The Hindu Business Line : `Total CST phase-out linked to sound tax info exchange system'

RESPONDING to queries by trade and industry representatives at an interactive session on value added tax (VAT), organised by the Indian Chamber of Commerce here, Mr C.M. Bachhawat, Commissioner of Commercial Taxes, West Bengal, said CST was on its way out.

The first requirement is a technology-backed method of verification of inter-State transactions through a sound tax information exchange system, he pointed out.

Conceding that CST, of course, meant substantial revenues for the Centre, emanating from centralised sales and purchases, he clarified that its phase-out did not hinge so much on revenues, but actually pertained to tax compliance and documentation.

Explaining further, he said the clear objective behind CST, when it came into existence, was that while a consumer in a State has to pay tax, the same should not be transported to consumers of another State. "Under no circumstances would a tax-evasion advantage be allowed."

Cautioning trade and industry against fake stock transfers and doctored central sales (showing local sales as central sales), Mr Bachhawat said CST phase-out depended entirely on the full operation of the tax information exchange, based on advanced technology, for tracking inter-State sales effectively.

Expecting the information system to become fully operational by end July, he said misuse of the system by a few can affect all traders.

Trade survival under VAT will depend on efficiency and tax compliance, he pointed out.

On the price rise issue, he said a meeting with manufacturers has been called on Saturday to understand what happens to prices in the face of a reduction in tax rates.

He clarified that when tax costs decline, prices, especially the MRP of packaged goods, too should come down. Appealing to the trade to take a collective decision in the matter, he said efforts were already on to further simplify the return format.

Describing the consultative committee meetings held so far with representatives of chambers of commerce and other industry bodies as highly successful, the commissioner said the queries till date have been mostly on tax-related issues, commodity-wise classification and refunds of input taxes under VAT system.

Pointing out that the issue of refunds, particularly with regard to EoUs and non-EoUs, was being examined, he said a decision would be taken within the next two weeks.

All trade-related problems would be addressed seriously, and all refunds problems would be sorted out to the full satisfaction of trade and industry, he pointed out.

He said the knotty issues pertaining to jute industry, plastics and engineering goods have been sorted out through fresh ordinances.

In the case of capital goods, where earlier it was stipulated that only notified CGs would be eligible for input credits, Mr Bachhawat said it has now been decided that all CGs (particularly in the 4.5 per cent VAT fold) would be eligible for this facility.

All the earlier omitted CGs are now being brought into the schedule, he added.

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