Over 400 Mandi Gobindgarh based iron and steel units including induction furnaces and rolling mills today went on two-day strike protesting Punjab Excise and Taxation department's new proposal of levying tax on iron and steel items as per electricity consumption of a unit.
Dubbing the department's proposed method of calculating VAT as "irrational and anti-industry", the secondary steel makers said they would extend the strike if the state government did not withdraw this proposal.
Punjab Excise and Taxation department has proposed fixing 750 units of electricity as consumption for producing one metric tonne (MT) of iron and steel items and then charge VAT on output in order to curb tax evasion.
"It is unfeasible to project 750 units of energy in making one MT of steel. An iron and steel unit normally takes over 900-1000 units per tonne and with department's method which is irrational and illogical, steel industry will have to pay more tax," North India Induction Furnace Association President K K Garg said today.
Garg said steel making units in Ludhiana have also decided to go on strike tomorrow.
"Through such unreasonable methods, the state government is trying to ruin the industry under the garb of checking revenue leakage," alleged a Mandi Gobindgarh based steel maker Mohinder Pal Gupta.
Mandi Gobindgarh - known as the steel town of Punjab has more than 400 units including 80 induction furnaces with daily production of 12,000 MT. It caters to several industry verticals including construction industry and light engineering sector.
Iron and steel industry is one of the major tax paying sectors to state kitty as state government collects over Rs. 550 crore in the shape of VAT from secondary steel makers.
"Today more than 400 units remained shut in protest against department's new proposal," said All India Steel Rerollers association President Vinod Vashisht.
"The department will have to devise another mechanism or solution in order to address concerns of industry," he said.
Garg suggested the Centre allow 'deemed credit' facility on the purchase of recycled scrap, a measure which will help in curbing tax evasion.