The Telegraph
Since 1st March, 1999
Email This Page
Defence canteens face state tax blow

Guwahati, Sept. 2: Defence personnel used to buying sales tax-exempt goods from canteen stores department (CSD) outlets have to pay more for the same items from January 1 next year, thanks to an unprecedented decision by the seven states of the Northeast and Sikkim to withdraw the sop.

The decision, which will affect thousands of army, CRPF, BSF, Indian Air Force and Assam Rifles personnel deployed across the insurgency-ravaged region, was taken at a meeting of finance ministers and senior officials here today. The meeting was convened to evolve a uniform tax structure.

Nagaland finance minister K. Therie, who chaired the conclave, told a news conference later that the main reason for withdrawing the tax exemption on CSD goods was to stop “gross misuse” of a benefit only defence personnel are entitled to. “Civilians buy various items, including luxury goods and liquor, from the CSD outlets, depriving governments of revenue,” he said.

On whether the states expected the defence ministry to object, Therie said sales tax was a state subject and Delhi could not impose any decision on the governments. “There will be no problem for the respective governments to implement the decision.”

The finance ministers of the northeastern states decided to move the Centre for a directive to the railway authorities to comply with sales tax regulations and enable the governments of the region to prevent evasion of taxes by traders.

“The railways is the biggest carrier of commodities and its co-operation with the state governments is imperative to check tax evasion,” Therie said.

The meeting decided, “in principle”, to have uniform floor rates of sales tax on all 227 commodities listed by the empowered committee of finance ministers. It set December 31 as the deadline to implement the decision.

Another important decision taken at the conclave of finance ministers was to devise a mechanism for cross-verification of inter-state transactions.

However, Arunachal Pradesh sought time to comply with the decision on uniform floor rates, saying it introduced a taxation system only last year. “Our taxation system is still at the nascent stage and it will be difficult for us to immediately implement a uniform structure,” finance minister K. Pul said.

All the northeastern states and Sikkim agreed to introduce value-added tax (VAT) on the same date. The meeting decided to seek financial and logistical assistance from Delhi in readying the requisite infrastructure for implementation of VAT. Assam, however, claims to have already completed the task.

Finance ministers of four states — Meghalaya, Mizoram, Tripura and Sikkim — were represented by officials of their departments. As many as 14 resolutions were adopted, including a demand for a change in the funding pattern of Delhi-sponsored schemes from the ratio of 75:25 to 90:10. “In case of funding from the non-lapsable pool of resources, it should be converted to a 100 per cent grant instead of 90 per cent grant and 10 per cent loan,” the resolution said.

Inaugurating the conclave, Assam chief minister Tarun Gogoi made a case for a “special economic package for the Northeast to hasten the process of economic development”.

Email This Page