Distributors seek discount on penalty under VAT

Staff Reporter

Delegation holds talks with Finance Minister

Kozhikode: The All Kerala Consumer Goods Distributors’ Association (AKCGDA) said here on Sunday that Finance Minister T.M. Thomas Isaac had agreed to permit discount on the “huge” penalty imposed on them under the Kerala Value Added Tax (KVAT) Act and also consider their other demands.

The AKCGDA office-bearers had met Dr. Isaac last week and apprised him of the issuing of demand notices to distributors of Fast Moving Consumer Goods (FMCG) products to pay 12.5 per cent tax and not 4 per cent on their products. Also, the authorities had directed them to pay the differential amount at the rate of 8.5 per cent together with double this amount towards penalty and heavy interest thereon, with retrospective effect.

They argued that the authorities should have pointed out this to first sellers\manufacturers\importers within the prescribed time after filing their returns and collected the differential amount together with penalty from them. This was not done and instead the authorities were penalising the distributors.

They said the distributors procured their products either directly from manufacturers\importers or through their principal offices in Kerala and sold it to wholesale\retailers at the price fixed by the original suppliers taking into account all components of price structure, including the distributor’s margin and VAT liability.

They demanded that tax liability of FMCG products be determined at the rate charged at the first point of sale i.e., by manufacturers\importers as envisaged at the time of introduction of KVAT Act.

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