In a representation, Pepsico India Holding has said aerated beverages are being subjected to a penal levy of 20 per cent sales tax (plus 10 per cent surcharge and 1 per cent turnover tax), on a par with alcoholic beverages in the state. The high rate of sales tax for aerated beverages, combined with additional octroi of 4-7 per cent in the cities, makes the products the highest taxed as compared to other states.

The sales tax rate on aerated beverages in Gujarat is 15 per cent, Tamil Nadu--13.5 per cent, Karnataka--13 per cent, Andhra Pradesh--12 per cent, Madhya Pradesh--11.5 per cent, Delhi--10 per cent, and Goa--9.2 per cent.

Pepsico India Holding chairman PM Sinha said the penal rate of sales tax combined with the high rate of excise duty at 40 per cent is an "unbearable burden" on theindustry adversely affecting its growth. "Forty per cent of our price to retail in Maharashtra is paid as taxes (excise, sales tax and octroi), against 32 per cent in Delhi," he said.

Karnataka and Tamil Nadu have reduced the rate by 2 per cent, while Gujarat and West Bengal have cut it by 1 per cent and 4 per cent respectively. "On the other hand, the Maharashtra government has shot up the rate by 7 per cent," Sinha added.

Two Pepsi plants at Roha and Mumbai have paid Rs 30 crore as sales tax during 1998-99. "With a negative growth of industry in Mumbai, revenue growth too is slowing down," Sinha said.

Sinha said that reduction in the sales tax rate would stimulate growth in volumes and, thereby, generate employment. "We estimate that we can provide at least 300,000 man days of employment in the tertiary sector," he added.

According to Sinha, an aerated soft drink is a mass consumption item and cannot be considered as a luxury product. He said that at least 10-15 per cent of soft drinks sold inMaharashtra were spurious. It was not only a health hazard but could also lead to loss of sales tax revenue to the government, he added.+