The elusive tax trove that State sits on

Court cases and Government largesse to industry has tied up 6,000 cr in arrears

Tax arrears to the tune of a whopping Rs 6,000 crore are to be cleared or settled by the four major resource generators of the State government - commercial taxes, excise, motor vehicles and stamps and registrations.

The commercial taxes department with an arrears balance to the tune of Rs 5,138 crore tops the list followed by excise (Rs 712.72 crore).

However, the bad news is that a huge chunk of this arrears is either riddled in court cases or are dues from industries gone defunct or have been covered under the rehabilitation scheme proposed by the Board for Industrial and Financial Reconstruction (BIFR).

But then, another major portion of arrears due especially to commercial taxes department is due to the largesse of successive governments prior to the year 2000 in form of sales tax deferment to industries.

That is, newly started industries were given an opportunity to defer payment of sales tax till they established themselves. The deferment period ranged from five to even 18 years.
The arrears pooled during the deferment period carries no interest. Sources in the Finance Department put the quantum of arrears in this category at Rs 2,000 crore.

A chief secretaries conference in 1999 resolved to do away with the sales tax deferment scheme, the sources added.

Minus the arrears covered under court stay orders, BIFR cases and sales tax deferment, the net quantum of recoverable arrears by the commercial taxes department boils down to Rs 498 crore. In the Excise Department arrears or rental dues as it known go back to pre-independence era.

The interest accrued on the arrears is more than the principal amount. While the principal arrears is Rs 258 crore, the interest accrued has crossed Rs 470 crore, Excise Department officials said. Here the dues are on arrack contracts prior to its ban three years ago.

Both the departments are now working on ‘Karasamadhana scheme’ wherein interest waiver would be provided as a relief to the assesses who pay the principal tax amount prior by June 30, 2010.

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