Some VAT measures

Finance Minister presenting 2009-10 budget in State Assembly floor.
Finance Minister presenting 2009-10 budget in State Assembly floor.

The traders have been confronting a genuine problem of penal action by the authorities for non compliance of rules which were notified much after the date of commencement of the VAT Act in the State. Unfortunately, this problem has not been addressed so far. Obviously, the traders cannot be penalized for violation of rules which did not exist but were later on given retrospective effect. I announce a scheme of general amnesty for all such cases which shall be notified shortly.

The negative list of raw material and finish products:

Representations have been made to us by Industry asking for scrapping the negative list. We have  considered this demand. We have come to the conclusion that placement of certain identified items of raw materials and finished products in the negative list does not come in the way of competitiveness of the related end-products. As such, as of now, there is no justification in letting go whatever amount of revenue is accruing to the state by charging VAT on such raw materials and finished products.

However, it has also come to our notice that Vanaspati which is a product of some of the local industrial units cannot be easily distinguished from Vegetable Oil which is also product of  some local industrial units. Vegetable Oil is already on the negative list. Besides the situation has changed when Vanaspati was accorded exemption from GST/VAT treating it as a priority industry. Therefore, I announce to place the production of Vanaspati also on the negative list.

Amendment in VAT Rules:

Registering authority can demand, at its discretion, additional security from the dealers, on eventualities of the existing dealer adding more commodities to its approved list etc. A representation has been made that no such additional security should be demanded in cases where the existing dealers have been regularly filing their returns and depositing the VAT amount without any default. The demand is rational and if accepted, shall amount to due recognition for law abiding dealers. I accordingly accept this demand. The rule shall be modified accordingly.

Rule 77 dealing with registration of appeals requires that report of assessing authority shall be obtained before proceeding with any appeal. A demand has been made that in case of delay in supplying this information, the appellate authority should proceed without such report, on the basis of information furnished by the appellant. The demand is justified. However, the department of Commercial Taxes is computerizing its system very soon and all the record shall become available on line. The need to obtain a report from the assessing authority shall automatically vanish. In order to take care of the present concern, I have issued strict instructions to the department that all the assessing authorities must ensure compliance to the requirement of rule 77(a) by submitting the requisite report within 15 days time.

Simplification of laws and procedures:

A basic need of good governance is simplification of laws and procedures. We intend to encourage proliferation and greater use of information technology in government functioning. The land acquisition Act and Rules are being simplified so as to expedite land acquisition cases as also to ensure that the compensation is fair and its disbursement is made within the shortest possible time.

During our pre-budget consultations with various associations, organizations, economists, experts and intellectuals, we have received very valuable suggestions in large numbers. Several of these suggestions have been utilized by me while framing my budgetary proposals. We are giving further thought to the remaining suggestions for use at appropriate time. I express my gratitude to all of them.


Tax Revenue  (in Rs. Crore)
S.No Source of Tax Revenue 2004-05 2005-06 2006-07 (A) 2007-08 (A) 2008-09 (RE)
(A) (A)
1 2 3 4 5 6 7
1 Taxes on sales, trade etc.* 804 1014 1159 1805 1853
-70.54 -68.8
2 State excise 272 219 213 244 250
-9.54 -9.28
3 Taxes on vehicles 42 49 64 73 78
-2.85 -2.9
4 Stamps and registration 39 46 57 66 60
-2.58 -2.23
5 Land revenue 11 4 3 10 5
-0.39 -0.19
6 Other taxes** 183 296 303 361 447
-14.1 -16.6
7 Total 1351 1628 1799 2559 2693
-100 -100
Increase over respective previous Year ( % ) 15.47 20.43 10.57 42.25 5.24
*    Includes service tax also.
**  Includes taxes on goods and passengers and other taxes and duties on
commodities and services.
A = Actual, RE = Revised Estimates
Figures in brackets indicate percentage share.


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