| Highly placed sources in the state power department said the notification was issued after consultation with the industry. This was demanded by the captive power producers. |
| The move was thought to be beneficial for the Maharashtra State Electricity Distribution Company Ltd (MSEDCL) as it could then purchase energy from captive producers along with other linked sources such as NTPC and Tata Power. The power crisis can be handled if captive power generators are allowed to wheel their power in the regional grids, said a senior MSEDCL officer. |
| "The exemption could have reduced the production cost of energy by almost 25 per cent for captive producers," he said. |
| The state finance ministry said that there is no provision in the VAT regime to allow such an exemption. |
| "Even, the finance department was not empowered to exempt any commodity from the VAT. The power ministry does not have any authority to do so," said a senior finance ministry official. |
| Tax collected through petroleum products forms a major part of the state's sales tax.Of Rs 20,400 crore collected last financial year, 25 per cent came from petrol, diesel, furnace and lube oil, said a sales tax official. |
| The power ministry has been asked to withdraw the notification. A meeting to discuss the issue was held last week and the power ministry was asked to look for other ways to overcome the crisis. Sales tax (now VAT) is charged at the rate of 12.5 per cent on which 4 per cent can be claimed. |
| "A meetnig is also scheduled to be held with the state's chief secretary and it is expected that the issue would be sorted out soon," said another power ministry official. |
| If the exemption is allowed or even extended beyond June 2006, captive power plants may reduce the burden of Maharashtra's power generation utility. |
Top Section
Explore Business Standard