Hyderabad: Telangana Mobile Distributors Association, Twin City Mobile Retailer Association, and Telugu Cellular Association have jointly held a one-hour Silent Protest here in the city at Dharna Chowk at Indirapark on Wednesday morning.
All three organizations have 200 distributors and 5000 dealers. About a two hundred members of these three organizations held a protest against Re-Assessment Notices served to them by the Commercial Tax Department.
Interacting with the media Mr Chaitanaya Dev Singh, Venkata Bhanu, President and Secretary of Telangana Mobile Distributors Association and Majid Bin Abid, President of Twin City Mobile Retailers Association said, during the period of 20th September 2014 to 28th July 2016 mobile phone manufacturers charged VAT of 5% to distributors. The same was charged to retailers and customers. Accordingly, the Commercial Tax Department completed the assessments without raising any objections. But, suddenly the Department started issuing Re-assessment Notices for the same period at 14.5% and proposed to demand the differential tax liability of 9.5% which runs into several crores.
As per the GOM No. 1615 dated 31.08.2005 Notified the HSN Code.8517 to Cell phones/mobile phones to attract 4%/5%
As per the Memo No. 10427 dated 17.05.2014 and based on the request received from the Union Minister of Communication and Information Technology, Government of India to declare the mobile phones/cell phones as goods of special importance under Central Sales-tax Act, the Government of Composite State vide this Memo issued clarification that mobile phones/cell phones are taxable at 5%
They alleged that the intention of the Government is to tax the mobile phones at 5% but due to this assessment/re-assessment notices demanding the differential rate of tax, all the dealers are facing difficulties in replying to the notices and filing an appeal against the assessment orders.
As it is the trade operates at a very less margin ranging from 1% to 1.5%. The net profit they after-tax liability and deducting operating expenses will range from 0.25% to 0.75% only.
Due to change in the technologies, the distributor/dealer has to bear the loss in deadstock/end of life stock(Outdated Stock) which would have been sold at loss ranging to 50% of the price.
The Entire industry including the manufacturer’s have charged 5%. Also, since the trade was already completed and manufacturers/ distributors/dealers cannot collect the differential tax from their customers
The members informed that they met the Commissioner Commercial Tax and Principal Secretary Commercial Tax and submitted their representations. Now we would seek help from the government to solve the issue. We have planned to have a Silent Dharna just to highlight our problems and seek government support for resolving the matter. Hope thegovernment will consider our request in view of interest of trade and industry and extend support said Majid Bin Abid, Venkata Bhanu and Chaitanya Dev Singh.
They pointed out that to meet the demand notices of the Commercial Tax Department, the margin and entire capital of these players will get eroded and they will have to shut their shops. Many representations have been made to competent authorities and got assurances but the problem is not solved.
The three associations appealed and demanded to the Government to intervene and save the distributors and dealers immediately