MADIKERI: The undeclared strike resorted to by wholesaler drug dealers in the State over the notice served to them by the Sales Tax Department that they pay handling charges and incidental charges for seven years with retrospective effect could affect supply of medicine in the State.

According to sources, wholesalers have stopped purchase of medicine from pharmaceutical companies for the past one month. This has plunged the health sector into a crisis. The situation in Kodagu is alarming as shortage of medicine has started affecting the retail trade.

The notice served on wholesalers under Section 18 of the KST Act stipulates that the assessees (wholesalers) pay handling and incidental charge "arrears" for seven years with retrospective effect.

"We have been levying handling and incidental charges in the entire country for the past four decades. This cannot be termed levying excess charge on customers," A.K. Jeevan, vice-president of the Karnataka Chemists and Druggists Association, said.

He noted that there used to be the "first seller" (pharmaceutical companies) and "second seller" (wholesalers) concepts before the advent of VAT. The first seller collected sales tax whereas the second seller collected handling and incidental charges.

The charges ranged from 10 per cent to 12 per cent of the billed amount.

The Sales Tax Department has now asked the assessees to calculate their accounts for the current year and based on it arrive at the handling and incidental charges collected during the seven years and pay it to the Government.

Mr. Jeevan said those who refused to pay were forced to approach the court. Unfortunately, the aggrieved party could do so only by paying half the assessed sum. The wholesalers are also thinking of approaching the Supreme Court if the issue is not resolved.

Bandh threatened

The situation can deteriorate if the association gives a bandh call, said K. Gopala Bhat, a wholesaler, and added that the shortage of drugs could hit the common man if the Government does not take steps to resolve the crisis.

Memorandum

The association submitted a memorandum to P. Ravi Kumar, Commissioner, Commercial Taxes, on February 10 stating that it found no rationale in collecting handling and incidental charges for seven years while they were in existence for over 40 years.

Printer friendly page  
Send this article to Friends by E-Mail