CAG recommends tax on sugar in MP

The comptroller and auditor general (CAG) of India has said the Madhya Pradesh (MP) government should levy the value added tax (VAT) on fabric, sugar and tobacco. In its report for the year ending March 31, 2009, tabled today in the state Assembly, CAG said, “Fabric, sugar and tobacco products are tax-free goods, unless additional excise duty is levied on them under the Central Excise And Tariff Act 1985. Since the central government has exempted these goods from the additional excise duty from March 2006, they are now eligible to be taxed at the rate of 4 per cent.”

The report has also recommended to make amendments in the VAT provisions of the act to check losses in revenue. The CAG has said in its pre-VAT (2003-2006) and post-VAT (2006-2009) audit, that there was a loss of revenue due to lack of certain provisions — name of commodities, in the form prescribed for filing return, has been observed as missing. “As most of the cases under the VAT regime are to be covered under self-assessment, it is not understood how the department plans to scrutinise returns in absence of such details,” said the report.