A happy new year to the
readers and given the situation, a safe one as well.
The Christmas season is also a business opportunity. Alert,
commercial taxes department decided to ensure that this festive
season no one evaded taxes. So, they literally got up early, went to
the interstate bus stop and caught a hapless passenger with a
suitcase full of Christmas decorations. He had no bill and the
INSPECTOR who had only the State’s interest at heart wanted to
collect the tax. We must all give this brave and committed officer a
standing ovation. He actually sacrificed his sleep and added a few
rupees to the States empty coffers. Meanwhile thousands of rupees
slipped in on trucks and even the roof of the bus.
We have been selling
SHAKTI tanks in this State for close to two decades. When we started
we had a level playing field. We were exempt from paying sales tax
for some years, and the competition did not pay tax i.e. available
without bill. Now, these tanks come into Goa not in a suitcase but by
the truckload. I know, I caught one and handed it over to the
Department. Unfortunately the officer concerned was not as energetic
as the bus stop inspector and the consignment was released, to be
sold without tax.
When India, joined the VAT
regime, we lost our level playing field. Now we pay the tax and our
competition continues to sell without bill. At that time Mr. A.T.
Kamat, Commissioner of Sales Tax asked industrialists to make a
sacrifice for the Nation and not oppose the loss of the sales tax
exemption. My question then is relevant today; when will the
Commercial Tax department start batting for the State/Nation and
begin doing their job and get every item to be sold on an invoice
with the taxes paid so every establishment has a level playing field?
I once gave another
Commissioner Mr. Pai Bir,"intel". He was told that a truck load
of tanks was headed to Goa and from the brand, I also told him it
would go to South Goa. Two hours later he called me, very upset. He
was waiting for the truck at the Margao end of Zuari Bridge with his
team and no truck was visible. One can only laugh because everyone
but this department knows that trucks cannot cross the Zuari bridge due to laod restrictions.
When you start your
business you will calculate the price that should be feasible in the
market. Now, on finding that adding the tax and doing business
legitimately puts your company at a disadvantage, many smaller
players opt to follow the same path i.e. sales without bill. Even if
caught, and the chances of that happening are slim, one can assume an
escape with a payment below the table. With such a low down side on
one hand and on the other hand a loss of market share if sold with
tax, what would you choose? This is exactly what the bus passenger
did – he bought without a bill, and would also sell without the
bill.
The other major hassle of
registering with the Commercial Tax dept. is the paper work. You have
to file returns, you have to go for assessments, you have to follow
up for C forms etc., and chair bound officials keep calling you to
remind you of the due date to deposit the VAT collected. If you are
unregistered, then no one knows you exist and therefore there is no
paperwork. Some businesses opt for dual model, show some sales
officially and rest in is cash. A la, best of both worlds.
Despite the many pluses of
avoiding VAT, I would suggest that each new start up and possibly
even those currently avoiding any kind of taxes, pay them in the
interest of your own growth and peace of mind. For your customer it
is “proof of purchase” and access to after sales service. It is a
bit harder but surely more profitable in the long run. As technology
advances, the playing field will become level, be there to take
advantage. For the customer this "proof of purchase" is very important in case he wishes to enforce his rights as a customer in case of a defective product. The customer should consider paying VAT as an insurance against a defective product.
In the meantime, petition
your local industry Trade body to force the department to make the
playing field level. Happy selling.
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