The Hindu Business Line : SSI body lists VAT difficulties

THE Kerala State Small Industries Association has submitted a memorandum to the Commissioner of Commercial Taxes highlighting several problems related to the implementation of VAT in the State.

The State President of the Association, Mr Xavier Thomas Kondody, said that the seizure of goods by the VAT Intelligence Squad for different reasons has been disrupting smooth movement of goods of genuine manufacturer.

The VAT officers are pretending to be unaware of many of the provisions of the Act and Rules, denying acceptance of proper returns, thereby causing disharmony in the whole system, he alleged.

He pointed out that huge amounts are outstanding for refund to genuine exporters from VAT authorities. The procedures for complying with the submissions of documents by direct exporters and also manufacturers, who depend upon merchant exporters, are not legibly listed thereby causing confusion in the system.

According to the Association, acceptance of return in a specified form should be made obligating in a time bound manner. The high rate of tax on timber, which is an essential industrial input, is causing great hardship to the wood industry. The timber is listed under 12.5 per cent of VAT rate and also attracts entry tax at the same rate. This item, he said, should be brought under 4 per cent in Delhi VAT.

As the wood industry being the most important industrial sector in the State providing large employment opportunities, it deserved to be brought under the industrial input list, he said, adding that the entry tax on timber imported from other countries should also be removed.

Though the State Government had stopped sales tax exemption to new SSI units forthwith the introduction of VAT, it allowed existing exempted units to collect VAT and repay it in 60 monthly instalments with the interest rate of 12 per cent. Such units are now asked to provide with bonds secured for the entire remaining exemptions with two personal guarantors, who are solvent enough to be proved.

According to Mr Kondody, SSI units cannot get such personal guarantors to guarantee to the Government and now those units are forced to forgo the exemption benefits. The Association also demanded the Government to issue a notification to include veneer sheets as an industrial input.

The Association pointed out that the present rule compelling payment of entry tax under Form No.2 B along with draft or by cash at the check post create a lot of problems to entrepreneurs, thereby disrupting the movement of goods. As there are possibilities for corruption in this system, alternative arrangements are to be made to ease the mode of payment, he said.

The Association also suggested opening of VAT help centres in the district level to assist people.