3.1  Honourable Members, in order to ensure that this deficit does not affect the full realisation of plan outlay, there is an urgent need to minimise this deficit through mobilisation of additional resources. However, my objective is not simply to raise resources but also to help create, through the proposals on mobilisation of additional resources, an enabling environment in which the State can grow faster in agriculture, industry and trade with as high generation of employment as possible. In my tax proposals, therefore, special emphasis will be placed on simplification of rules and procedures, rationalisation of tax structure and improvement in the tax administration through introduction of e-Governance so as to promote growth of agriculture, industry and trade and ensure better tax compliance.
   
3.2  Expeditious disposal of applications for registration of dealers under the West Bengal Value Added Tax Act, 2003 has been one of the major priorities of the State Government. For this purpose, two computerised Central Registration Cells have been established in the Directorate of Commercial Taxes. The dealers can obtain registration on the same day of making applications to these Cells. This apart, in order that dealers do not face any difficulty as a result of occasional delay in disposal of application for registration, a provision has been introduced in the West Bengal Value Added Tax, 2003, according to which if the application of a dealer for registration is not disposed of within a period of 30 days, he will be deemed to have been automatically registered. These measures have resulted in a significant increase in the number of registered dealers. I am happy to  mention that since the introduction of Value Added Tax (VAT) with effect from April 1, 2005, about one lakh new dealers have been registered and the total number of registered dealers has now reached a figure of 2.08 lakh.

3.3  Honourable Members may recall that dealers who became liable to be registered but who were avoiding registration as the penal provisions were acting as a deterrent were given a one-time opportunity to get themselves registered by simply submitting a self-declaration and paying the tax. Although a number of dealers have used this opportunity, I am aware that there are still some dealers who are otherwise liable to pay tax but are finding it difficult to get themselves registered as they have already incurred a huge tax liability. I, therefore, propose to give such dealers a last opportunity of registration by making application on or before September  30, 2008 and paying tax at the rate of 0.5 per cent of their total annual turnover of sales calculated from the date of accrual of liability for registration. I am sure that all dealers who are liable to be registered but who are yet to get themselves registered will make full use of this highly liberal scheme of registration.
   
3.4  At present registered dealers whose annual turnover exceeds Rs. 40 lakh are required to submit an audit report by a Chartered Accountant or a Cost Accountant. It has been brought to my notice that small dealers are finding it difficult to comply with this
provision. To provide relief to such dealers, I propose to increase the limit of annual turnover for the purpose of submission of audit report by a Chartered Accountant or a Cost Accountant from Rs. 40 lakh to Rs. 1 crore. Accordingly, dealers whose annual turnover does not exceed Rs. 1 crore will not be required to submit any audit report either by a Chartered Accountant or a Cost Accountant.

3.5  Under the West Bengal Value Added Tax Rules, 2005, a registered dealer whose total purchase in a year exceeds Rs. 40 lakh is required to submit, within sixty days from the closing of the accounting year, an annual statement of such purchases along with the names and registration numbers of those dealers from whom goods have been purchased. Since the details of purchases exceeding Rs. 50,000 are now required to be submitted along with quarterly returns, I propose to dispense with the requirement of submission of annual statement of purchases.

3.6  Under the existing provisions of law, 100 per cent export-oriented units as well as units which export at least 75 per cent of their goods are eligible to get refund of input tax in respect of the quantity exported at the pre-assessment stage. Instance of delay in getting timely refund of such input tax have been brought to my notice. I propose to streamline the procedure for payment of refund through necessary amendments in the West Bengal Value Added Tax Rules, 2005 so that 50 per cent of the admissible amount of input tax is refunded to the exporters, after scrutiny of the returns, within one month of receiving application, and the balance amount is refunded, after verification of the returns, within five months thereafter.

3.7  Honourable Members are aware that a new mechanism for settlement of certain types of disputes has been put in place through the setting up of a Settlement Commission. Cases relating to the West Bengal Sales Tax Act, 1994 and the West Bengal Value Added Tax Act, 2003 as well as those relating to the Repealed Acts, namely, Bengal Finance (Sales Tax) Act, 1941 and the West Bengal Sales Tax Act, 1954 and other repealed Acts fall within the scope of the Settlement Commission. I propose to extend further the scope of the Settlement Commission by bringing pending cases under the Central Sales Tax Act. I further propose to extend the cut-off date for assessment for the purpose of settlement from June 30, 1997 to June 30, 2000 so that pending appeal or revision cases against orders of assessment passed on or before the 30th day of June, 2000 can also be brought up before the Commission for settlement.

