Traders exploit loopholes in ordinance, get sugar from UP

Ruchika M Khanna

Tribune News Service

Chandigarh, August 28

The lackadaisical attitude of the state government in imposing 11 per cent tax on sugar from other states has led to the ordinance being declared legally unsustainable.

With the Punjab and Haryana High court asking the state government “not to take any coercive steps” for recovery of this tax, many large-scale sugar consumers in the state have started building their stockpiles of sugar, without paying the tax, at least for now.

Sources have informed The Tribune that armed with the court directions to the state government, large manufacturers of sugar in the food industry had started stocking up cheaper sugar from outside the state till the court gave a final order on the implementation of the tax. Some large consumers of sugar are reportedly getting their sugar supply by getting their trucks in the state through the escape routes, and avoiding tax barriers along the state’s borders.

With sugar from Uttar Pradesh still being cheaper by Rs 300 per quintal, those who are bulk sugar consumers are trying to create sugar reserves in their units. It is learnt that as against price of Rs 2,700 per quintal (manufactured in Punjab), the sugar from UP costs Rs 2,400 per quintal. With the court orders against coercive recovery, the consumers find it economically viable to get the sweetener from other states.

Since the state Excise and Taxation Department, on the advice of the Advocate General office, has interpreted the court direction as not staying the imposition of the tax, but only as not using coercive methods to collect it, the sugar laden trucks passing through the escape routes, when caught, are being let off without the penalty of 50 per cent. For those trucks that are passing through the barriers, tax on sugar at the rate of 11 per cent is still being charged.

“Though we are not imposing any penalty, as mandated in the ordinance issued by the government, the traders are being issued notices, saying that the tax could be charged subject to the outcome of the case,” said a senior officer in the Excise and Taxation Department.

Sources in the Excise and Taxation Department say that there has been a fall in the total tax collection on sugar, ever since the court ordered against the use of coercive methods for collecting tax. It is learnt that before the court order, the average daily tax collection on sugar was Rs 3 lakh, which has now fallen by almost 30 per cent.

The government had issued the ordinance to charge 11 per cent tax on sugar coming from outside the state. The key ordinance was signed by Governor Kaptan Singh Solanki, but it was not notified under the Governor’s signatures and seal. Even the schedule was not appended to the ordinance and thus this ordinance now requires to be repealed.