SEZs tax issue hangs fire

 Senior government officials said Revenue Secretary Vineeta Rai and Commerce Secretary Dipak Chatterjee, who met on Monday to resolve the contentious issue of vesting fiscal powers with the commerce ministry as proposed in the draft SEZ Bill and finalise tax rules announced in the Budget for 2003-04, could not bury their differences.

 While the revenue department is of the opinion that all tax-related matters are to be decided by it, commerce ministry officials contend that according to the allocation of business, all matters related to SEZs, including tax related issues, fall in its domain.

 The commerce ministry wants to provide a single window mechanism for SEZs and proposes to vest powers of various departments and regulatory agencies with the development commissioner or the chief executive of a zone.

 The two departments have been squabbling over the matter for the last few years with the commerce department accusing the revenue department of not operationalising benefits announced in successive Budgets and exim policies.

 The differences between the two departments have resulted in the government postponing the notification of consolidated Customs and excise rules for special economic zones by two months to October 15.

 A consultation mechanism had been set up for the two ministries to iron out the differences on the notifications, which were to be originally issued by August 15 but even the new deadline is set to be missed.

 Officials, however, played down the issue said that the draft notifications have been sent to the revenue department field formations and the rules would be in place shortly.

 On the issue of who would have the fiscal powers governing SEZs, officials said that the matter will be taken up by the Cabinet and the ministers would deliberate on the matter.