Kerala was the only state that had decided to shift to the new system, risking losses by sparing all traders under Rs 10 lakh turnover category from tax, Mr Purushottaman informed the Assembly.
Even when the state assured traders of a critical majority Vat compliance from fellow-states for go-ahead, there was no fear that this eventuality will occur, the minister said. If Kerala appears enthusiastic on this change, there is no political axe to grind but only because the state is convinced that a uniform tax system is necessary, he added. If the neighbouring states decide to stay out of Vat, the traders in Kerala will not suffer, state finance minister assured.
Neither the state government nor Kerala traders will incur losses because of access to a non-Vat state, because there is a set-off window to address this issue. According to tax officials, it could create a smuggling problem for the Vat-deviant state.
Border checkpost revenues in Kerala are up by 58%, registering an increase from Rs 88 crore in 2003-04 to Rs 115 crore (up to January). However, he admitted tax evasions at border were too high.
Buying a Rs 10 crore commodity scanner for each of the 12 main checkposts are in consideration. However, on trial-run, it was found the officials needed a lot of training in reading these scanners and the proposal was shelved. To tackle smuggling through private property near the main check posts, the government had decided to arrest the owners of the private property whenever such offence was detected, the minister said.