The tussle between the pharmaceutical stockists and tax officials has resulted in an acute shortage of life-saving and other essential drugs in North Karnataka. | |
| The retail medical shop owners complained that the stockists had resorted to pressure tactics by not purchasing the drugs from the manufacturers and supplying to the retailers. The commercial tax officials have issued notices to the wholesalers across the state asking them to pay the tax arrears amounting to Rs 600 crore. |
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| According to the officials of commercial tax department the stockists had been collecting excess tax from retailers and not remitting the excess amount to the government. "This has been going on for the last eight years and came to light only when the VAT was introduced," said an official. |
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| The official said that it was an economic offence to collect excess tax. "Not remitting the amount collected to the government amounted to a criminal offence and pleading to waive the arrears is unjustified. They have collected excess tax amounting to Rs 600 crore from 1997-98 to 2004-2005. There is no way they can escape. The stockists have to pay the amount to the government," the officer asserted. |
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| Citing an example, the officer said that the tax imposed for a medicine worth Rs 10 was Re 1. The stockists charged eight paise more from the retailer who in turn charged the consumer. The stockist would remit to the government Re 1 and retain the remaining eight paise. |
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| The matter came to light with the introduction of VAT. While the officials were keen to investigate the matter and recover the money, the stockists allegedly approached the then finance minister Siddaramaiah and ensured that the probe did not progress. |
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| The issue was raked up when P G R Sindhia took over as finance minister. The stockists lobby got into action again and scuttled the probe. Now with B S Yediyurappa in the FM's seat the matter has come to the fore again. The officials have issued notices for the recovery of excess tax under section 18(A) of Commercial Tax rules. |
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| While the stockists want the matter to be settled amicably, the officials say there was no provision for such a settlement. |
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| "The retailers have to remit to the government the tax collected from the consumer," the officer asserted. |
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| As a result of the imbroglio, there has been a shortage of essential drugs like insulin. The drugs controller and inspectorate said that the artificial scarcity will be overcome with the department issuing the wholesale licences to the retailers. "They can directly purchase the drugs from the manufacturers without depending on the stockists. The supply position will be restored soon," the officials promised. |
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| Meanwhile, the association of medical representatives has submitted a memorandum to Karnataka Lok Ayukta justice Venkatachala seeking his intervention. The association feared that the state government may succumb to the pressure from stockists' lobby and waive the arrears. The association has urged the Lok Ayukta to ensure that the arrears were recovered and there was no shortage of drugs in the market. |
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