In the Letters to the Editor column (April 26), T R Rustagi has given a reply to the points raised by me in my article dated April 7. I wish to clarify three points.
Constitutionality of the tax on MRP: Mr Rustagi has quoted some judgements to say that once the tax remains an excise, the measure need not be the wholesale value. I wish to state that retail price is removed from wholesale value by the commission for wholesale and retail dealers. This makes it lose its nexus with manufacture. Thereby, it ceases to be an excise duty.
Abatement: Sub-section 3 is as follows: The Central Govt, for the purpose of allowing any abatement under Sub-section 2, can take into account the amount of duty of excise, sales tax and other taxes. So there is provision for abatement of taxes. If the intention was to allow other elements, then the expression inter alia should have been there. Moreover, if abatement is given for commission to dealers, then in effect it becomes the wholesale price.
Administrative difficulty: The earlier notification 36/83 CE dt. 1.3.83, regarding cigarettes, was based on MRP. Excise officers started collecting evidence whenever cigarettes were sold at prices higher than the MRP. Cigarette companies started saying that they had no control over retailers. The excise officers said that the lower MRP prices were deliberately fixed. The premises of cigarette companies were searched. They were given a show-cause memo after which they went to court. The battle went on for 10 years. Now they have gone to the tribunal. The entire exercise is prone to abuse.
Since the finance minister is a lawyer, he should look into these legal issues and ensure that the government does not insist on repeating past mistakes.
