Bengal fails on export VAT returns

Export units in West Bengal are yet to get VAT refunds though almost three years have passed since the tax regime was rolled out in June 2005.

Exporters said refund worth Rs 325 crore was pending with the government.

Pending dues of engineering sector exporters were worth Rs 225 crore followed by leather and handicrafts exports worth Rs 80 crore and Rs 30 crore respectively.

Exporters from these sectors had raised exports expecting speedy VAT refunds.

The lack of refund had eroded their working capital.

"West Bengal government has failed in its commitment to provide timely VAT refund from funds it has accumulated from the day the act was implemented. Despite several appeals to the tax commissioner, the situation remains unchanged," said Ganesh Kumar Gupta, president Federation of Indian Export Organisations.

In addition to this the VAT refund claims of the year 2005-06 would be time barred in March 2008, thus making the claims redundant.

"In the states like Tamil Nadu, Andhra Pradesh and Maharashtra VAT is refunded within 90 days of the submission of the claim, and so this could have a ripple effect as potential investors will shy away from West Bengal on hearing that VAT refunds might not come," he said.

FIEO also pitched for a stable currency as the rupee appreciation has affected the export sector.

The FIEO president urged the government to have an exchange neutralisation fund, exclusively for the exporters, to provide relief.

"Exporters will be credited with the exchange rate as determined in this connection and the gain due to rupee depreciation will be pooled in an exchange neutralisation fund which can be used when there is appreciation of rupee. In case there is no balance in the fund, the same should be met by the government, which may also make an initial contribution to start the fund," Gupta added.

According to him government should contribute Rs 5000 crore to start the fund.