Nagpur Municipal Corporation (NMC) had called a meeting and invited all trade associations and chambers of commerce to discuss on proposed Local Body Tax (LBT) in lieu of Octroi from April 1, 2013.
Accordingly a delegation of Vidarbha Taxpayers Association (VTA) led by its President J. P. Sharma attended discussion and submitted oral as well as written notes of objection on proposed move to Municipal Commissioner Shyam Vardhane, also present in the meeting were Deputy Municipal Commissioner Sanjay Kakade, Assistant Municipal Commissioner Octroi Mahesh Dhamecha, Chief Accounts and Finance Officer M. N. Gadage and others officers of NMC.
J. P. Sharma President of VTA in his submission before Municipal Commissioner said, that VTA strongly objects to the proposed move by State Government to replace Octroi by far more cumbersome LBT. He said, unconfirmed reports say that as on date only other place other than Maharashtra to levy Octroi is Ethiopia. As over period of time, every country including every State in our Country abolished Octroi, however Maharashtra continue levy of the most obnoxious tax and this tax is in adding fuel to fire of inflation.
Sharma said, from time to time various committees has been formed by Government to prepare report on Octroi and all 13 committees so formed have recommended abolishment of octroi. These committees had submitted various other forms of revenue generating venues, which State Government did adopted at various levels, however failed to repeal octroi.
He also that during levy of Value Added Tax in early 2000, State Government had gained confidence of the traders that even octroi would be abolished in phased manner, although MVAT got enacted in 2006, however octroi like a termite is gradually destroying economy of all such cities were octroi is applicable in Maharashtra. Moreover when Government is on verge of enacting GST, wherein all indirect tax, including local taxes are to be merged into GST, why this new LBT is being imposed, which shall create another administrative office with working of few years.
Tejinder Singh Renu, secretary of VTA in his submissions said that in a meeting with Chief Secretaries of the States in 2011, Dr. Man Mohan Singh – Prime Minister had said that rising prices present a strong case for waiving octroi and other local taxes as inflation is posing a serious threat to the growth momentum of India and disproportionately affecting the poor. Even such recommendation by one of countries most talented economist has gone unheard and just for sake to mislead countrymen octroi is replaced by such arduous LBT.
Renu said octroi restricts free and fair movement of goods; moreover already traders are upset with plenty of compliances & record keeping as number of taxes and its provisions has already burdened traders and industrialists and another tax introduction in form of LBT is absolutely unacceptable. He said presently traders are able to compete with our markets by keeping goods outside city limits, however once LBT is enacted, all invoice raised shall carry LBT, irrespective of material actually coming into city. This would cause serious harm to the trader community of Nagpur city.
Sanjay Agrawal, secretary of Steel & Hardware Chamber of Vidarbha as well as executive body members of VTA said “Chapter–XI of Bombay Provincial Municipal Corporation Act 1949, consisting of Section 127 to Section 152 deals with various aspect of taxing powers of Municipal Corporations. We are of opinion that provisions of the Act expressly prohibit Municipal Corporations levying tax on sale purchase of goods. We are also of opinion that such tax by Municipal Corporations would be ultra-vires to Constitution of India. We reserve our right to agitate the issue further before appropriate forum in time to come”.
Concluding the memorandum VTA demanded from State Government that Octroi should be withdrawn without the same being replaced by any other form of tax or cess from Nagpur City and if State Government is hell-bent on keeping either octroi or LBT, we recommend Octroi to continue in its present form till the same is merged in GST. As LBT would evidently create a situation which shall cause more harm; in other words it would create a position of frying pan to fire.
Before NMC could show its presentation on LBT to the traders; all office bearers of Chambers of Commerce and Trade Associations submitted oppose on LBT and refuse to watch and listen presentation on LBT.
Municipal Commissioner Vardhane recorded all say by the traders and accepted to convey to the State Government that traders of Nagpur City are totally against LBT.