The Hindu : New Delhi News : Passage of VAT Bill resented

Online edition of India's National Newspaper
Thursday, Dec 30, 2004

New Delhi

New Delhi

Passage of VAT Bill resented

By Our Staff Reporter

NEW DELHI, DEC. 29. The All India Tax Advocates Forum has expressed dismay at the passage of the VAT (Value Added Tax) Bill by the Delhi Assembly even after concerns had been voiced by various sections of the trading community against the new law. As against improving upon the tax collection system, AITAF said the new law is set to compound the confusion which would be detrimental to the interests of the traders who happen to be the backbone of the Capital's economy and the main source of income for the Delhi Government.

Spread over 106 sections, excluding hundreds of other sub-sections, the Bill is not only a lawyer's nightmare but riddled with conflicting and contradictory clauses leading to added harassment of the honest and upright traders, the Forum president and tax lawyer, M.K. Gandhi said, adding that the cascading effect of several stiff provisions is bound to lead to greater corruption and unprecedented price hike that would impact the citizens.

According to the Forum, the new law appears to be the handiwork of bureaucrats who in tandem with politicians have paved the way for greater rule of the `babus'. This sordid aspect of the proposed law, it said, was aimed at pleasing the clerical staff and officials who generally always miss the sales tax collection targets.

Noting that "draconian powers'' have been vested in the Commissioner, the Forum said under the new law, the ST Commissioner is not only going to be court of last appeal but the final arbitrator of the trading community's fortunes. "The traders have no option but to lump the Commissioner's directives with penalties that remind us of the infamous POTA law,'' Mr Gandhi said.

Similarly, in case of inter-State trade, exports and other sales and purchase activities, the cumbersome procedures are set to rob the traders of their genuine tax refunds even as their hard earned tax payments get locked for considerable time subject to whims and fancies of the bureaucrats, he added.

Several other clauses, such as section (24-3) provide for fresh security leading to a double-whammy effect even after the trader has paid the tax at the time of initial registration. Significantly, the amount of initial security is to be determined by the Commissioner based on the volume of business and turnover.

Extending its anti-business paradigm further, Mr Gandhi said under VAT the transporting agencies such as railways, shipping companies, air cargo agents and inland cargo depots have been roped in to furnish unwanted information with regard to the sales and purchase of goods. This will not only lead to an unavoidable rise in transportation costs detrimental to the interests of the metro's consumers but also in a huge hike in paper work.

Moreover, the maintenance of ST-records by the traders will have to be for preceding seven years as against the existing norm of 6 years in case of Income Tax files.

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