THIRUVANANTHAPURAM: Under cover of a special package to revive the cashew industry, the previous LDF Govt condoned the fraud committed by cashew dealers which caused a loss worth crores of rupees to the state exchequer.The astonishing fact is that an executive order was issued at the behest of the then Finance Minister T M Thomas Isaac waiving the penalty citing that “he was taking a lenient view in view of the crisis in the industry”.The Commissioner of Commercial Taxes order dated July 24, 2008, quotes Para 174 of the budget speech 2007-08 to justify the dubious act. It reads: "They (cashew dealers) have been showing inter-state sales as stock transfer to their depots or agents to evade central sales tax (CST). Even though this is a criminal offence, the government has not launched prosecution against these dealers. The dealers should have been charged 10 to 12.5 per cent tax with interest for their failure to file valid statutory forms.’’Further, Isaac’s reason for not initiating prosecution measures was the representation against it by dealers and trade unions.The order further quotes budget speech: “Hence, considering the interest of the labour, I offer to waive the penalty and all amounts in excess of 4 per cent thereon on all transactions up to March 31, 2006.”Isaac himself admits in his budget speech that he was sacrificing revenue involving Rs 25 crore.Though Isaac had claimed that his leniency was in the interest of labour, it may be noted that it was the dealers who had committed the fraud and it had nothing to do with the labour.It has been learnt that of the 220 companies concerned, a company alone got tax exemption worth Rs 35 to 40 crore. However, the CAG report for the year on March 2009 has put the loss to the exchequer at a minimum of Rs 96.87 crore.Isaac submitted a detailed note to the then Chief Minister V S Achuthanandan seeking the waiver. He noted that Excise and Labour Minister P K Gurudasan also had an interest to implement the package. However, Achuthanandan did not take the bait and asked him to place it before the Cabinet.The Cabinet decided to grant waiver only if it could be exempted under Section 8(5) of the CST Act. But for doing so, it should have satisfied the provisions of Section 8 (4) of the CST Act.The law department pointed out that it did not satisfy the provisions of the Sections 8 (4). The source in the government told Express that Isaac neglected the Law Department’s directive and took the hasty and illegal decision to issue the executive order.
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