The Hindu Business Line : Nation-wide network to link sales tax commissionerates

IF you thought evasion of taxes during inter-State trade would be a possibility in the post-VAT regime, think again. Coinciding with the implementation of the value-added tax (VAT) system, State Governments have taken a major step forward in effective tax administration by getting together to implement an information superhighway linking all their sales tax commissionerates under a Tax Information Exchange System (TINXSYS).

The system would enable all constituents to track and verify inter-State transactions, thereby plugging evasion.

ICICI Infotech has been appointed as the Managed Service Provider (MSP), with the mandate to operationalise the TINXSYS, which will be funded entirely by the States. Ernst &Young has been appointed as the consultant to the ambitious project by the Empowered Committee of State Finance Ministers, which is implementing the project on behalf of all State Governments.

If the project goes through, a Sales Tax Commissioner sitting in one State, say Maharashtra, can gain access to detailed information on a dealer registered in another State, say Delhi. Each time the trader sends his goods over from Delhi to Maharashtra, the Commissioner sitting in Mumbai can ascertain if the dealer has paid his taxes in Delhi or not, or if he is recovering any tax on the same commodity from consumers in Maharashtra.

This is a quantum jump from the present situation, where the sales tax/commercial tax departments of each State acts as a water-tight compartment, with minimal or no sharing of information on dealers between States, the State Government officials said.

To start with, ICICI Infotech will undertake a pilot project to link 10 states over the next seven months. The remaining States are to be linked over the next nine months. The linkages will be done on a build-operate-transfer (BOT) basis. ICICI Infotech will run the system for the first five years, following which it will be transferred to the Empowered Committee.

Besides ICICI Infotech, Wipro and the Tata-owned VSNL were in the race for implementing the project. The project will be run on a fee-based transaction basis under which each State Government which accesses the system will have to pay a fee.

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