The Hindu Business Line : Bengal trade body backs all-India bandh on Feb 21

DESCRIBING the White Paper on State-level VAT as a "Black Paper", the Federation of West Bengal Trade Associations, affiliated to national bodies such as Confederation of All India Trade Organisations, Bharatiya Udyog Vyapar Mandal and Federation of All India Trade Associations has announced full support to the 24-hour all India trade bandh on February 21, being called to protest against VAT implementation.

The federation has also announced a State-wide block level hunger strike on March 17, against VAT.

Talking to Business Line here, Mr Amar Nath Paul, Honorary Joint General Secretary of the Federation, said traders throughout the country were against imposition of VAT in its proposed form.

Traders were also agitated about the additional 10.2 per cent service tax burden and the need to seek separate registration under the Service Tax Act.

According to Mr Mahesh Singhania, senior member of the federation, there should be one tax throughout the country, and, "If traders are forced to swallow the VAT pill, we will accept jail once for all rather than carry on business through a fear psychosis."

According to Mr Singhania, the proposed penal provisions under criminal law in the VAT legislation should be removed so that traders do not run the risk of being branded as criminals. He felt the multiple taxation system under VAT and the additional service tax burden will increase costs for the trade by a minimum of 25 per cent, while at the same time eliminating distributive trade besides wiping out the SSI sector.

He felt that under the proposed VAT regime, honest traders will be compelled to choose the path of bribes and grey market business activities. According to the White Paper, VAT will replace the existing system of inspection by a system of built-in assessment by traders and manufacturers, making the tax structure simple and more transparent.

Pointing out that the proposed composite system of levy for those with a turnover between Rs 5 lakh and Rs 50 lakh did not make much sense, he said contrary to the usual practice of traders remitting the sales tax after collection through a sale in the existing system, under VAT a trader will have to pay upfront from his own pocket.

Pointing out that the proposed VAT structure will be more complex, contrary to what is stated in the White Paper, he said the price for the consumer will definitely go up. He also questioned the so-called advantages of VAT over the existing sales tax system, claiming that prices may not actually fall, as pointed out by the White Paper.

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