Indirect Tax- Both the State and Central Governments Looting small Entrepreneurs:

Our Governments depriving the fundamental right guaranteed to every citizen by Art. 19(1)(g) to carryon any business by imposing unreasonable charge as indirect duties on the machine and equipments purchasing to set up small and tiny Industrial Undertakings. The Hon. Supreme Court has declared deprivation of livelihood as deprivation of life. (http://www.elaw.org/resources/text.asp?id=1104)

(http://www.escr-net.org/caselaw/caselaw_show.htm?doc_id=401006)

But through imposing heavy duty namely VAT, CST, Customs Central Excise duties on the machines and/or equipments purchasing to set up self-employment projects, both the State and Central Governments restraining the poor people from earning livelihood through promoting tiny enterprises.

The computing system of Indirect Taxes is maximizing this burden. Central Government Charging Basic duty of Central Excise/Customs on the basic price and additional duties, special charges, surcharges etc and CST on the aggregate of each time. State Government Computing VAT on the End User Price. Hence the net effect of excise duty itself is arrount 24% to 37% of the basic price and the total tax effect will come around 35% to 60%. Due to these unreasonable charges, a promoter fails to rise a huge amount in addition to the basic price of the machine can not set up the unit to earn his livelihood.

As per directive principles of the Constitution, it is the duty of the State to take endeavor to eliminate inequalities in status, facilities and opportunities. It must keep economic system to result in the concentration of wealth and means of production to the common detriment.

The main purpose of Taxation also is the elimination of inequality as declared in directive principles and development of the Nation. Here through charging huge amount as indirect taxes on machines and equipments to set up a small enterprise, Governments not only preventing, and restraining poor people from earning his livelihood through setting up a tiny business establishment in his village or town, but also back railing the development of the Nation and developing inequality in the society by helping the rich one to have monopoly in business. By starting a business an entrepreneur making his livelihood and building the nation by generating employment opportunities and supplying goods needed for his surrounding. Our economists knowingly and willfully forgetting this facts since independence and preventing the common man from entering in the pool of business through imposing huge tax.

Industrial Activities Facing Adverse Effects:

Unreasonable Indirect Taxes on machines and equipments affecting both? Traditional and New Generation Industries. Industries including Textiles, Wood, Garment Making, Hosiery, Information Technology etc. and Service segments including Photography, Hospitals etc.. are facing the Tax hit.

Growing Gray market… Losing Revenue..

If we conduct a survey on the studios working in Kerala, it can be found that 99% of cameras and film using there are purchased from gray market. The Nikon D40 digital still camera available with authorised dealer for Rs. 39000/- can be purchased from gray market paying 19000/-. Only problem is, loss of warranty and after sales service. Here State losing revenue and photographer losing after sales service and rights of a customer vide consumer protection laws. In some other industries, machines billing for lesser rate to reduce the tax burden here also, the rights under consumer laws and insurance coverage losing to the end user.

Subsidies and Grants:

Governments putting sand in to the eyes of entrepreneurs setting up PMRY units or Industrial Undertakings by granting back end subsidies and margin money loans using a portion of money pick pocketed from their pocket as indirect tax on plant and machinery purchased. Margin money loans issued to the small scale industries must write-off on this ground.

Suggestions:

The government has granted duty drawback to the undertakings established in Special Economic Zones. In the same manner duty drawback can be given to small entrepreneurs also. In India business establishments having registration with Local Authorities. Tiny industrial undertakings may have registration either with KVIC or with Industries Department. Hence issuing duty drawback based on any of the above registration certificate is easily possible.