Important
Act for SSIs withdrawn discreetly
Federation of Indian Micro and Small
& Medium Enterprises (FISME) has accused the central government
of discreetly repealing one of the most important Act for
SSIs. According to President of FISME, Mr. Dinesh Singhal
the entire amendment Act of 1998 of the 'Interest on Delayed
Payments to Small Scale and Ancillary Industrial Undertakings
Act (1993 ) has been repealed by the government without informing
even the Ministry of SSI.
It may be recalled that
the Act was brought into force in 1993 to address the chronic
working capital problems of the SSIs. To strengthen the provisions
of the Act, a crucial amendment was effected in 1998 which
provided the necessary 'teeth' and which led the establishment
of mechanism of Facilitation Councils in the states to dispose
off the cases speedily. Such councils were established in
more than a dozen states. The efforts started paying off and
many SSIs could get their bills paid due to the intervention
of councils. In U.P. alone at least in 10 cases large defaulters
paid their bills at presentation of notice itself and cases
involving more than Rs. 2 crore were decided through the Facilitation
Council in favour of SSIs.
The crucial amendments of
the Act of 1998 that have now been repealed through the Repealing
and Amending Act no. 30 , 2001 contained the following important
provisions:
a. Payment of bills of SSIs to be made within 120 days
b. If delayed beyond 120 days the buyer was made to pay the
interest @one and half times the PLR of SBI from the date
agreed upon
c. To expedite the cases States were suggested to establish
Facilitation Councils (verdict of which could only be challenged
in Higher Courts )
When further efforts were
afoot by the Committee formed in Ministry of Small Scale under
Joint Secretary, to strengthen the mechanism by suggesting
certain amendments in the Companies Act and in Income Tax
assessment provisions, suddenly Government withdrew the amendments
of the principal Act itself. According to FISME, the manner
in which the abolition exercise was carried by the Government
smacks of foul play. What is even more worrying is that Ministry
of Small Scale Industry is not even aware of the development!
Mr.
Singhal informed that FISME has represented the matter to
the Prime Minister Shri Atal Behari Vajpayee. This is the
development that would effect the lives of millions of small
entrepreneurs, he added. FISME has demanded from the Prime
Minister that the repealing of the Act be quashed and further
efforts be made to strengthen the provisions of the delayed
payment act.
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States`
VAT draft nullify benefits of VAT
Date: 31.01.2003
1st April 2003 could, indeed,
make businesses an `April fool`. As the date of implementation
of Value Added Tax (VAT) gets near, most states have released
their draft legislation. Close examination of VAT drfts of
states, however, reveals that significant benefits of the
new VAT regime have been nullified by inclusion of clauses
that are quite contrary to the spirit of VAT. According to
Mr. Dinesh Singhal, President of Federation of Micro and Small
& Medium Enterprises (FISME), it was like implementation
a 21st century concept with 16th century mindset.
From the transitional issues
(during the period of transition from Sales Tax regime to
VAT regime) to crucial issues as Tax threshold, point of taxation,
definitions, registration procedures, powers of Tax authorities,
penalties and appeals have been formulated through a colonial
mindset and would lead to chaos at the very outset. He said
that industries by and large have been demanding VAT as they
thought that it would make industries more competitive by
reducing cascading effect of Taxes, reduce cost of doing business
and make India one market. "Whereas the desirability
of VAT remains unquestioned, the proposed drafts are nowhere
near to reach the objectives", he said. He further warned
that VAT, as proposed, could in fact, increase inspector raj,
harassment and corruption, fragment the Indian markets further
and increase cast of doing business.
During the open house on
VAT organized by FISME with 32 associations highlighted serious
flaws in the draft legislation of states.
