AP Report 2019-final

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Status Report - Union’s Commitment to Andhra Pradesh Successor States of Andhra Pradesh and Telangana on the basis of population ratio and the State discharging the liability shall be entitled to receive from the other State its share of the liability, if any. (2) The liability of the existing State of Andhra Pradesh to refund any other tax or duty collected in excess on the appointed day shall be the liability of the Successor State in whose territories the place of assessment of such tax or duty is included, and the liability of the existing State of Andhra Pradesh to refund any other tax or duty collected in excess shall be apportioned between the Successor States of Andhra Pradesh and Telangana on the basis of population ratio and the State discharging the liability shall be entitled to receive from the other State its share of the liability, if any.” It may be noted that arrears, deferred taxes treated as interest free loans and also refunds arise under the Andhra Pradesh Value Added Tax Act, 2005 on the transactions of purchases and sales effected by a dealer in the entire State prior to reorganization. Therefore, differential treatment for their apportionment between the two Successor States is not justifiable and both should be apportioned on the basis of population. The following excerpt from the Chief Minister’s letter to the Union Home Minister (para 4 of the letter dated 8 May 2015) illustrates the loss sustained by Residual Andhra Pradesh: (Annexure -13) in respect of arrears pertaining to M/s Krishnapatnam Port Company whose operations are in the seaport of Krishnapatnam in Nellore district of Andhra Pradesh, while their corporate office is located in Hyderabad city in Telangana State. “4. Further, the following illustration highlights the anomaly and its adverse impact on the revenues of the State of Andhra Pradesh. The High Court of Telangana and Andhra Pradesh at Hyderabad in their Orders dated: 3 December 2014 in W.P.No. 34680/2016 dismissed the Writ Petition filed by M/s Krishnapatnam Port Company Ltd. (KPCL) and upheld the orders passed - 33 -
Loss Incurred on Account of Anomalies of Law by the Commercial Tax Officer, Jubilee Hills, Hyderabad directing them to remit Tax Deducted at Source during the years 2009-10 to 2011-12 from the Works contractor, M/s Navayuga Engineering Company Ltd. (NECL), Visakhapatnam to an extent of Rs. 92.98 Crore. As a consequence of the judgment of the High Court, the dealers M/s. KPCL will have to immediately pay Rs. 92.98 Crore along with interest. As per Section 50 of the Andhra Pradesh Reorganization Act, 2014, total tax arrears go to the State, where the dealer was registered and assessed before the date of reorganization i.e., 2 June 2014. M/s KPCL’s entire operations were in Nellore District of Andhra Pradesh, but dealer was registered in the Capital City of Hyderabad for administrative (purposes) before the date of reorganization i.e., 2 June 2014. Due to that, the right to collect and appropriate the tax arrears goes to the State of Telangana as per Section 50 of the Reorganization Act. In case the judgment of the High Court results in refund to a dealer instead of arrear, the burden of payment of such refund has to be shared by the two States in the ratio of population as per the provisions of Section 56 of the Reorganization Act ....... ” The anomaly between Sections 50, 51 and 56 of the Andhra Pradesh Reorganisation Act, 2014 is seriously impacting the revenues of the State of Andhra Pradesh to the tune of about Rs. 3,820 Crore. Table 2.1 shows the arrears, deferred taxes and refunds due in the combined State of Andhra Pradesh at the time of division. As per existing provisions of APRA, the right to collect arrears and loans goes to the State where assessment was made or the dealer is located whereas refund burden should be shared by Andhra Pradesh and Telangana in the ratio of population i.e. 58. 32 : 41.68. Table 2.2 shows that as per provisions of the APRA, 2014, Net Revenue for Andhra Pradesh is Rs. 3,021.20 Crore, and for Telangana it is Rs. 8,709.89 Crore. Table 2.1 Arrears, deferred taxes and refunds due in erstwhile Andhra Pradesh Rs. in Crore - 34 -
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Other Government Infrastructure Sta
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AP Report 2019-final

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