Finance Minister Arun Jaitley vows to help out Telangana

HYDERABAD: IT minister K.T. Rama Rao and chief secretary Rajiv Sharma met Union finance minister Arun Jaitley and demanded that the RBI re-credit the amount  in the TS account immediately since APBCL is yet to be bifurcated between AP and TS and clarity on the share of each state on income tax liability would come only after bifurcation.

Mr Jaitley assured Mr Rao that he will ask the union revenue secretary to resolve the issue by Monday.

“It is illegal, without jurisdiction and in contravention of the directions of the HC. TS is neither a party to the judgement of the HC nor an I-T assessee. No not-ice can be issued to TS before recovering the dues,” Mr Rao said.

The High Court had clearly stated that the dues have to be recovered after the bifurcation of APBCL,” Mr Rao said.

Mr Rao pointed out that the High Court had directed that the dues have to recovered from the successor state governments and not just TS government but the RBI unilaterally adjusted the dues only from TS account against the bifurcation formula of 52:48 between AP and TS in the ratio of population.

“The action of the RBI and at the instance of Tax Recovery Officer has caused acute financial crisis to TS. The state is unable to pay salaries or meet day to day administrative expenses,” he said.

Fact box:
- In undivided AP, state-owned corporate entity APBCL took up wholesale trading of Indian Made Foreign Liquor in the state.
- Despite being a state agency, the Income Tax Department assessed IT on APBCL and initiated proceedings claiming Rs 2,939.53 crore for the assessment years 2012-13 and 2013-14 though similar assessments made for previous years were pending in the High Court.
- After bifurcation of AP, a new entity TSBCL was formed on May 30 to take up IMFL trading in TS.
- IT department issued attachment and prohibitory proceedings on TSBCL for tax liability of APBCL for 2012-13 on the premise that TSBCL is a successor organisation of APBCL.
- TSBCL filed a writ petition in High Court against this which observed that, alleged dues of APBCL for assessment year 2012-13 after the bifurcation of state can be recovered from the successor governments in terms of Section 68 (2) of the Act.
- The court also observed that Tax Recovery Officer has to issue a notice under Section 226 of Income Tax Act, 1961.
- The Tax Recovery Officer addressed a letter on May 18, 2015, requesting payment of tax but no notice was issued under Section 226 as stated by the High Court.
- Surprisingly, the notice was issued to RBI on June 19, 2015, a copy of which was received by TS government on June 24, for depositing Rs 1264.21 crore in favour of Deputy Commissioner, Income Tax, Circle No.1, Hyderabad, from the principal account of TS.
- Chief General Manager, RBI, Nagpur has paid the amount from the account of TS, without any intimation or notice to TS government.