The Hindu Business Line : Assocham irked by States' `fictitious' tax demands

SOME State Governments are trying to offset their fiscal laxity by raising "fictitious" tax demand on companies, said Mr R.K. Somany, President, Associated Chambers of Commerce and Industry (Assocham), at a press conference here today.

At the press conference, an exercise to highlight the need for a common market within India, Mr Somany indicated that some States have begun to reject sales tax returns filed by companies, and subsequently raise "fictitious" demands.

Subsequent appeals filed by the companies take a long time to be disposed, but in the interim companies have to pay 20 per cent of the demand, said Mr Somany. He claimed the "drive has become so ruthless and arbitrary, a lot of industries are facing problems".

One of the Assocham officials suggested that "fictitious" demands could be a fall out of the States' attempt to seek a high compensation from the Centre for the forthcoming value added tax (VAT) proposal.

Referring to the troubled situation in West Asia, Mr Somany hoped that war could be avoided. A fall-out that he feared was the possibility of fuel touching $50 a barrel.

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