union Government has utterly failed to rein the States in taking unilateral and unjustified decisions. The Centre and the State Governments have started showing their real colours. The deteriorating tax structure will result into making Indian goods incompetative in the global market,” he said.
Both Bhartia and Khandelwal said CAIT cannot remain a silent spectator and has therefore decided to move to apex Court against the Union Governments and State Governments. ``We may have to resort to mass agitations too,” they warned.