Financial Daily from THE HINDU group of publications
Thursday, Mar 31, 2005
Industry & Economy - Taxation
Calcutta HC declines to grant stay on VAT implementation
Our Legal Correspondent
Kolkata , March 30
A DIVISION Bench of the Calcutta High Court comprising Mr Justice V.S. Sirpurkar, Chief Justice and Mr Justice Ashok Kumar Ganguly today refused to grant any order of stay against VAT implementation from April 1. The Bench directed the parties to file an affidavit. Hearing would commence after eight weeks.
The determination of the West Bengal Government to introduce value-added tax (VAT) in the State from April 1, was, however, put under challenge by Dr Ashok Mitra, former Finance Minister of the State, through a writ petition in the form of a public interest litigation in the Calcutta High Court. The petition was strongly opposed by the State Government.
It was stated in the petition that by invocation of VAT, the sales tax regime was being sought to be abolished.
By trying to replace sales tax with VAT, there is a complete bar on Entry 54 of Sales Tax Rules, as it is not covered in any of the items of the second list of Sales Tax schedule.
It was further stated that the proposition of VAT here merely was a loan, not a taxing factor, and hence, the traders are afraid of undue harassment at the hands of commercial taxes department officials.
The State authority has no legal competence to enact VAT without amending the Constitution, the counsel argued.
The Counsel stated that the Central Government will compensate in full for the first year, if there was any tax short fall and this would continue for three years, on a quantum
reducing basis, and on the fourth year, there would be no compensation at all.
It is a kind of Central Tax in the garb of VAT, having a shape of excise duty, the counsel argued.
It was further submitted that the Central Sales Tax also will be abolished to facilitate the entry of VAT.
The Advocate General of the State opposed the contentions of the petitioner and submitted that traders or consumers do not have any chance to be prejudiced.
The petitioner could not make out any case, the State counsel argued.
The matter is still under review to make it foolproof.
The court, before dealing with the matter, expressed discomfort about the PIL filed by an individual, without explaining, who the petitioner was representing.
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