APSFC division, tax matters between TS, AP to figure prominently in MHA meet

MHA joint secretary to hold meeting of two States through video conference

Division of Andhra Pradesh State Finance Corporation between the two successor States – Telangana and Andhra Pradesh – is likely to figure prominently in the meeting between the Finance Secretaries of the two States convened by the Ministry of Home Affairs.

The dispute resolution sub-committee headed by MHA joint secretary had convened the meeting through video conference on Thursday as a preparatory step to discuss the pending issues between the two successor States. Division of the erstwhile APSFC is on the top of the agenda which also includes payment of power dues to APGenco by Telangana power distribution companies, removal of anomaly in taxation matters, division of cash balance and bank deposits and cash credit by civil supplies corporations of the two States.

The issue is pending redressal since the formation of the State as the Telangana Government has been raising objections to the manner in which the APSFC board had prepared the demerger plans when it does not have equitable representation from the State. The State represented the matter to the Centre, but to no avail.

The Telangana Government had been insisting on implementation of Section 71(b) of the Act that empowered the Central Government to reconstitute the board of directors of the Schedule IX institution so as to give adequate representation to the successor States. “The State has requested the Centre through a letter (December 24, 2016) not to approve the demerger scheme of APSFC referred by the corporation’s managing director as the resolution of the board is one sided and has serious impact on the interests of Telangana. Most importantly, the resolution of the board is completely in violation of the provisions of the AP Reorganisation Act,” the government said in its representation to the Centre.

Apportionment of tax arrears

Another major issue is the apportionment of tax arrears and refund in line with Section 50, 51 and 56 of the Act. In the meeting convened on January 12 this year, the MHA joint secretary said refund of the taxes was to be shared between the States on population basis and deferred taxes were to be shared on location basis.

The recent meeting of the Southern Zonal Council too desired that some practical way was to be found out. The AP Government is insisting on its stand that both the amounts should be shared on population basis. The neighbouring State government has been contending that it had received a revenue of only ₹3,000 crore out of the total ₹12,000 crore. It had demanded that either the Act be amended on the lines of Reorganisation Acts of 2000 or the loss suffered by AP could be reimbursed by the Centre.

The Telangana Government has however expressed its strong disagreement to the suggestion of amending the Act asserting that it would be inappropriate to amend it after lapse of more than seven years of it coming into operation. The same is the case with AP’s claim on dues pending from Telangana power utilities to APGenco wherein the AP Government had been claiming that Telangana should pay ₹3,442 crore dues while the latter had presented a strong case in January 12 meeting seeking repayment of dues to the tune of ₹12,111 crore from AP.