Telangana govt accuses RBI of violating AP Reorganisation Act, deducting Rs 1,274 crore

Hyderabad: Telangana government has urged Finance Minister Aurn Jaitley to direct the Reserve Bank of India to credit back Rs 1,274.21 crore in the account of state government, alleging the apex bank has "illegally" transferred the amount at the behest of the Income Tax Department.

The RBI has violated the AP Reorganisation Act and transferred the amount without any prior notice to state government, as per a representation submitted to Finance Minister Arun Jaitley in Delhi on Saturday by Telangana Minister for Panchayat Raj and IT, K Tarakarama Rao.

The deduction was in connection with a tax demand raised by the I-T Department on Andhra Pradesh Beverages Corporation (APBCL) before the state was bifurcated. The IT department has been arguing that the state government entity is liable to pay Rs 2,939 crore for the assessment years 2012-13 and 2013-14.

APBBCL carries out wholesale trading of Indian Made Foreign Liquor (IMFL) in the state.

Telangana government is arguing that APBCL falls under the Ninth Schedule and is due for bifurcation between AP and Telangana with specified shares.

"The above illegal action of deduction of an amount of Rs 1,274.21 crore by the Reserve Bank of Indian from the account of the state of Telangana at the instance of tax recovery officer is causing acute financial crisis to the state of Telangana," the memorandum said.

Citing an order by the High Court of Hyderabad, the minister said the recovery of the amount from the Telangana government's account is against the court's order.