State agency will recover trade tax arrears

Saddled with outstanding arrears of over Rs 4,400 crore, the trade tax department of the Uttar Pradesh government has decided to outsource the recovery of dues.

The department has chosen the Pradeshiya Industrial Corporation of UP (PICUP), the premier industrial finance agency, for the purpose. PICUP is already performing this task for various public sector banks.

Recovery operations by PICUP are likely to begin as soon as the state government approves the proposal. PICUP will charge 10 per cent of the recovered amount.

The trade tax department will provide the list of defaulters to the recovery agency. PICUP will attach their properties and will be responsible for its security. After the evaluation of the attached properties, PICUP will conduct the process of disposing of the properties in the market by auction and other methods.

"We have decided to hire the recovery agency because the traditional method of realising the arrears as land revenue proved too cumbersome and the recovery was poor," said Avneesh Awasthi, trade tax commissioner.

He said in 2004-05, the total recovery of outstanding arrears was only Rs 307 crore, against the arrears of Rs 4,136 crore. The arrears have now mounted to Rs 4,433 crore on April 1.

Awasthi said being a state PSU, PICUP was an experienced organisation in the task of recovery of loans. He said the tax recovery machinery of the department would continue to work as usual.

The moveable and immoveable assets already attached by the trade tax department in 14 districts would be handed over to PICUP to be disposed of. PICUP would design the publicity campaign before the auction. It would be the overall responsibility of PICUP to find a suitable buyer.

Till April 1, trade tax department has issued recovery certificates for realizing outstanding tax arrears of Rs 4,433 crore.

Tax arrears are steadily mounting even as the trade tax is the major sources of revenue for the state government. In 2004-05, total receipts from trade tax were Rs 9,226 crore and the target for the current fiscal has been fixed at Rs, 11,650 crore.

For the benefit of the defaulters the trade tax department has launched compounding scheme where a part of the penal interest and 100 percent penalty amount imposed on the principle amount was waived off.

A senior official of the department said the compounding scheme is being revised for making it more attractive for the defaulters and ultimate aim of liquidating the arrears.