State Government has directed Nagpur Municipal Corporation (NMC) to impose Local Body Tax (LBT) in lieu of Octroi from April 1, 2013 and accordingly NMC has started registration process from March 13, 2013.
J. P. Sharma, President of Vidarbha Taxpayers Association (VTA) said that this is breach of trust by State Government by enforcing LBT; when MVAT was proposed in early 2000; to gain support of traders State Government had promised gradual withdrawal of all taxes including Octroi; however replacing Octroi with LBT or any other form of tax was never intended.
Sharma said, thereafter Government started announcing that Octroi shall be merged once Goods and Service Tax (GST) is enacted and the same was openly declared by many State Ministers including Chief Ministers in the past. Now when GST is most likely on verge of being implemented, State Government came up with this unique idea of replacing octroi with more burdensome act of LBT and is claiming as well as misleading that they have abolished octroi and introduced more trader friendly act
Tejinder Singh Renu, secretary of VTA said, ‘many citizens are under the impression that LBT is to be paid by traders and hence they are free of octroi, however they are under wrong notion as final burden of LBT will finally fall on the end users. Moreover not only traders, but as per the definition of dealer in LBT Rules, 2010 practically all whose turnover is more than Rs. 1 Lac and importing goods above Rs. 5,000 shall be required to get registered under LBT. Hence including Traders, Industrialists, professionals like Chartered Accountants, Doctors, Advocates, Transporters, Hospitals, Broker, Agent, Railways, Insurance & Financial Companies, Advertisement Agencies, Clubs, Central and State Government Departments which buys, sells, supplies, distributes or imports goods directly or otherwise and others are required to get registered under LBT.
Renu said, another area where we feel of being cheated is that when State Government framed Bombay Municipal Corporations (local body tax) Rules, 2010 under section 152T of the Bombay Provincial Municipal Corporation Act, 1949 (Bom LXI of 1949), Nagpur was governed by City of Nagpur Corporation Act (CNC), 1948 hence Nagpur never got opportunity to submit its suggestions and objections during the process and now State Government repealed CNC Act in 2012 and enforced LBT from coming month.
Sanjay K. Agrawal, Executive Body Member of VTA after carrying in depth study of the Maharashtra Municipal Corporations Act 1949, Constitution of India and LBT Rules, 2010 had prepared detailed points which point out short coming in procedure being followed by State Government in hurry and also various provisions which are contradictory and hence require legal estimation.
Vidarbha Taxpayers Association is in process of seeking legal opinion on this as well as other lacunas in said rules, including constitutional validity and if VTA finds any of the provision illegal, VTA shall challenge the same and seek justice by filling petition before Bombay High Court, Nagpur Bench well before 31st March 2013