Bhubaneswar, Dec. 7: The state government is in a dilemma over the Centre's recommendation to abolish inter-state check gates to facilitate trade across the country.

In reply to a question in the Assembly today, finance minister Pradip Kumar Amat said: "We are studying the system in other states and yet to take a decision whether to abolish the check gates."

The state generates around Rs 40 crore from tax collection through the 17 inter-state check gates. The contribution from the check gates is considered to be meagre compared to the total revenue collection of more than Rs 13,000 crore from other tax sources. The authorities impose entry tax and VAT on selective items entering the state.

Two states - Chhattisgarh and Rajasthan - have abolished the system. "These states claim that the abolition of check gates has not impacted their revenue collection," said the finance minister.

Two states, including Bengal and Andhra Pradesh, are weighing the pros and cons of the recommendation. "A detailed examination of the proposal is required before the abolition of check gates," said Amat.

A finance department official said: "The check gates would become redundant after the introduction of Goods and Services Tax in the country. But, the revenue loss due to abolition of check gates has to be compensated by the Centre."

The state is yet to get more than Rs 2,500 crore as compensation on account of phasing out of the Central Sales Tax. The state government has received only Rs 287.41 crore from the Centre as against Rs 2,834.43 crore claimed by the government since 2011-12.

Amat said he had raised the demand for early release of the arrears amount at the meeting of the empowered committee of finance ministers.

Amat, however, admitted that there was tax evasion since many goods-laden vehicles passed through other roads.

"The road network has expanded across the state during the Naveen Patnaik's regime. The goods' vehicles use the concrete rural roads to skip the check gates," Amat said.