Cloth merchants gherao special commissioner of sales tax PN Mishra in Cuttack. Picture by Badrika Nath Das

Cuttack, March 25: Hundreds of cloth merchants under the aegis of Textile Merchants’ Association today kept down their shutters protesting against the collection of penalty from the traders on checkgates.

Around 3,000 traders took out a rally and also staged a protest in front of the commercial tax office here.

“Cloth is a VAT exempted item. Despite this, all the traders are already paying 2 per cent entry tax to the government for bringing items from other states. Moreover, the decision of the officials of the commercial tax department to collect 4 per cent penalty from the traders who fail to show waybills is not justified,” said association’s secretary Sushil Kumar Choudhry.

There are around 318 wholesaler and over 3,000 retail cloth traders in the city. According to the traders, the state government had introduced entry tax after abolishing the OCTRAI tax provision in 1999.

For the past 12 years, the traders were only paying 2 per cent entry tax as cloth items including saris, suiting, shirting and others are VAT exempted. However, 4 per cent penalty along with 2 per cent entry tax was imposed on the traders who imported cloth materials from other parts of the country without requisite waybills.

“We are ready to pay tax to the government. But we are against the collection of penalty at check gates as cloth is already a VAT exempted item,” said Shiv Prasad Poddar, joint secretary of the association.

The small traders who do not have waybills are the worst affected as they are unable to purchase items from other states. At present around 90 per cent traders do not have necessary waybills despite getting the VAT licence.

“Though we had brought the matter to the notice of commercial tax commissioner, no step was taken to solve our grievances,” Poddar added.

On the other hand, special commissioner, sales tax, P.N. Mishra informed that steps are being taken to solve the grievances of the traders.

“Sufficient waybills will be provided to registered dealers which they would be supposed to show at checkgates while bringing cloth items from other states. However, we will impose penalty where there is a violation,” Mishra said.

The printing of waybills is also a problem for the traders. “We are contemplating to introduce online waybills to overcome such shortages,” Mishra added.