Speaking on the LBT issue, Mr. Niranjan Hiranandani, President, IMC, said, "It has always been IMC's view that Octroi should be abolished and we applaud the Government's initiative in this direction. However, after carefully studying provisions of the LBT Act, which is being introduced effective October 1, 2013 in lieu of Octroi, we feel that creating multiple centers of tax registration and collection is not advisable since it will create havoc in the system and encourage corruption."

"It is our considered view that the taxation to be levied in lieu of Octroi should be integrated with VAT collection by adding 0.5 to 1% Surcharge with a clear provision that the additional 1% Surcharge would be diverted to BMC or any other local bodies. This will allay fear of BMC that they will not get funds from the State through VAT collection and they will go bankrupt after the abolition of Octroi." Mr. Hiranandani added.

The various trade associations have written to IMC vehemently opposing introduction of LBT in lieu of Octroi for the following reasons:

· The Trading Community is already so over burdened with bureaucratic procedures like following rules and procedures thereof, filling up challans and returns under various Acts & Rules, undergoing assessments from various State & Government Taxation Agencies that it hardly leaves any scope for imposing a new LBT system.

· The Act & Rules framed for LBT are so harsh that no trader, howsoever, he desires, can completely comply with the same. Besides, it will result into harassment and corruption due to reasons such as :

§ Initiating prosecution proceedings against Traders even for default of Rs.200/.This is against the back drop of Central Government limit of Rs.50 lacs in case of Service Tax, Customs and Central Excise.

§ Inspectors have powers to search and seize and intercept goods laden tempos, trucks, hand-carts etc. under the pretext of checking whether LBT has been paid on the goods in transit. These unbridled powers will be more often than not misused by the Inspector Raj to collect illegal gratification. Revenue collection is entrusted to agencies like Income-Tax, Sales Tax, Central Excise & Customs Department, and in case of land revenue the powers are given to Collectors. It cannot be the task of Civic body staff to go on revenue collection by ignoring their basic duty.

§ LBT will adversely impact the final costs of the goods and services as it will be difficult to claim refund. There will be a cascading effect leading to inflation. There is no time limit given to refund the excess collection of LBT. Dealers will be charged 2% interest on late payment of LBT besides penalty, interest etc. on short payment.

§ Stopping any vehicle (including personal & private, vehicles) within the area of Municipal Corporation, as long as necessary, till the satisfaction of the commissioner.

§ Unlimited search and seizure powers which are so far reaching that they are not even available to Income Tax and Central Excise Commissioners.

§ There is no appellate authority and as such the decision of the Municipal Commissioner is full and final.

While the Government of India is trying to eliminate number of windows and is trying for one window system, the Government of Maharashtra is introducing one more window in the form of LBT, which would breed corruption.

Mr. Suresh Kotak, Chairman, Forum of Affiliated Associations, IMC and Mr. Surendra Savai, President, Mumbai Textile Merchants Association had also expressed their views on LBT.