A day after Volkswagen reportedly decided to put the proposed Rs.2,000 crore investment plan in the state on hold, over the Value Added Tax (VAT) refund dispute, chief minister Prithviraj Chavan on Friday said that the government was in touch with the car manufacturing giant.
Talking to the media after addressing a meeting of revenue department officials, Chavan maintained that he had read about Volkswagen’s decision, but that the government was negotiating with companies that had objections to VAT refund.
To encourage automobile companies to set up plants in the state, the government would refund the tax deducted on purchase of raw material. This facility was later withdrawn by the government, saying companies were claiming refunds twice – once on behalf of manufacturing unit, and then by the marketing units of the same companies.
About a dozen automobile companies, with plants in the Pune-Aurangabad belt- objected to the decision, saying they were losing crores of rupees. Companies such as Bajaj Auto, Mahindra and Mahindra, General Motors and Kirloskar had also objected.
Commenting on the policy change, Chavan said: “How can the government refund tax two times on a single commodity?”
Volkswagen, which has plants near Pune, and in Aurangabad, announced in January this year that they would invest Rs2,000 crore more in Maharashtra and expand operations.