Trade tax leakage at rail stations to be plugged

For curbing tax evasion, the trade tax department is likely to set up checkposts at 48 major railway stations of UP. The issue is under negotiation between the trade tax department and the Railway Board.

A more than three-decade-old dispute between the Railways and the trade tax department is nearing a solution, following the recent verdict of the Kerala High Court in favour of the sales tax department of the Kerala government.

Following the High Court's judgment, the Centre had set up a three-member committee for suggesting a settlement of the issue. The trade tax commissioner of UP is a member of the committee.

The Railways have always resisted the move of state governments regarding monitoring the movement of goods transported by the Railways.

State governments want to set up checkposts at railway stations, which is being resisted by the Railway Board on the grounds that this would discourage traders, thus affecting the Railways' revenue from freight traffic.

"So far, three meetings have been held between the Railway Board and the committee and now the issue is pending before the cabinet secretary," said Rajneesh Gupta, UP's trade tax commissioner.

Gupta said several state governments had asked the Railways to furnish the list of parcels and the names of consigners and consignees, which was rejected by the Railways. This was challenged at the Kerala High Court, which ruled in favour of the Kerala government.

"The Railways remain the single-biggest source of the evasion of trade tax not only in UP but in all states," said Rajneesh Gupta, adding that "if the department is allowed to set up checkposts outside the parcel offices of railway stations, the revenue of the department could increase by at least Rs 500 crore in a year without undertaking any enforcement activity."

He said the modus operandi was simple as lakhs of parcels were received at major railway stations without carrying the name of either the sender or the receiver. These parcels are released by the Railways without identifying the receiver or the sender since they have already got their revenue, he added.

"Now we want to check this practice and we would ensure that the identity of the sender and receiver of the parcel is clearly established before the release of the parcel so that we get our revenue," said Gupta.

He said for 2006-07, the state government had set a target of realising Rs 15,000 crore as trade tax.

In the first month of the current fiscal, against the target of Rs 465 crore the recovery was over Rs 502 crore.