MP pulse plants fined Rs 32 crore

A 20-year-old case of tax imposition on small-scale units has been haunting Madhya Pradesh Cabinet meetings for several months.

The Indore Agriculture Mandi Committee has demanded Rs 32 crore from 239 pulses-processing firms of Indore. The tax is due against the purchase of notified agri-products from within and outside the state between January 20, 1986, and February 7, 1990.

The MP government has imposed a mandi tax of Rs 3.62 crore, Rs 3.62 crore as penalty and Rs 24.58 crore as interest upon the principal.

Government officials said necessary documents and certificates were not submitted by the processors in compliance with Section 5 of the Mandi Fee Refund Rules, 1986. As a result, the mandi committee imposed a fine of Rs 14.53 crore by passing an order defining Section 21 of the Madhya Pradesh Agriculture Produce Mandi Act, 1972.

However, the law department has said that when the government has exempted the processing units from paying mandi fee for the said period, penalty and interests are just redundant details.

After a long discussion over the issue, the state Cabinet in its recent meeting deferred a decision.

"As of now, negotiations between politicians and dal processors are on to slash the tax, penalty and interests etc," a senior government official who participated in the Cabinet meeting told Business Standard.

The department of finances has also advocated imposing tax and penalty from the processing units.

A Cabinet committee, comprising Industry Minister Babulal Gaur, Finance Minister Raghavji and Forest Minister Himmat Kothari recommended levying a mandi fee on the processing units by considering it an exceptional case. The processors had also been asked to make payments within three months from the issuance of notifications. They will be refunded the amount which they have already deposited for the period.

It was unlikely that the issue would be discussed at the next Cabinet meeting, a government official said.