The Hindu Business Line : VAT panel may consult Ministries over monitoring price movements

(From left) The Chairman of the Empowered Committee of State Finance Ministers on VAT, Dr Asim Dasgupta; the Member Secretary, Mr Ramesh Chandra; the Himachal Pradesh Excise and Taxation Minister, Mr Rangla Ram Rao; and the Haryana Finance Minister, Mr Vinod Sharma, in the Capital on Wednesday. — Ramesh Sharma

New Delhi , Aug. 24

DISTURBED by the reluctance by some manufacturers to pass on the benefits arising from reduced VAT rates to consumers, the VAT panel has sought the Union Finance Ministry's intervention in convening a meeting between the panel and the Central Ministries concerned to ensure that price movements are regularly monitored.

"There are a number of cases where the maximum retail price (MRP) tag has not been adjusted to reflect the reduced VAT rates (as against the rates existing in the sales tax regime). When pointed out, some of the trade and industry representatives have responded. But it is not yet a country-wide experience," Dr Asim Dasgupta, Chairman of the Empowered Committee of State Finance Ministers on VAT, told newspersons here today.

Indications are that the VAT panel may consult Union Ministries such as the Ministry of Consumer Affairs (on the MRP issue).

Asked whether the VAT panel would recommend punitive action for those manufacturers' who have not changed their MRP to reflect the reduced VAT rates, Dr Dasgupta said that the VAT panel would be "recommending action collectively after discussion with the Union Government and also the chambers".

Dr Dasgupta said the VAT panel was concerned over certain items where prices have gone up even though the tax rates for such items have been lowered under the VAT regime. He, however, declined to name the items or the broad industry sectors in which such a trend was noticed.

The VAT panel met here today to review the progress in implementation of the State-level VAT system, which has so far been introduced in 23 States and Union Territories.

On whether the VAT panel discussed the possibility of introduction of a new rate between 4 per cent and 12.5 per cent, Dr Dasgupta said that right now the empowered committee wants the present VAT structure to stabilise. "It is settling down very well. This does not foreclose the issue (of having another rate). At this moment, we should look at improving the quality of VAT system in terms of price monitoring, invoice issuance and campaigning as well as the spread of the system in terms of bringing in more States," he said.

The VAT panel chairman also said that a trial run of the TINXSYS (tax information exchange system) would be run from October 1. About 14 States, including certain non-VAT States like Uttar Pradesh, are adopting the system for the pilot run.

Further, Dr Dasgupta said the VAT panel would approach the Railways and seek its co-operation for ensuring the success of the VAT system. As regards the eight non-VAT States, the VAT panel chairman said that the members intend to visit the State capitals from September and meet the respective Government heads to persuade them to switch over to the new tax system.

Dr Dasgupta also said that the controversial issue of variations in tax rates on bullion would now form part of the agenda of his meeting with the chief ministers of the non-VAT States that are not adhering to the uniform floor rate (UFR) principle.

Meanwhile, Delhi Government is likely to take a call on reducing the VAT rate on bullion only after 15 days. The VAT panel chairman is understood to have assured the Delhi Finance Minister, Mr A.K. Walia, today that the States of Rajasthan, Uttar Pradesh and Gujarat would be persuaded to raise tax rates on precious items to one per cent.

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