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Cola war on Krishna

New Delhi, Aug. 8: The BJP today used the controversy over the pesticides content in soft drinks manufactured and supplied by Coca-Cola and Pepsi to score points against the Karnataka government.

The BJP accused the Congress government of “pampering” the cola majors at the expense of “swadeshi” beverage manufacturers and demanded a CBI inquiry into what it termed a “single window, single day operation”.

Speaking to the media, newly-appointed Karnataka BJP chief Ananth Kumar said the S.M. Krishna government had granted huge tax exemptions to both Coke and Pepsi, straining the state’s economy.

Kumar released a written reply made by minister for large and medium industries, R.V. Deshpande, to a starred question by BJP MLA S.V. Manjunath in the legislative council on March 18 last year.

While doing so, the state BJP chief said between January 1999 and December 2001, seven project proposals, each involving investment of up to Rs 50 crore, had been approved by a single-window agency.

One proposal, of more than Rs 50 crore, was approved by a high-level committee for manufacture of soft drinks, aerated water, mineral water and fruit drinks. The drinks to be manufactured included Pepsi, Coca-Cola and Mirinda.

In his reply, Deshpande had said Pepsi was exempted from paying sales tax on finished goods for five years, subject to a ceiling of 100 per cent of the value of fixed assets which was Rs 33.43 crore for the first investment or first project.

Pepsi was also exempted from sales tax on finished goods for five years, subject to a ceiling of 80 per cent of the value of fixed assets which was Rs 15.19 crore (for expansion).

Coca-Cola was exempted from paying sales tax on finished goods for eight years or “deferment” for 10 years together with exemption from payment of entry tax on raw materials for eight years. Both these were subject to a limit of 150 per cent of the value of eligible fixed assets, which was Rs 101 crore.

Kumar quoted a finance ministry order which says no predatory tax relief should be given to the non-core sector industry, which includes Coke and Pepsi.

He said 72 swadeshi bottled soft drinks in Karnataka were still subject to 16 per cent sales tax.

He asked for the tax rebates granted to Pepsi and Coke to be withdrawn immediately.

Railway waits

Driven by the engine of commercial interest, the railway is not planning a ban on soft drink sales at stations across the country.

The railway says it will pull the soft drink bottles off the shelves only if the government issues a directive banning sale of Coke and Pepsi.

“The stalls at railway stations are given on a yearly rental basis, which is less than Rs 10,000. In addition, the railway gets a 10 per cent commission on the products sold. We work as any retailer does and profits are important in the open market system,” said a railway official in the commercial department.

A railway spokesperson said Wednesday’s directive is to “ban the sale of the products (Pepsi and Coke) within the premises of Parliament. It does not talk about places outside that area.”

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