VAT on salt: Gujarat salt-makers threaten to stop supply for 3 days

Express News Service‎: Ahmedabad: Thursday, April 14, 2016.

Seeking the withdrawal of Value-Added Tax (VAT) on industrial salt, around 350 salt manufacturers from across the state Tuesday threatened to stop salt supply for three days from April 26 to 28 if the state government did not withdraw its decision by April 25. This was preceded by a meeting of salt makers over the withdrawal of VAT on industrial salt. Gujarat is the largest salt producer of India, contributing nearly 80 per cent of the total salt production of the country.

The Gujarat Government, in its Budget for the year 2016-17 recently passed in the state Assembly, has levied 5 per cent VAT on industrial salt, with an estimated annual tax revenue income of Rs 5 crore.

This is for the first time that the state government has levied tax on salt in Gujarat. And the decision has not gone down well with the salt manufacturers. Bachubhai Ahir from Kutch, who also leads the salt manufacturers’ protest, said that they had met Finance Minister Saurabh Patel to get the decision withdrawn, but in vain. “And following that, we have decided to come out in open to protest,” Ahir said.

Speaking in the Assembly, the Finance Minister had stated that the tax was being levied only on inter-state trading of industrial salt and the local industry or common people would not be affected by the decision. Patel also said that the local manufacturers could get tax credit for the salt sold for industrial use in Gujarat.

However, the salt manufacturers have stated that to bring the salt manufacturing sector under the “Inspector Raaj” by levying VAT on it was nothing, but a move to harass the manufacturers. “More than 50 per cent salt-manufacturers are doing small-scale business who don’t even know some basic computing. And now, with this new tax on salt, they will have to install a proper mechanism to keep records of salt manufactured. This is nothing, but an added burden on them,” said a salt manufacturer who did not want to be identified.

“Also, at the time of salt production, there is no bifurcation like edible salt or industrial salt. And still the ill-equipped small manufacturer will have to keep record of all his production and sale. And for a meagre amount of Rs 5 crore per year, the government is harassing the salt manufacturers,” he added.

Ahir said that after the British, the present government was the first one to introduce tax on salt in Gujarat. “Like the Salt Satyagraha launched by Mahatma Gandhi, we will also have to protest to get the tax on salt withdrawn,” he said, addressing the meeting before giving an ultimatum to the state government to withdraw the tax. “After Britishers, two other states of Independent India had levied tax on salt, but withdrawn it subsequently. Similarly, we will have to fight with the government till the end to get the tax decision reversed,” Ahir said.

“We are considering various means to protest. First, we are giving a deadline of April 25 to the state government. Then, we might stop salt supply for three days. Also, we are consulting various lawyers to see if the government’s decision can be challenged in a court,” said a senior salt manufacturer, who did not want to be identified.