Chandigarh, August 1
Many states, including Punjab and Haryana have disagreed with the Central Government on certain issues involving services tax. These states have come together to press the Centre withdraw fiscal concessions given to hill states such as Himachal Pradesh, Uttaranchal, Jammu and Kashmir and Assam to promote industry.
Highly placed sources told The Tribune that the issue of services tax and fiscal concessions dominated the meeting of the high power committee held in Delhi today. The committee deals with fiscal issues pertaining to the Centre and states Finance Ministers of many states, including Punjab, Haryana, Andhra Pradesh, Karnataka, Tamil Nadu, Assam, Madhya
Pradesh and Bihar attended the meeting.
The Union Government, which in the recent Budget raised the services tax from 8 to 10 per cent and also added about 20 more services in the this tax net, besides the existing 58 ones, has proposed to collect through this tax Rs 14,000 crore during the current fiscal year.
Finance ministers of states have asked the Union Government that it should not proceed further on the services tax without first settling various issues with the states concerned. They are of the view that first it should be settled that on which services the tax would be collected by states.
After a prolonged discussion at the meeting, sources said, it has been decided that all states would submit lists by August 10 to the empowered committee giving areas of their preference to collect the services tax. The next meeting of the committee would be on August 17 when the finance minister would meet again to take a final decision in this connection.
The Punjab Finance Minister, Mr Surinder Singla, who attended the meeting, confirming that the issue of services tax was raised, he strongly argued that the collection of services tax on
telecom services in Punjab should be with the state government. He said the penetration of telephones was the highest in Punjab in the country. “ Because of this reason, Punjab would like to retain all tax revenue collected from this service.”.
On fiscal concession to hill states, Mr Singla, said Punjab, Haryana, Gujarat and several other states had been hit hard because of this concession given to hill states. Industrial units well shifting from plains to these states. Mr Singla, said all non- hill states were united on this issue and wanted that the Centre should find some alternative to promote industry in hill states and concessions should be withdrawn immediately. Hill states should be helped but not at the cost of other states.
Moreover, concessions had been given without consulting the committee, which was set up a few years ago with the purpose of restoring parity in taxes in various states so that these ( states) should not bleed themselves by competing with each on tax issues.
Mr Singla said except Uttar Pradesh, almost all states were fully geared up to implement VAT. But there seems to reservation at the national level as various trader organisations were strongly opposing its implementation. A meeting would be held with the All-India Traders Association in Delhi in the second week on this issue by the Union Finance Minister. Punjab has asked the Union Government to compensate at least for three years the revenue loss to be suffered by it because of the enforcing of VAT at the initial stage.
Punjab, and Madhya Pradesh have joined hands on the refinery issue. Both have refused to give sales tax concession for Indian Public Sector Oil Companies for setting up refineries in both the states. While one refinery is to be set up near Bathinda other is to be set up at Beena in Madhya Pradesh. Punjab and Madhya Pradesh have told the Centre that Assam was not giving this tax concession to Indian oil, why Oil Companies are expecting it from them. The Centre should waive the excise duty, they have urged. Even Assam has supported Punjab and Madhya Pradesh stand on this issue.
