The Hindu Business Line : Industry concern over continuation of CST in VAT first year

TRADE and industry have voiced their concern over the Centre's proposed move to continue with the 4-per cent Central sales tax (CST) during the first year of implementation of the value added tax (VAT) regime, which will replace the sales tax system from April 1.

Informed sources said trade and industry representatives conveyed their concerns during their meeting with the Chairman of the Empowered Committee of State Finance Ministers on VAT, Dr Asim Dasgupta, here on Monday.

Annual CST collections stand at about Rs 13,000 crore.

Even as it was acknowledged that the continuation of CST in a VAT regime was not a "happy situation", sources said that it was pointed out to trade and industry that the States had very little role on this decision and CST was being continued due to certain constraints.

A consultative mechanism between trade and industry associations and the empowered committee has been put in place. The first meeting, which was held on Monday, also saw demands from trade and industry for uniform VAT laws across the country.

Trade and industry's demand for a "generally identical" VAT laws in all the States was turned down.

"It was made clear to them that it is not possible to have identical VAT laws for all the States. It is neither our endeavour nor is it possible to have identical VAT laws in all States. The stand of the Empowered Committee is that in a federal set-up like ours, 100 per cent convergence is not possible," Mr Ramesh Chandra, Member-Secretary, Empowered Committee of State Finance Ministers on VAT, told Business Line here.

Mr Chandra said the representatives of trade and industry associations have been asked to submit their apprehensions in writing within the next 15 days.

Besides representatives of apex chambers of commerce and industry, the meeting was attended by members of Federation of All India Trades, Bhartiya Udyog Vyapar Mandal and Confederation of All India Traders.