The Hindu : Business : Move to levy cess on industry to revive sick units opposed

Online edition of India's National Newspaper
Friday, Dec 03, 2004

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Business

Move to levy cess on industry to revive sick units opposed

By Our Special Correspondent

NEW DELHI, DEC. 2. The Associated Chambers of Commerce and Industry of India (Assocham) has suggested the Government to reconsider its proposal for imposition of cess on industry to finance revival of sick units.

In a statement, the Assocham President, Mahendra K. Sanghi, said the chamber had information that the Government intends to levy 0.2 to 0.5 per cent cess on company's gross turnover through the enactment of a new legislation.

The Assocham chief, however, suggested that instead of this levy, the sick industries should be allowed to close down after paying statutory dues to workers.

Even in the draft Companies Bill 2004, the Government has incorporated Section 140 to facilitate imposition of cess, which is being opposed by all quarters of industry.

He sought the removal of this provision, arguing that the companies, having large turnover or gross receipts, need not necessary have surplus resources or liquidity to pay cess. Moreover, the industry did not expect the Government to make the modified Companies Act for revenue raising exercise for the Government.

Therefore, there was no rational for this clause to be incorporated in the new Companies Act, for it would erode the liquidity base of the strong companies not only in the private sector but also in the Government, he said.

The chamber chief also suggested that the revival and rehabilitation process of sick and weak companies should be funded through investor's protection fund as mooted in the draft Companies Bill 2004.

On the contrary, it should be the endeavour of the Government not to put additional burden on industry by imposing cess on it for creation of funds for sick companies' revival and rehabilitation.

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