3.8  Honourable Members, I have always placed emphasis on prompt disposal of litigations and settlement of disputes. With this objective, a scheme of one-time settlement of disputes related to sales tax pending in various appellate fora was first introduced in the year 1999-2000. A modified scheme of settlement of disputes was again introduced in the year 2003-04. A further opportunity for settlement of disputes was given in the year 2006-07. While a large number of dealers have  benefited from these one-time settlement schemes, review of the number of pending appeal and revision cases has prompted me to propose, once again, a very attractive scheme of one-time settlement of disputes for all pending cases under the West Bengal Sales Tax Act, 1994, Central Sales Tax Act, 1956 and other Repealed Acts so that concerned dealers get yet another opportunity to get their disputes settled on payment of a certain fraction of the disputed tax, which will be 25 per cent if the disputed tax does not exceed Rs. 2 lakh and will progressively increase to 40 per cent with increase in the amount of disputed tax, along with a nominal interest, depending on the date of settlement. Details of the scheme will be provided in the Finance Bill. This measure is expected to yield an additional revenue of Rs. 30 crore in the next financial year.

3.9  Honourable Members, I have already mentioned that improvement of tax administration through introduction of e-Governance is one of my major priorities. I am happy to announce that considerable progress has been made in this regard. Electronic Filing of returns has been introduced during the current financial year for dealers whose annual tax liability exceeds Rs. 5 lakh. This facility will be extended to other dealers during the next financial year. In addition, a facility for electronic payment of tax by dealers at their option is also being developed in coordination with selected scheduled commercial banks. This will be operational during the next financial year.
   
3.10  I am also happy to inform the Honourable Members that a project of upgradation of five major check-posts in the State has been initiated. Most of the vehicles carrying goods from other States to West Bengal have to pass through these check-posts. By installing modern way-bridges and necessary electronic and communication devices at these check-posts, it will be possible to reduce the detention time of vehicles, while ensuring tax compliance by importers of goods. The infrastructural facilities at the check-posts will also be improved for the convenience of the transporters as well as the personnel of the Commercial Taxes Directorate.
   
3.11  My attention has repeatedly been drawn to the difficulty being faced by dealers in getting way bills from various offices under the Directorate of Commercial Taxes. While there is a need for regulating the issue and monitoring the utilisation of way bills as these are important instruments for tracking entry of goods from other States into West Bengal, we must ensure that the bonafide requirement of dealers is met in a prompt and transparent manner. For this purpose, the entire scheme of way bills is being reviewed. The Directorate of Commercial Taxes is working with the National Informatics Centre (NIC) for developing a transparent process for issuance of way bills and their utilisation using information technology.

3.12  For the purpose of verification of inter-State transactions, following a decision taken by the Empowered Committee of State Finance Ministers, a Taxation Information Exchange System has been developed. The success of this system depends upon regular uploading of data relating to issue of ‘C’ Forms and other Central Sales Tax (CST)-related Forms by all States. West Bengal has been uploading such data regularly. If all other States also upload similar data, issue of ‘C’ Forms and other CST-related Forms will become much easier. The position is being constantly reviewed by the Empowered Committee.

3.13  Honourable Members may recall that in my budget statement for the year 2006-07, I emphasised the need for evolving a policy on trade, the major components of which would be simplification of existing procedures relating to registration, payment of taxes, filing of returns and annual assessments. As already mentioned, significant progress has been achieved in this regard over the last two years. Time has, therefore, come to put in place an institutional mechanism by which these aspects of the trade policy can be reviewed on a sustained basis and improvements can be brought about wherever necessary and feasible. For this purpose, I propose to set up a Consultative Committee with representation from the Directorate of Commercial Taxes, concerned departments of the State Government and trade bodies which will not only deal with the tax-related issues on a regular basis but will also address, in coordination with the concerned authorities, the various problems which the traders face in the course of their business.

3.14  Honourable Members may recall that while presenting my budget proposals for the year 2007-08, I made a general statement that if a particular commodity is found to be used as an industrial input, the rate of tax on that commodity will be reduced from 12.5 per cent to 4 per cent. I now take this opportunity to inform the Honourable Members that several commodities have since been found to be used as industrial inputs. These are pre-cured tread rubber, vulcanizing solution and cushion gum, zinc dross, pre-sensitised aluminium lithographic plate, yeast, wire mesh and expanded wire-mesh. I accordingly propose to reduce the rate of tax on these commodities from 12.5 per cent to 4 per cent.

3.15  Road roller is an important machinery used in the construction and improvement of roads. Construction and improvement of roads has been accorded a high priority by both Central Government and the State Governments as roads constitute an important infrastructure for development. To encourage the production of road rollers, I propose to reduce the rate of tax on road rollers from 12.5 per cent to 4 per cent. I propose to reduce the rate of tax on shoes with maximum retail price not exceeding Rs. 750 from 12.5 per cent to 4 per cent. I propose to bring tailoring items like eyes and hooks, collar band pattis and  butterfly collar stays under the 4 per cent tax-category. These are now taxed at the rate of 12.5 per cent. To give relief to small biscuit manufacturers, I propose to reduce the rate of tax on biscuits not manufactured in factories defined under the Factories Act from 12.5 per cent to 4 per cent. Kerosene stoves are mostly used by poor people. I propose to reduce the rate of tax on kerosene stove from 12.5 per cent to 4 per cent. I also propose to bring camphor, which is now taxed at 4 per cent, under the exempted category.

