The Hindu : Other States / Pondicherry News : Confusion in Pondicherry

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Sunday, Apr 03, 2005

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Confusion in Pondicherry

By Rajesh Nair

PONDICHERRY, APRIL 2. Industrialists and traders here are a confused lot as the member-secretary of the Empowered Committee of State Finance has been quoted as saying that Pondicherry has `migrated' to the Value-Added Tax (VAT) from April 1.

The statement is contrary to the stand taken by the Territorial Government.

Chief Minister N. Rangasamy did not make any commitment on the issue in the Assembly.

A senior government official told The Hindu , "though the VAT Bill is ready and that it has been cleared by both the Home Ministry and the Finance Ministry, it is yet to be introduced in the Assembly. Hence the uniform sales tax structure will continue until the bill is passed".

Earlier the Government was considering passing an ordinance. "Since the Assembly is in session a bill has to be introduced," the official said. "The session is on till April 25 so we have considerable time".

`Take decision fast'

Industry feels that the Government will have to take a decision fast. "We have to do a lot of homework once the Government takes a decision. Many of the traders and small industries do not know much of it. It is better the Government comes out with a decision," an industrialist said.

Industry and trade say VAT is will be "beneficial only when the Central Sales Tax is abolished".

Problems

"Pondicherry being a small place does not have a market of its own. It is neither a producing nor consuming State. All raw materials required for industry have to come from outside. Also it will have to find a market outside," said a member of the Confederation of Indian Industry, Pondicherry chapter.

He said CST, freight and service tax on freight on two-way movement would make the product produced here costly. Hence, the CII wanted Pondicherry given the option of adopting any State of its choice as the mother State to trade under VAT.

Industry adopting a particular State could be considered to be in that State for purposes of trade under VAT.

Input materials procured from that State could be treated as local purchase and sale made to the adopted State treated as local sale.

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