1. News emanating from Delhi clarifies that the compensation package finalised by States for phasing out 4% CST from October 1, 2006 is unlikely to find favour with the Finance Ministry as it would severely squeeze the Centre’s Revenue Resources.
    

2. As per Business Standard report dated 8-6-2006, a Ministry official stated as under: -
   
   "The package seeks much more from the Centre than what was being sought by them (the States) when they first proposed a total cash compensation for the Central Sales Tax phase-out. They will have to meet us midway on this."
    

3. The official further clarified that the States have sought transfer of some services from the Centre. They have, over and above this, also sought and increase in revenue share from service tax to 50% from the 30.5% as at present. Since this transfer of funds would be on a permanent basis, it would sharply increase the share of revenue resources of the Centre.
    

4. It was furthermore clarified by the official that in addition to this and other measures like bringing imports under the Value Added Tax (VAT) and the additional excise duty items under VAT, States want any revenue losses to be compensated in hard cash. In this connection, States have identified 124 services, which are intra-State in nature and do not fall under the service tax net, which could be transferred to them to compensate for revenue loss resulting from the CST phase out. Apart from this, States have identified 68 more services which are intra-State in nature and are presently taxed by the Centre, to be transferred to them. These include services like advertising agencies, air travel agents, beauty treatment, courier, internet café, health and fitness, opinion poll, private security and rail travel agents, amongst others.

As per Business Standard report dated 14-6-2006, faced with outstanding compensation claims of over Rs. 2,200 crore by Maharashtra for losses due to the introduction of the VAT, something that could wipe out the Centre’s entire VAT compensation kitty for the current fiscal (F.Y. 2006-07), the Finance Ministry has now asked the State’s Accountant General to verify the above claim of the State, inasmuch as, it involves Rs. 1,500 crore tax refunds given by the State.

2. As per the figures released by the Central Government in this behalf, the State had forwarded a compensation claim of Rs. 1,146 crore for the period July 2005 to January 2006, which was processed and released by the Centre. The State subsequently forwarded a second claim of Rs. 2,225 crore for February – March 2006, taking its total compensation claims for the July – March period to a whopping Rs. 3,340 crore.

3. As a matter of fact, the Central Government had, in its Budget, set aside Rs. 3,000 crore to compensate States for losses under VAT. Against this budgetary provision, Maharashtra’s claim alone amounted to Rs. 3,340 crore. According to the roadmap chalked out earlier, between the States and Union Government, the Centre is obliged to compensate only up to 75% of the losses suffered by the State during this fiscal year.

As per ‘Sandhyanand’ Marathi daily report dated 11-5-2006, the State Government in response to the State-wide agitation of the traders, bowed down to exempt 4% VAT on the sales of food- grains effective from 19-4-2006 for a further period of six months only. However, in the meantime; i.e., from 1-4-2006 to 18-04-2006, the wholesalers on their sales to retail traders have recovered 4% VAT aggregating to Rs. 25 crore or thereabout. Finance Minister Shri. Jayant Patil has advised the wholesalers to deposit the same into Government Treasury. However, instead of depositing the said tax into Government treasury, the wholesalers have agreed to refund the said tax to retail traders. However, the catchy situation is that the retail traders have passed on the VAT to their customers, whose identity they do not know. In the situation, the State is going to be richer by Rs. 25 crore, which revenue is indeed a windfall to the Government! It shows that in reality Government is not protecting the common man from the taxes he pays. If you have a solution to this tangle, please give your suggestion in this matter.

The Second Administrative Reforms Commissions (ARC) recommended scrapping of the 83-year-old Official Secret Act (OSA), saying it was incongruous with the regime of transparency in a democratic society. It advocated a slew of measures for "effective implementation" of Right to Information Act at all levels including judiciary and legislature.

Shri Kuldip Nayar, His Excellency ex-High Commissioner of India to London, in his article in ADC, dated May 31, 2006, has opined as under: -

"As a matter of fact, over 50% of the laws are enacted purely because of inefficiency, corruption and lack of accountability of the administration and creating great hardship for an ordinary man who has to go through unnecessary and avoidable procedures."

2. Do we not find the above scenario in the procedures adopted at Registration Branch ?