New Delhi: Most trade organisations in India are observing a two-day strike to protest against the imposition of value-added tax (VAT), which is to be imposed effective from 1 April 2003. The two-day Bharat Bandh is organised under the banners of Bharat Udyog Vyapar Mandal and Confederation of All India Traders.

In Delhi, where traders had earlier expressed their stiff opposition against VAT, the bandh appeared to be total. Business establishments in Connaught Place, and central and north Delhi areas were shut down. Wholesale markets in Sadar Bazar, Khari Baoli and Azadpur areas were completely paralysed.

In Chennai, the Madras oilseeds and bullion remained closed on account of the bandh. Trading bodies in Chennai maintained that though commercial activities would be affected during the two-day bandh, essential services and supply of commodities like milk would remain unaffected.

In Mumbai, too, the response to the bandh call was vigorous and the strike was nearly total.

Though all states except Delhi, Himachal Pradesh and Arunachal Pradesh were asked to get the necessary legislation passed in their respective assemblies before the 1 April deadline, some states have not passed the legislation due to fears of loss of revenue and political pressure from traders.

The government has launched an awareness creation campaign by releasing advertisements in major newspapers in the country. These advertisements explain the nature of the new taxation system and the benefits that will accrue to all parties concerned after imposition of VAT.

However, these measures seem to have fallen on deaf ears. Traders are apprehensive since they have to account for all their transactions if they have to obtain the benefit of VAT. They also fear harassment from the tax officials.

State governments fear loss of revenue and some state governments are also holding on to the imposition of VAT due to the elections which are to take place in their states.

Tamil Nadu has passed the necessary legislation but it has said that it will impose VAT only after all other states pass legislation and impose VAT as otherwise they will be in a position of disadvantage as compared to the other states.

States like West Bengal and Maharashtra are prima facie agreeable to go along with the new VAT regime but they have insisted that they will impose VAT only after some gray areas pointed out by them are resolved.

The Empowered Committee of State Ministers, which had framed the model VAT laws, is meeting on 8 April to sort out the gray areas that have been pointed out by these states. Till such time, the confusion is likely to continue.