Scheme for VAT defaulters

The state government will offer a bonanza for VAT defaulters before the rollout of GST from July 1. The government is drafting a one-time settlement scheme for the defaulters with the aim of closing the VAT arrears issue before the GST regime comes into force.

Various industries and traders owe nearly `4,000 crore in VAT arrears to the government since 2005. Several of these cases have landed up in legal tangles, making the recovery process difficult for commercial taxes department. The defaulters have approached VAT tribunals and higher courts seeking exemptions on various grounds.

Under the proposed amnesty scheme, such industries and traders have to withdraw cases. The government will waive the interest on arrears, penalty and interest on penalty.

Officials expect the move could benefit defaulters by up to `2,000 crore, while the government would recover `2,000 crore. The government feels that recovering the `2,000 crore arrears, which have been pending for years, within a short span is a big gain.

“We want to start the GST regime with a clean slate by resolving VAT arrears and disputes. We are negotiating with industries including PSUs which owe huge arrears. Some have filed cases in the High Court and the Supreme Court. Efforts are being made to persuade them to withdraw cases and utilise the amnesty scheme,” said Mr Somesh Kumar, principal secretary, commercial taxes department.

He said there were some deferrment cases amouting to `1,300 crore, which could be cleared in five to 10 years. These too would be sorted out in the amnesty scheme.

The government has made several attempts earlier to recover arrears. It has even made the list of defaulters public and threatened to invoke the RR Act, seize and auction properties to recover arrears. Nothing move the defaulters.

OFFICIALS expect the move could benefit defaulters by up to `2,000 crore, while the government would recover `2,000 crore.