Our Bureau

Mumbai, April 15

TRADERS in Maharashtra on Friday began an indefinite strike to protest value-added tax (VAT).

Markets remained closed and trucks carrying goods across and outside the State took part in a `go-slow' stir.

"Some manufacturers and traders plan to move out of Maharashtra to neighbouring Gujarat (which has not implemented VAT) because of the increase in tax burden. Even items such as rakhees have been taxed at 12 per cent. This is hurting the small-scale industry. But there is no clarity from the Government," said Mr Mohammed Ali Patel, General Secretary, Federation of Associations in Maharashtra.

Traders said they will reconsider the agitation only if the Empowered Committee for VAT, which meets State Finance Ministers in Delhi on Saturday, agrees to their demands. The implementation of VAT has been hasty and has created immense confusion on the ground as different States have announced different rates for the same item, they said.

The protest was supported by the Bombay Goods Transport Association (BGTA) and `only important deliveries' were given priority, according to Mr Deepak Rane, Secretary, BGTA. Traders in Pune, who stayed out of the protest, are expected to join tomorrow, Mr Patel said.

Meanwhile, traders in Delhi staged protests to demand that the Union Government defer VAT implementation.

"Traders want the Government to constitute a high-power committee to look into the gross anomalies in VAT Acts of all States. The committee should submit its report in six months. Also, a Central VAT monitoring cell and a Website should be set up to explain details to traders and customers," said Mr Praveen Khandelwal, Secretary General of the Confederation of All India Traders.

According to Mr Khandelwal, traders will wait up to Saturday evening for the Union Government to respond to the demands. Traders are preparing for a legal battle, he said.

Industry, however, believes the Government needs to phase out Central taxes and impose a general sales tax in the long run.

Mr N. Srinivasan, Director General, Confederation of Indian Industry, said: "The Union Government could use this period (of confusion) for gathering market feedback. VAT has worked only as a replacement for States sales tax. Octroi and entry tax should also go and the Government must introduce a flat uniform sales tax in the coming three years or so."

(This article was published in the Business Line print edition dated April 16, 2005)
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