The various Industrial Units/Transformers units were set up in Punjab for the Development of State and the material was being purchase locally by various Punjab consumers & PSEB (now PSPCL/PSTCL). All the manufacturing units beside other taxes have to pay Punjab VAT @ 5.5% or 13.75% depending on item to item. However, in the adjoining states, the manufacturers pay only CST @ 1% or 2% only against their supplies to PSPCL/PSTCL Punjab as these are registered VAT dealers. Therefore they are eligible to purchase the material from outside states against form- C, while they do not sell the transformers any further. Under such purchase pattern, the manufacturing units of Punjab have to suffer a rate disadvantage ranging from 3.5% to 12.5% depending upon item purchased and the state from where it is purchased. The maximum disadvantage is suffered against goods manufactured in neighboring hill states. Under present cut throat scenario of competition the Punjab Based units are on the verge of closure as this difference in rates is much more than profit margins.
Recently, in order to nullify this discrepancy so that the Punjab based industry could be revived, the Govt. of Punjab levied entry tax @ 5% or 12.5% upon the goods imported from other states in the state of Punjab. But this also has been stayed by Hon’ble High Court. Once again the state based units have been exposed to bear the brunt of this disparity. This being a statutory discrepancy, it warrants reddressal by Govt. of Punjab only. If left untouched it will have serious ramifications for the state:
- The related small scale sector will be wiped out; resulting in widespread unemployment. This is particularly relevant as most of public sector vendors are located at industrially backward areas. - Under the present policy Punjab Govt. is also losing a significant chunk of revenue in the form of loss of VAT collection because Punjab State Power Corporation Limited / Punjab State Transmission...
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