VIEWS ABOUT E-SUGAM IN KARNATAKA OF CAIT GENERAL SECRETARY

Ref. No.: 1424/1/29 25th November, 2013 Shri Siddaramaiah, Hon'ble Chief Minister & Finance Minister, Government of Karnataka, Bangalore Dear Shri Siddaramaiah Ji, CAIT would like to bring in your attention about the practical difficulties faced by traders ever since introduction trader unfriendly ‘e-sugam’. We believe the policy was devised with all good intentions and encourage transparent and fair trade in state. However in reality it is proving counter productive as this will encourage traders to exploit system and prefer to do business without keeping proper records. This will also promote nexus between inspectors, other enforcement officials and traders. Instead of revenue coming to government exchequer, the money will go in the pocket of few officials. Such a situation will be detrimental to economy and development of state. The conditions of e-sugam are very impractical due to following reasons:- 1. It directs to register the trader to his consignment invoice and receives a number for any transaction where the value of the goods is equal to or more than Rs 20,000. 2. First problem is that most of the traders are single handedly handling their trading activities, hence as per the notification, he/she needs to spend considerable time in registering and generating consignment number from the e-sugam web portal or through mobile. 3. Our main submission is that around 90% of traders are still not computer literate. Hence what is the use of imposing a rule where the user is not up to the mark. 4. Even those traders who are computer literate may not have necessarily a computer with internet facility in their work premises. 5. Generating e-sugam number may also not be always feasible as this too will consume time and in hinterland and countryside the user may fequenty face the network coverage issue. 6. In very short, the submission is that this notification if implemented will create a headache for honest trader who will have to focus more on compliance process and requirements rather than his trading activity. Thus it will be adversely affect trading environment in state. Another biggest challenge which state must look into is the clear violation by those traders who knows to exploit the situation. There will be many unscrupulous individuals who will use the existing rules of e-sugam for their business benefit without paying any taxes at all. Example there is provision of cancellation of e-sugam citing various reasons. As per the current notification, the number obtained needs to be produced at the department’s checkpost or shown to officials randomly inspecting vehicles transporting goods. The unscrupulous traders after ensuring that the consignment reached the destination cancel the transaction filed under e-Sugam. Thus this mechanism fails to deter the dishonest traders have been using the duration of delivery of goods for evasion purposes. Sources in the Commercial Tax Department said a dealer can cancel the consignment invoice without drawing the attention of the department as its validity is for 48 hours. In such scenario I would like you to kindly have a re-look at the fair objectives and deliverables of the e-sugam so that it encourages honest traders, increases state revenue while curbing the menace of tax evasion and corrupt nexus of tax officials. On behalf of traders from different business, we would seek a an appointment for a delegation of traders so that you can be apprised of practical difficulties faced by honest traders and manufacturers. Thanking you. With regards Yours truly Praveen Khandelwal National Secretary General Contact Cell : +91-9891015165, 9310199771