GUWAHATI, April 26 ? Because of the failure of the North Eastern States to enforce uniform sales tax, Assam Government?s bid to augment revenue collection through imposition of 20 per cent sales tax and ten per cent surcharge on cost price composition of ex-bond price, excise duty and import fee ? of India Made Foreign Liquor (IMFL) petered out as large number of IMFL buyers resorted to buy from liquor shops in neighbouring Meghalaya and Arunachal Pradesh at a cheaper rate thanks to low rate of sales tax in those States.
In the wake of State Sales tax hike made effective from February 15 last, the IMFL prices went up steeply resulting in sharp decline in volume of sales which forced All Assam IMFL Retailers Association to knock at the doors of the concerned Government departments to review the tax-hike. However, State Finance Department stood by its decision to raise the sales tax stating that it was done in accordance with all India norms. However, State Excise Department was found ?very sympathetic? by the retailers and the department proposed to neutralise 60 to 70 per cent of increased sales tax through reduction of State Excise Duty on IMFL brand and the State Cabinet was convinced to put its seal of approval on the proposal. After the reduction of tax which has stirred the hornet?s nest in the State, the IMFL brands will become only about 10 per cent dearer in Assam then in off shops in Meghalaya.
However, sources in All Assam IMFL Retailers Association are sceptical of State Government decision to reduce the excise duty which is pre-paid by retailers and where chances of evasion by bonded warehouses were very less. They are of the view that it would cost the State coffer dear as the hike in sales tax which was left untouched, would fail to enrich the State exchequer because of glaring leakages in procedure of collection of tax that is hugely inclined to the advantage of bonded warehouses. Sources in the association informed that the sales tax is collected neither at the first point nor at the last point from the retailers. It is collected through bonded warehouse which collect the sales tax in advance from the retailers at the time of lifting of stocks to be sold.
Although the bonded warehouses collect the sales tax in advance from the retailers, they are not bound to pay it to the Government immediately and the usual practice is to pay either half yearly or annually. Now considering the much debated loopholes in the State?s tax collection machinery, it is not above doubt whether the cent per cent of the sales tax collected by the total 30 bonded warehouses in the State actually find way into to State exchequer or not. Sources informed that each of the bonded warehouses collects average Rs 15 lakh per month as advance sales tax from IMFL off shop owners whose number is above 1400 in the State as on today.
So in view of the huge possibility of chances of evasion of sales tax, the State Government should have reduce the sales tax instead of reducing the Excise Duty if it was interested in reducing the prices of IMFL brands to check fall of volume of sales within the State. Now the situation is like, the liquor prices have come down which will definitely boost the sale and IMFL ?off? shop owners will be lifting more cases of liquors from Bonded Warehouses by paying more amount in terms of sales tax. Is the Government taking any steps to plug the loopholes in procedure of sales tax collection as alleged by retailers? association.