3.16  Honourable Members may recall that the West Bengal State Tax on Consumption or Use of Goods Act, 2001 was enacted in order to prevent the possibility of trade diversion from this State on account of lower tax rates on certain commodities in other States. After introduction of value added tax, tax rates have become uniform all over the country. As a result, this Act is no longer relevant. I, therefore, propose to repeal the West Bengal State Tax on Consumption or Use of Goods Act, 2001 with effect from April 1, 2008.

3.17 Honourable Members are aware that in terms of an agreement reached between the Union Finance Ministry and the State Governments, the Central Sales Tax (CST)  is to be phased out completely by the year 2010-11, since this tax is distortionary and incompatible with value added tax. As a part of this process, CST was reduced from 4 per cent to 3 per cent with effect from April 1, 2007. The States are being compensated for the loss of revenue on account of reduction of CST according to an agreed compensation package. It has been announced in the Union Budget for the year 2008-09 that the CST will be further reduced to 2 per cent with effect from April 1, 2008 and a notification in this regard will be issued after an agreement is reached between the Central Government and the Empowered Committee of State Finance Ministers as regards the compensation package for the next financial year. I also take this opportunity to inform the Honourable Members that on the request of the Ministry of Finance, Government of India, the Empowered Committee of State Finance Ministers has been developing a model along with a road map for introduction of Goods and Services Tax in the country with effect from April 1, 2010, and there has already been considerable progress in this regard.

3.18  Under the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1979, persons whose monthly salaries or wages do not exceed Rs. 1,500 are exempted from payment of profession tax. To give relief to more people with low salaries and wages, I now propose to raise this limit to Rs. 3,000 per month.

3.19  West Bengal has a significant potential for growth of tourism. The State Government will soon announce a tourism policy for comprehensive development of tourism in the State. As a part of the State Government’s efforts towards promotion of tourism and concomitant economic activity, I propose to reduce the rate of luxury tax on  hotels imposed under the West Bengal Entertainments and Luxuries (Hotels & Restaurants) Act, 1972 from 10 per cent to 5 per cent. At the same time, I propose to increase the tariff limit for exemption from payment of luxury tax from Rs. 500 per day to Rs. 1000 per day.
   
3.20  Under the Bengal Amusement Tax Act, 1922, the proprietor of a new multiplex theatre complex or of an existing cinema hall which has been converted into a multiplex theatre complex can, subject to certain conditions, retain by way of subsidy, entertainment tax for a specified period. However, a theatre complex qualifies for a multiplex theatre complex if it has three or more theatres. Having regard to the optimum demand for cinematographic exhibitions at various places, particularly in the district towns, I propose to broaden the definition of multiplex theatre complex so as to include also a theatre complex which has two theatres.
   
3.21  I propose to increase the one-time tax levied on motor cars and omnibuses, not being transport vehicles, levied under section 9B(1) of the West Bengal Additional Tax and One-Time Tax on Motor Vehicles Act, 1989 by amounts varying from Rs. 2,000 to Rs. 10,000 depending on the description of the vehicle and the engine/seating capacity. This measure is expected to yield additional revenue to the tune of Rs. 15 crore during the next financial year.
   
3.22  At present, excise duty on foreign liquor is based on alcohol content of the liquor expressed in terms of London Proof Litre. The maximum retail price (MRP) of foreign liquor, however, varies widely, depending on the brand. The present system of levying excise duty on foreign liquor thus suffers from distortion in the sense that the impact of excise duty on the price of premium  and super-premium brands is very small compared to that on the price of ordinary brands. To remove this distortion, I propose to discontinue the present system of levying excise duty on foreign liquor based on its alcohol content. Henceforth, duty will be calculated as a percentage of MRP after allowing an abatement of 65 per cent on MRP towards supply and distribution costs. This percentage will vary, depending on the brand, and will be fixed in such a manner that there is a little reduction in the actual excise duty on ordinary brands and a reasonable and graded increase in case of premium and super-premium brands. Necessary notifications in this regard will be issued in due course. I take this opportunity to inform the Honourable Members that this system of levying excise duty was introduced in the case of beer and wine in 2006-07 with encouraging results on revenue. The measure proposed now is expected to yield additional revenue to the tune of Rs. 30 crore in the next financial year.
   
3.23  As a result of all the measures enumerated in the foregoing paragraphs, a sum of Rs. 75 crore is likely to be realised as additional resources during the next financial year.