The Kashmir Chamber of Commerce and Industry on Tuesday expressed concern at the non-settlement of Taxation and other budgetary issues by the concerned departments which were causing complications for the business community.
The spokesman said that although all issues are equally important for us, the Kashmir Chamber of Commerce and Industry would like to pick the issues which indicate the problems faced by the business community and these are; Input Tax Credit for Post 2014 Flood Period and Problems in implementation of Amnesty Scheme for Settlement of Unresolved Issues of the previous VAT regime.
INPUT TAX CREDIT FOR POST-2014 FLOOD PERIOD
The Kashmir Chamber of Commerce and Industry had taken up the issue of Reversal of Input Tax Credit of dealers for the damaged in the September 2014 floods with the then Hon’ble Minister for Finance in December 2017. The Hon’ble Minister issued instructions to the Commercial Taxes Department to jointly explore the options available with the KCC&I to arrive at an acceptable resolution of this problem.
After detailed deliberations with KCC&I, the Addl Commissioner, Commercial Taxes & Tax Planning vide his communication No. Gen/DTC/VAT/1764 dated 23rd of January, 2018 recommended the waiving off of the demand of interest/penalty and in addition providing of budgetary assistance for adjustment of the liability of flood-hit dealers towards payment of demand of tax, the demand of input tax credit or demand on account of reversal of input tax credit.
The same was approved by the Hon’ble Finance Minister on 6th of February, 2018. The Finance Department then vide it’s letter No. ET/Estt/GST/246/2017 dated 12th of March, 2018 solicited information from the Commercial Taxes Department about the financial impact of the above.
The Commercial Taxes Department provided details about the demand created on account of Reversal of Input Tax on the 13th of June, 2018 vide it’s No. CCT/Flood/VAT/1/228 giving the break-up of Principal, Interest and Penalty portion of the demand. The same is pending final disposal of the Finance Department since then.
It would be pertinent to mention here that the final settlement of this issue is also connected to the availment of the Amnesty Scheme announced under Order No. 39-FD, details of which are explained in the following point.
Problems in the implementation of Amnesty Scheme for Settlement of Unresolved Issues of the previous VAT regime
The issuance of order No. 434- FD pf 2018 dated 12.10.2018 which grants a final extension for depositing of 1st Installment under Grant of Amnesty Scheme prescribed vide Order No.39-FD of 2018 dated 05.02.2018, read with the subsequent five extensions. The last date for depositing of the installment would now be 14.11.2018. The amnesty relates to the settlement of unresolved issues in the previous VAT regime.
In this regard, the KCC&I submits that the scheme was welcomed by our organization and members/dealers were urged through the issuance of an advertisement in leading newspapers to avail this opportunity. The response to the scheme was not as expected and the Kashmir Chamber, upon enquiring about the reasons for dealers not availing this opportunity, were informed that although a majority of the dealers were desirous of settling their accounts they were not in a position to do so because of the poor financial condition.
This was more prevalent in dealers who had to pay bigger installments. Taking a view in support of this predicament of such dealers, the KCC&I approached the then State Government through it’s Finance Minister in early May, 2018 with the request to break-up the first instalment into three equal quarters. Our organisation was assured of sympathetic and humanitarian consideration of this request.
However, the subsequent change of the government resulted in the only grant of extensions without redressal of the basic issue. Now through the latest order, the Government has announced a final extension which the KCC&I considers to be unfair. This opinion is formed on the fact that as per the original schedule of the Amnesty Scheme announced, the 2nd Instalment falls due on the 31st of January, 2019.
Thus the dealers who initially were not in a position to deposit even one installment would now be required to pay two back to back installments. That too in the leanest period of the business year.
If not addressed, this would in effect, make the whole exercise one of futility, create a huge default, invite litigation and would also deprive the honest dealers of an opportunity to settle and down the shutters for a number of business establishments.