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DIMAPUR — While expressing support to the newly elected Urban Local Bodies (ULBs) in their efforts to improve towns and municipalities across the state, the Confederation of Nagaland Chamber of Commerce and Industry (CNCCI) has also cautioned the ULBs from imposing illegal taxes and perpetuating monopolistic practices that harm businesses and consumers.
In a press release issued on Friday, the CNCCI raised concerns over the previous ULB dispensation’s practice of granting exclusive licenses and leases for various goods and services “which led to monopoly and syndicate system in many commodities.”
“The direct end result was price escalation of commodities as prices were fixed by the monopolist and syndicate, further those lessees took cuts/commission/share by means of forcefully collecting over and above prescribed rates in permit/ license.
“The CNCCI makes it very clear that such a system will not be tolerated and all means will be explored to stop such undemocratic, unethical practices,” it asserted.
GST law and road tax regulations
The confederation reminded the ULBs that collecting taxes and setting up collection points on national, international, and state highways directly violates the Goods and Services Tax (GST) law and existing road tax regulations.
It emphasised that the GST subsumes all forms of entry tax on goods, making any additional levies illegal. Additionally, the road tax paid by commercial vehicles during registration and renewal already covers toll fees, making further collections on the same roads unjustified.
Calling on the ULBs to refer to the existing laws, it also cited specific government orders, including the ones issued on September 14, 2021 and May 1, 2022, that explicitly ban unauthorised tax collection by town councils and municipalities on GST-covered items and restrict the establishment of collection gates except interstate check gates.
Leasing out tax collection rights
Furthermore, the CNCCI clarified that ULBs should not collect parking or toll taxes on state, national, or international highways within their jurisdictions unless they assume responsibility for the maintenance and management of those roads from the government.
“The citizens and businesses community cannot pay multiple taxation in the form of road tax to the government and parking/toll tax to ULBs on same road,” it said.
It also condemned the practice of ULBs leasing out tax collection rights to private individuals or entities. “This is totally unacceptable and unappreciated,” it said, pointing out that the ULBS, as an arm of the government, “cannot give away its exclusive rights to collect taxes and taxation to individuals or third party.”
“In the past such leasing out of rights to impose collection and taxation has resulted in misuses by forceful collection of more than prescribed rates by ULBs thereby harassing the business community beyond limit,” it said.
Moreover, the revenue generated through lessees or third parties in the past has resulted in heavy fiscal losses for the ULBs, as most lessees submit revenue well below the amount fixed by the ULBs, thereby affecting public services, the CNCCI said.
Consultations and fair market rates
Directing the district chambers to ensure that no individual business person or entity is allowed to participate in rate-fixing discussions with ULBs, the CNCCI reasoned that individuals often lack a comprehensive understanding of market dynamics and could inadvertently mislead ULBs in setting prices.
This, they said, could lead to significant losses for both the business community and consumers. Instead, the CNCCI insisted that district chambers themselves should be consulted by ULBs during the price-fixing process to ensure fair and informed decisions.
It also urged ULBs to engage in thorough consultations with district chambers of commerce before fixing rates for trade licenses, sanitation fees, and other charges, as per government order no. CON-6/LOR-II/2006(Vol-I) dated Sep. 14, 2021.
“The appeal is made in the interest of ULBs, business community and consumers and to maintain cordial relationships and a supportive business community,” it said.
Unilateral tax imposition
Further expressing concerns over reports that certain ULBs are “forcefully trying to impose monthly collection on GST items and high rates on perishable items,” the CNCCI warned that such actions would lead to an “abnormal and alarming price increase” in essential commodity prices, severely impacting the common man.
“The CNCCI makes it clear that it will not allow brazen acts under any circumstances but go all out to safeguard the business community and consumers,” it said.
In this connection, it directed the district chambers to be vigilant on imposition of new taxes and collections that contradict existing central and state government orders and laws. It encouraged the district chambers to initiate swift intervention and report such instances to the CNCCI to prevent the establishment of unfavourable precedents in ULBs across Nagaland.