The Hindu Business Line : IPSTA demands cut in purchase tax on pepper

THE India Pepper and Spice Trade Association (IPSTA) has urged the Kerala Finance Minister, Mr Vakkom Purushothaman, to reduce the purchase tax for pepper from four per cent to two per cent to help the trade to combat the imports from Sri Lanka as well as tax evaders.

In a letter to the Minister, the IPSTA President, Mr Kishor Shamji, said that imported pepper from Sri Lanka as well as evasion was escaping the Kerala purchase tax. He said that the prevailing market prices were much below the procurement price of Rs 75 a kg.

The State Government, he said, had announced procurement of arecanut (betel nuts/supari) at a support price of Rs 57 a kg following sharp fall in its prices. Besides, in this case, the trade is paying tax only at the rate of Rs 25 a kg, which is likely to be reduced to Rs 20 a kg.

Reduction in purchase tax, he said, would help the pepper farmers at a time when the Government is supporting them, especially the small growers through procurement.

"Trade believes at this juncture at least for a period of three months till March 31, if tax on black pepper is reduced from four per cent to two per cent the benefit will get definitely passed on to the growers as genuine traders will be able to buy at 2 per cent higher level from the market, which will give additional support to the Government's effort," he pointed out.

According to him, the concessions allowed would not affect the revenue of the State "since the evasion is being done at a cost and therefore reduction in tax would wipe out the cushion available to share for evasion."

Besides, amending the CST by the Centre in April 2002 making it compulsory that only a registered dealer of one State can sell to another registered dealer of the other state has also resulted in tax evasion.

This change has snatched away the benefit of doing away with Form C and Form F for the inter-State business and therefore, it has become compulsory to collect Form C for inter-State sale and Form F for inter-State transfer over and above paying purchase tax under the KGST Act.

"This amendment under the guise of VAT have hurt the genuine trader who were paying the full tax to the state and carrying on interstate business without collecting Form C or F since it was exempted".

Thus, since April 2002 the genuine traders of the State are pushed out and the tax evaders have taken over the trade who are evading Kerala State Purchase Tax since their ultimate buyer at the other end is also evading the tax". He also urged the Minister to get the traders, who were paying the tax, exempted from collecting Form C and F for the interstate trading through amending the CST Act by the Centre.

IPSTA also requested the Government to have a "re-look at the pepper taxation frame on a war footing same as to arecanut and help the pepper growers for a better return as it will be impossible to procure even 50 per cent of the production at the support price by market intervention with the limited resources at the disposal of the Government."

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