Small-scale industry threatens to approach high court
December, 23rd 2008
The Association of Small Industries
of the Union Territory of Puducherry (ASIUTOP) has threatened to move the Madras high court over
the government's decision to withdraw concessions extended to industries here.
Association secretary K Parthasarathy told The Times of India that the Puducherry government, after promising PGST (Puducherry government sales tax) and CST (central sales tax) concessions to industry, has now issued a notice to pay taxes with effect from October 16, 2008. The government had earlier promised PGST and CST concessions to industries established before 2002. Such industries were exempted from paying PGST and CST for the first five years, and again for another four years if they re-invested 50 percent of the first-year investment
. After the tax holiday, industries would pay CST at one percent. The same rule applied to industries established between July 21, 2002 and October 16, 2008.
"However, government made a U-turn and started issuing notices, instructing industries to pay PGST and CST with effect from October 16, 2008. The commercial taxes department refused to accept monthly returns filed by industries claiming tax exemption and instead demanded payment of taxes," Parthasarathy pointed out.
Parthasarathy regretted that the department was threatening to prosecute industries for failing to pay taxes. The association sought the immediate intervention of Lt Governor Govind Singh Gurjar. "The Lt Governor directed the department to accept the returns submitted by industries claiming exemption till the end of December. Chief Minister V Vaithilingam has called for a meeting on December 23 with commercial tax officials and representatives of industrial associations to sort out the issue," he said, adding that the associations would be left with no option other than approaching the court for relief.
Parthasarathy pointed out that the Puducherry government that was extending since 1991 a power subsidy of 25 percent to industry for the first three years, followed by 20 percent in the fourth year and 10 percent in the fifth, had withdrawn the concession in 1999. However, the affected units moved the Madras High Court and the court had passed a judgment in their favour. The Supreme Court then dismissed a special leave petition filed by the government against the high court order.
Puducherry industries department sources said that there was a communication gap between industry and the commerical taxes department and that the issue would be positively addressed shortly.