HP may withdraw proposed Sales Tax hike on limestone

Entire mining activities in Sirmaur district have remained paralysed since August 3 last after the state Assembly had passed a bill authorising the government to raise the sales tax. The mine operators had also given an ultimatum to the government of direct action, if the proposed hike was not withdrawn.

Reliable sources said the loss due to stoppage of mining activities, besides despatch of minerals from the stockyards, ran into several lakhs of rupees. Indirect loss to 750 truck operators, 2,000 mine workers, labourers and other 1,500 people employed in the tranport sector was also immense.

After a detailed report of Deputy Commissioner, Sirmaur, Rakesh Kaushal, who also held talks with Sirmaur Mine Operators’ Association, the government had set up a committee to examine all aspects and submit its findings.

The committee, headed by Financial Commissioner-cum-Secretary, Industries, Harsh Gupta also included official and non-official members. There was a strong view that because of the sales tax hike the limestone produced in Himachal Pradesh (mainly Sirmaur) would become costlier than that reaching the market from Rajasthan.

Currently, the government has been charging sales tax at a rate of Rs 4 per metric tonne ld grade limestone and Rs 2.56 per metric tonne on non-ld grade limestone. Under the proposed hike the government, will charge Rs 50 per metric tonne — an increase of 1,150 per cent on ld limestone and Rs 32 per mt on non-ld lime stone , which would mean a 1,184 per cent increase.

Official sources said the government, under the present system of taxation, had been realising over Rs 35 lakh per annum and under the proposed hike it was expected to border around Rs 4.50 crore — which was a big jump in terms of revenue collection. Besides sales tax, the government had also been charging royalty at a rate of Rs 50 per tonne on ld limestone and Rs 32 per tonne on non-ld limestone.

Investigations reveal that in case the government goes ahead with the levying of 100 per cent tax hike, the production would come down and many miners might close down the business. “There is also possibility of miners resorting to selective mining i.e. avoiding low-grade limestone-mining,” the Deputy Commissioner said. Officials of the mining wing of the Industries Department also share the view that nearly 45 per cent material will become uneconomical.

It will also result in an increase in illegal and unscientific mining, environmental degradation and rendering hundreds of persons, labourers, small-time hoteliers and shopkeepers jobless.

It was an admitted fact that Sirmaur already had serious unemployment problems, poverty and was facing a failure of crops. “Closure of mining is aggravating the problems of locals,” alleges Congress MLA Kush Parmar. Even targeted revenue from the sales tax could come down to merely 30 to 35 per cent.

Other serious implication would be the marketing of limestone since Haryana, UP and Punjab are also fed from Rajasthan, which has not imposed any tax on limestone. The imposition of tax would make limestone produced in Himachal Pradesh costlier than material reaching from Rajasthan.

A senior government official, when contacted, confirmed that the matter was being examined at the highest level. “A report from the Deputy Commissioner has already reached and will be placed before Chief Minister Prem Kumar Dhumal for appropriate decision.” he informed.