Big guns lose commercial tax respite in Madhya Pradesh

Some corporate houses in Madhya Pradesh will be stripped off commercial tax exemption facility granted by the previous government under 'special cases'.

Hindustan Coca Cola Beverages Pvt Ltd; Pouched; Bajaj Tempo (now Force Motors), Pithampur; Hotline Teletubes and Components Ltd, Malanpur; Bharat Environment Projects Ltd, Bhopal (to produce power from municipal waste); Saurabh Metals Pvt Ltd, Bhopal; and Rajshree Plastiwood, Pithampur, have been piling on a huge amount of tax since the concessions had been withdrawn.

In some cases, tax exemptions were more than 250 per cent of the total investment.

Bajaj Tempo, according to a highly placed source in the MP government, had been offered Rs 77.55 crore tax exemption since September 2002 for nine years; Hotline Teletubes Ltd had been offered a tax exemption of more than Rs 200 crore for a period of 11 years from March 30, 2004; Hindustan Coca Cola Beverages Pvt Ltd had been offered a tax exemption of Rs 78.70 crore with effect from November 1, 2001, for nine years; and Saurabh Metals got tax exemptions of Rs 4.1 crore for nine years.

"These companies have taken a part of the tax exemptions, and now the facility has been discontinued, and the department will recover the remaining part of the tax and the companies will have to pay tax now onwards," said GP Singhal, principal secretary, commercial tax department, adding, "in fact the companies got tax exemption on condition they'd do so till the implementation of the value-added tax (VAT) in the state".

According to existing the Industrial Promotion Policy Provisions, 2004, mega projects or projects of special importance with infusion of modern technology and management could be given special financial or other concessions by the apex investment promotion empowered committee, headed by the chief minister, on a case-by-case basis, keeping in view the requirements of such projects and resources of the MP government.

Similarly, for firms with a permanent capital investment between Rs 1 crore and Rs 10 crore, 50 per cent amount of the commercial tax and central sales tax deposited by the unit (excluding commercial tax on the purchase of raw material) is given as industry investment promotion subsidy. This subsidy is adjusted against the tax payable for the next year.

While companies making permanent capital investment of over Rs 10 crore, 75 per cent amount of the deposited commercial tax and central sales tax is given as industry investment promotion subsidy (excluding the commercial tax on purchase of raw material).

This amount is also adjusted in the tax payable for the next year.