THIRUVANANTHAPURAM: The Finance Bill, 2017, which was passed in the Assembly on Thursday, has withdrawn the luxury tax imposed on gold retailers in the 2013-14 fiscal. The tax, which was said to be inadvertently included in the Bill in 2014, stacked up arrears of nearly Rs 2500 crore against jewellers in the state. The Comptroller and Auditor General’s office had even started raiding jewellers in the state to recoup the money. The Finance Bill had also relaxed the deadline for the submission of application for amnesty, for arrears until March 2011, under Value Added Tax Act, Agricultural Income Tax Act Act, and Tax on Luxuries Act from June 30 to September 30. The Finance Department expects to mobilise Rs 1000 crore from the amnesty scheme declared under all these laws, which will cease to exist once GST comes into force.
The total ‘purchase tax’ arrears (5 per cent purchase tax and 5 per cent penalty) from 2013-14 has accumulated to Rs 2476 crore (according to the latest CAG figures); a trader’s liability ranging from Rs 15,000 to Rs 150 crore. It was a “mysterious omission” in Finance Act 2014 that had put gold traders in the state in a fix. Till 2013, finance acts referred to ‘levy of tax on sale or purchase of goods’. The 2014 Act speaks about just levy of tax on ‘sale’ of goods, prompting the AG to see in this omission a legal scope to extract a tax on purchase. Traders resisted payment and had even launched a series of agitation measures.
Last time, finance minister Dr Thomas Isaac was non-committal about withdrawing the tax. He said he would go ahead collecting arrears though he would state off the record that the amount could not be realised. Isaac agreed to do away with the purchase tax on gold retailers with retrospective provided the opposition made such a demand. “It happened during the UDF regime and the initiative to scrap it should come from them,” he had said. This time, too, he did not propose the amendment in the Finance Bill, 2017. It was only after a consensus in the Subject Committee, peopled with both UDF and LDF members, that a clause was inserted in the Finance Bill to withdraw the purchase tax with retrospective effect.
