The Times of India          07.10.2010

Civic panel restores 3% octroi on gold

PUNE: After a prolonged tug of war between the city gold merchants and the Pune Municipal Corporation, the standing committee on Wednesday cancelled its earlier decision to charge .35 per cent (35 paise per 100 rupees) octroi on VAT for gold and restored the earlier octroi charges of 3 per cent (Rs 3 per 100 rupees).

"The standing committee has decided to restore the old rate. Once the general body (GB) approves the same, 3 per cent octroi will be charge on gold and 1 per cent (Rs 1 per 100 rupees) on silver," standing committee chairman Arvind Shinde told reporters. While the NCP opposed the proposal, other parties, including Congress, BJP, Shiv Sena and Maharashtra Navnirman Sena (MNS), supported the same.

In March, the standing committee had decided to impose .35 per cent octroi on VAT for gold and the state government accordingly had issued a government resolution (GR). However, last week, the committee decided not to execute the GR till 121 gold merchants pay a collective fine of Rs 330 crore for evading octroi on gold brought into the city in the financial year (FY) 2009-10.

"We have nothing against the gold merchants. All we want is that they pay octroi. But, they are personally targeting me. I am ready for a CID probe and challenge the gold merchants to come forward for the same" said Shinde.

It may be noted that in February, this year, after discussions with the gold traders association, the PMC had decided to charge .35% octroi on VAT for gold. However, in June, the sales tax department informed the PMC that for 2009-10, Rs 1,500 crore was filed as tax returns by gold merchants. Of that, Rs 1,200-crore worth gold was brought into the city and a trading of Rs 300 crore was done. Simultaneously, the PMC also found that as against its expected collection of Rs 35 crore from gold octroi, only Rs 5 crore was collected. The tax department then told the merchants to furnish details of their gold dealings, but did not receive any response.

The consequences were -- first, the department served notices on 121 merchants, charging them a collective fine of Rs 330 crore. Second, the standing committee approved a resolution that the octroi rates will not be executed till the fine was paid. Around two months ago, the merchants approached the state, demanding that the new octroi rates be executed immediately. The state issued a GR on September 18 saying that the new rates be charged starting October 18.

Fatechand Ranka, president of the Pune Saraf Association, had recently said that the standing committee has no right to overrule the GR, since they had already approved the new rate. Evasion of octroi and execution of the GR are different matters. The association had claimed that neither have the gold merchants done anything illegal nor have they evaded octroi. However, some corporators are deliberately defaming them.