Delivering
the key note address, Prof. M. K. Purohit-ex. Member Secretary
of the Empowered Committee of State Finance Ministers on Sales
Tax Reforms, said that States had resorted to different classification,
different definition and different rates for same or similar
items and the most important VAT principle of homogeneity
of rates, rules and systems had been grossly impaired. The
states had contravened the very spirit of VAT, he said, by
proposing archaic practices as Entry Tax and physical verification.
A shift from ST to VAT regime obligates complete transformation
of presentST administration and equipping it with advance
IT infrastructure. Most states have not shown any urgency
in this regard., he added.
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FISME
asks for amendment in Customs notification to resolve the
DEPB controversy
Federation of Indian Micro and Small
& Medium Enterprises (FISME) has asked for issuance of
a new Customs notification for exemption of Special Additional
Duty (SADD) to resolve the controversy that DEPB could not
be used for payment of SADD . The recent interpretation by
some officers have created a stir among the a very large number
of exporters as well as importers.
According
to FISME the current EXIM Policy 2002-07 provides for DEPB
scheme under Chapter 4 Para 4.3 which was earlier in a different
chapter- chapter 7. To operationalize the scheme the customs
has also issued their Notification 45/ 2002 Dt. 22.04.2002.
However, the customs has not issued a fresh notification on
exemption from SADD after change of the chapter on the lines
of earlier Ntf. no. 23/2002 dt. 01.04.02(sl.no.60) (as amended
upto date). It is the absence of this exemption notification
that is giving rise to mis-interpretation and speculations.
It may be recalled that
the DEPB scheme was introduced by DGFT in the EXIM Policy
1997-2002 for the first time. After imposition of special
additional duty (SADD), in the budget proposal for 1998-99@
8% which was subsequently reduced to 4%, to offset the impact
of the SADD, it was allowed to be exempted from payment of
customs duty if paid through DEPB. It was done to avoid upward
revision DEPB and accordingly a requisite Customs notification
of this effect was issued.
FISME has stressed that
in absence of the exemption notification on SADD, DEPB would
be selling at discounts and the very purpose of DEPB scheme
would be lost. It has further said that if the exemption notification
is not issued in time, the DEPB rates would be required to
be revised upwardly to offset the impact of the SADD which
is a lengthy and time consuming exercise. Since SADD is non-modvattable,
in addition to DEPB, the exporters will be required to go
for cumbersome procedure of fixation of brand rates of draw
back for reimbursement of duty of SADD suffered in export
production. This is nearly impossible for Small Exporters.
Besides, this will
lead to host of issues related to exports already effected
on the basis of EXIM policy in force at that time in anticipation
of DEPB, the cut off date problem as DEPBs are claimed on
post-export basis and realization of export proceeds etc.
| DEPB scheme in EXIM Policy(Col.1) |
Corresponding Custom notf. for
exemption (Col 2) |
Corresponding Customs Ntf. for exemption
of SADD |
Remarks |
| EXIM Policy 1997-2002 Chapter no. 7
Para 7.25Allows customs duty credit against
DEPB |
Notification 34/97 dt. 7.04.97 Allows debiting
of duty credit as mentioned in EXIM policy
(col. 1) |
Ntf. no. 23/2002 dt01.04.02(sl.no.60)
amended upto date iAllows exemption of payment of SADD
if paid per Ntf. 34/97 dt. 7.04.97 (col .2) |
The scheme functions smoothly.DEPB
commands premium above 10% |
| EXIM Policy 2002-07Chapter 4Para 4.3Allows
customs duty credit against DEPB |
Notification45/2002Dt.
22.04.2002Alsoallows debiting of duty credit as mentioned
in EXIM policy (col. 1) |
Corresponding customs
exemption notification not issued/ amended
.
Corresponding customs exemption notification not
issued/ amended . In absence of it appears SADD exemption
is not allowed |
Circular no. 24/2002
customs dt 6.05.02issued by Sr. Tech. Officer (DBK)
appears to confirm SADD will also be debited in DEPB
scrip; hence no exemption.DEPB set to be sold at discount
by about 10%
|
Bact
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