Sima Seeks Karunanidhi Help Over Sales Levy

Southern India Mills Association (Sima) has asked Tamil Nadu chief minister, M Karunanidhi, to instruct sales tax authorities not to 'harass' the textile mills with regard to purchase tax on cotton.

In a statement here, Sima secretary P R Subramanian said that a large number of member-mills had been buying cotton from the Maharashtra Cotton Federation, and paying central sales tax on purchases to the Maharashtra government. However, the state government had refused to treat such purchases as inter-state, and had been demanding sales tax which was wrong, he claimed.

Some mills had obtained a stay order from the Madras High Court, and the sales tax assessments from 1991 onwards had been kept in abeyance, he added.

 

In spite of this, the authorities had taken up assessment for '1995-96 and 1996-97, and were demanding tax on cotton purchased from the Maharashtra Federation.

They were also imposing 100 per cent penalty on such purchases, he alleged.

When the mills filed appeals with the Deputy Commissioner of Commercial Taxes against the demand, orders were issued to pay 50 per cent of the tax amount demanded, and to furnish bank guarantees for the balance, he added.

Stating that the amount of liability of tax and penalty ran into crores of rupees, Subramanian alleged that the authorities were also threatening mills with recovery proceedings if they failed to comply with the order.

The predominantly cotton-based textile mills in the state were dependent on cotton from outside the state.

The industry was also facing a steep rise in cotton prices and sluggish demand for its products, he said.

Over two lakh workers were directly dependent on the industry.

Thousands of others in the powerloom, hosiery and handloom sectors were also dependent on the mills for their livelihood, the statement said.

Subjecting the textile mills, at this particular juncture, to the unfair demand of sales tax will push the mills into sickness and closure, rendering thousands of people unemployed and leading to disturbances in the industrial relations situation, Subramanian said.

Subramanian said that considering these factors, the chief minister should immediately instruct the authorities not to harass the mill owners.