Tamil Nadu MSMEs hit by notices issued for pending VAT-related documents, arrear payments

Micro, Small and Medium-scale Enterprises (MSMEs) that had pending payments or had delayed filing their returns during the Value Added Tax (VAT) regime have been receiving notices from the Commercial Taxes Department asking them to pay the pending amounts along with penalties, adding to the financial burden on MSMEs.

A small-scale compressor manufacturer in the city cited the notice issued for the 2012-13 period for delayed filing of returns. The amount to be paid now runs into lakhs. “Where will I go to get this money now?” asked the unit owner.

There are several MSME unit owners who are fighting this through representations or legal action.

The Federation of Coimbatore Industrial Associations said in a representation to the Tamil Nadu MSME Minister that the Commercial Taxes Department was sending notices for VAT for the last five years. The maximum penalty levied goes up to 348%, and notices are now being issued for VAT arrears or delayed filing of returns dating back 20 years. Even if the MSMEs submit the requested documents, officials are unwilling to close the cases, citing a lack of proper documents, it alleged.

The Federation has appealed to the Tamil Nadu government to come out with measures to settle all issues related to the VAT regime and ensure that MSMEs are not affected by it.

“The government should take into account the problems faced by MSMEs on a priority basis and address them,” added J. James, one of the co-ordinators of the Federation.

The Coimbatore District Small Industries Association president V. Rangaswamy said it has taken up the issue with the Minister and the officials concerned. “We are hoping to get a positive response soon,” he said.