Aboloish permits and sales tax check-posts and introduce a temporary service tax relief
Business Standard / New Delhi Jan 06, 2009, 00:15 IST
Yet another nationwide transport strike has been called, after one that lasted two days last July. Irrespective of how widespread the strike is and how long it lasts, it should be obvious that such periodic disruptions are not the way to sort out outstanding issues. One such is the levy of the service tax on goods transport. The scope for this was restricted and defined, but transporters allege that they have been getting outlandish tax demands that negate the previous understanding. Also, as road transport is one of the more badly-hit sectors in the current economic slowdown, it is necessary for the government to take a comprehensive look at the condition of the service providers and formulate a package to provide them with temporary relief. One way can be to hold in abeyance the service tax for say six months. Since the government has cut central VAT to boost demand, relief on the service tax may also be in order. But it is difficult to justify the truckers’ demand that operators be exempt from registration and filing of returns under the tax rules. These improve the tax data base, even if it initially earns negligible revenue. Some other demands, like sharply cutting diesel and tyre prices and putting a moratorium on the servicing of truck loans and highway tolls, are either impractical or have little to recommend them in the first place.
Truckers' have also demanded that different permits to carry goods to different states should be abolished. This deserves wholehearted support and should be implemented so as to turn the country into a single market. Currently the route for a journey covering different states is often taken keeping in mind not the shortest distance but on whether you have all the permits. Trucks typically wait for varying periods as drivers deal with the staff at border tax booths. The road tax for trucks and taxis should be levied exactly the way they are for private cars, as a one-time tax at the time of purchase. The Centre can compensate the states for any loss of revenue that they suffer.
Even more important is a demand which the truckers have not made – abolishing the sales tax check-post at state borders. Long lines of trucks waiting at these inter-state border points are a common sight and represent an enormous national loss. The check-posts are there to prevent loss of states’ revenue and they do serve that purpose, up to a point. A truck which comes in undetected can dispose of its load and go back, with the state losing its point-of-sale revenue on the entire consignment. But the states also pay a price for the delay and corruption at the check-posts. Over the years the country has simplified its customs practices so that delay at international entry and exit points resulting from the physical examination of all cargo is now vastly reduced. Customs revenue has not been affected and the country’s trade competitiveness has been enhanced. The Centre already has a domestic green channel system for large firms, which are unlikely to run away without paying legitimate taxes. If an agreement could be arrived at over VAT, patience and negotiating perseverance could also banish the sales tax check-posts and take the country a little further down the road to becoming a single market.
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