VAT's Going On?

VAT’s what and What’s VAT


That’s what. Most of you know that VAT (Value Added Tax) is the new tax regime that replaced the old. Some of you in industry know of another VAT regime named after the daughter of a certain south Goa politician based out of Circuit House in Margao, Goa’s commercial capital in addition to now being south Goa’s tax capital where a single window system at Circuit House caters to all the ‘personal development’ tax collected. Believe me, never in the annals of Indian taxation at least outside Laloo Prasad Yadav’s erstwhile Bihar has this kind of VAT been so defined and refined, to the extent tax assesses are required to leave their mobiles and pens outside the Commissioner’s chamber, if you get my drift.

This is how Goa’s tax regime works, but first let’s look at how it worked recently in the Taleigao plateau. A manufacturer got an order to supply water storage tanks and was informed by the concerned assistant engineer (AE) that if he was not paid a commission of five per cent he would reject the order; and, or, if the manufacturer did not supply the order he would blacklist the company. A kind of Hobson's Choice if you will –‘if you do not pay VAT your product will be rejected and if you do not supply, your company will be blacklisted.’ This rare to find tough-as-nails company told the AE to take a hike. Eventually, the supply was made and the AE still demanded his commission. You would think this irredeemable specimen of a human would let things lie. Not so. He kept pressurizing the supplier. What happened in time, I hope to tell you soon.

So you think you can dance

This ain’t about the popular TV serial -this is so that you know the Public Works Department (PWD) has Twinkles Toes too. The same said manufacturer the next time around responded to a bunch of PWD tenders worth roughly Rs 38 lacs.

What the manufacturer next heard was the familiar crack of the ring master’s whip and the waltz began. On the dance floor it works like this: first (step forward) the manufacturer was not allowed to quote (a manufacturer with a national presence only was allowed to quote which says a lot about the government’s BS of supporting local industrialists). Next, the local manufacturer demanded to know the basis on which it was rejected through a Right to Information request, as a result of which the PWD took one step backwards (see, this is part of the boogie steps) and retendered the process.

Now, the second time around the same manufacturer quoted around 20 per cent lower, and the PWD used a rather vague rule to eliminate it. Few in the industry knew enough to educate me on this, but it appears there is a loophole to crack the whip even on low bids in a band range of of 15-20 per cent. Mind you, the manufacturer was the lowest bidder in all nine tenders and was told by the chief engineer that it had to pay advance VAT (get my drift again) to the lady with the Twinkle Toes at Circuit House. This time, the manufacturer told the PWD chief engineer he could take a flying leap.

The funny thing is, the manufacturer’s rates went up just after the tender was announced, meaning that the PWD’s estimate price of Rs. 7/litre was fixed when prices were even lower. Had the local manufacturer’s prices not been raised a little before the tender due to the cost increase, the difference would have been 30 per cent plus. So, despite being the premium brand, the PWD feels it is too cheap. Its brand is among the higher priced tanks and if its quoted price was around 20 per cent lower, you as a taxpayer have the right to know on what basis the PWD fixed the estimated rate price. You will also be within your rights (those of you who have the courage to ask, that is) what kind of prices is PWD paying? Why is it spending taxpayers’ money and getting the lousiest rate for bulk purchases?

Not sticking to the straight and narrow

The picture we have is of real estate builders making pots of money after bulldozing (literally and figuratively) their way through Goa mowing down a hill here, converting land there so that some outsider can come and enjoy the sun and sea for a week every year. But things are not always that hunky dory, I’m glad to report. Someone in the business was telling me that a prominent builder does not get a walk-in just because he is has an all-India brand name to reckon with. Normally building loans are given out in three ways: the entire amount is handed over on the basis of an approved plan, the money is parceled out on a time-line basis in a way as to release the amount at different stages of building and finally, on the basis of construction. Needless to mention the last resort is adopted in cases when you don’t trust a builder to follow an approved plan. The prominent Delhi-builder gets this treatment “because I cannot trust them as they are known to deviate from an approved plan.” The building industry source tells me “legally they may be right but technically wrong and the latter is what concerns us.” So, now we know why certain housing projects that promised the sun and the moon have been stalled. And, why it is advertising, like the sun won’t rise on Monday morning.


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