After ACAUT Nagaland organised one of the biggest rallies at Dimapur in 2013 against “illegal and multiple taxations”, the state government constituted a four-member High Power Committee on August 5, 2014 headed by justice H.K. Sema retired Supreme Court Judge, K.K. Sema IAS(Retd), Joel Nillo Kath as members and additional secretary justice & law as member-secretary too look into “illegal and multiple taxations” and submit its report and recommendation.
HPC submitted its report on June 10,2015 to the chief minister but eight years since, the report appears to be in cold storage.
During its public hearings the HPC found ncriminating evidences during the course of deposition by the Prosecution Witnesses(PWs), about well established and “mindboggling” array of taxation being systematically imposed by the Naga Political Groups(NPGs) at almost every level of society.
The HPC summoned and examined a cross-section of those engaged in business enterprises who are directly or indirectly exposed to demand for taxation from both NPGs and the government departments.
As per HPC, the finding from depositions by the business community clearly established an overview fact that the NPGs had a very elaborate taxation network in place primarily commandeered by fear factor.
With a focused reference on Dimapur, the HPC found evidence that clearly brought to light that all goods entering the State were taxed by the NPGs without exception at New Field / Dillai Inter-State check gates.
HPC also confirmed that some of the government revenue departments were also collecting fees of all hue from the same venue(s) without issuing official receipts.
HPC report said NPGs imposed a broad base taxation infrastructure that the business community have to pay them in the form of “Yearly Tax, Godown (warehouse) Tax, Wholesaler Tax followed by Shop Tax at the retail outlet”.
According to HPC, every conceivable commercial commodity in Dimapur “is being taxed five times by the NPGs by the time the commodity actually hits the retail outlets.”
It also noted that the confounding problem of taxation was further compounded when these goods are transported from Dimapur to other districts, where similar tax were paid to the NPGs, the police and other government field staffs in all the established check gates along the way.
While HPC held the view that Inter-State and Intra-State check gates were an essential requisite, there was need to rationalise the reduction of the Intra-State check gates as these gates provided a fertile ground for convergence of both the NPGs and the government revenue departments solely to collect illegal taxes that have direct negative impact on the market economy.
HPC pointed out that every business was driven by profit motivation as not entrepreneur would be “insensitive enough to continue investing in a business that has absolutely no scope for earning a profit.”
Despite such unabated taxation imposed by both NPGs and some government departments, business thrives in Nagaland for the simple reason that the burden of heavy taxation is passed on to the consumers. Therefore, it is consumers, the common man, who bear the brunt of all taxes that the business community illegally pays to NPGs and government agencies each time a commodity is purchased.
HPC noted that (in 2014) there were 19 transport operators in Dimapur. Apart from the interstate trucks, hundreds of interstate buses, local commercial vehicles including six-wheeler and ten-wheeler trucks, mini-trucks, Pick-Up vans, etc., ply daily through New Field and Dillai Inter-State gates.
HPC revealed that the system of tax collection by all and sundry, was so refined that no commercial vehicles entering the State through these gates can evade tax, because NPG cadres physically man the gates.
IT said the “sheer audacity of the NPGs manning the check gates side by side with the law enforcement wing of the Government amply describe the utter spinelessness of the State government.”
HPC also took the Dimapur Municipal Council to task and described the latter as “the third prominent player in this rampant tax collecting game”.
According to HPC, the DMC Lessees also rigorously collected DMC ‘toll tax’ on every commercial vehicle.
Since the DMC Lessees collect ‘Toll Tax’ at the gates under the garb of legality, HPC said no vehicle can escape toll tax. HPC said the DMC vigil also “ very conveniently” serves the purpose for the NPG cadres to ensure that, no commercial vehicle escapes their tax dragnet.
HPC maintained that the “unhealthy camaraderie and deep penetration of NPGs within the government infrastructure” was in plain view for anyone prepared to address the issue.
The report also stated that interstate trucks are taxed according to the tonnage capacity of the vehicles. For 6-wheeler, 10-wheeler and 12-wheeler the tax imposed is anywhere between Rs. 3,000/- to even Rs. 20,000/- per truck per entry depending on the goods.
HPC prepared a rough estimate on the collection per tonnage from each vehicle passing through the two Inter-State Gates . It said out of 19 odd Dimapur Municipal Council (DMC) lessees/toll tax collectors who deposed before HPC, three of them disclosed that on a daily average they collect tax from 60-70 trucks at both New Field and Dillai check gates.
If three lessees can collect tax from roughly 70 trucks daily, HPC estimated that all 19 lessees together would be taxing several hundred trucks daily generating huge revenue for the factions and sundry at the gates.
“Even at a lower average of 200 trucks x Rs.6000/- the money generated is= Rs.12, 00,000/-per day with bandits in Police uniform and other government departmental field staffs not far behind,” HPC report stated.
It may be mentioned that the State government in May 2022, under public pressure, ordered immediate removal of all police check gates including check gates set up by other departments, including municipal and town councils etc.
Recommendation: Though the HPC recommendation was basic in general, it stressedon the urgent need of establishing Lokayukta- which was setup in 2017.
HPC also highlighted “very serious possibility that the business community were also capitalising on the uncertain taxation issue to enhance their profit motivation that necessarily escalates the price of commodities”.
HPC said there was no clear recommendation that it could provide other than to state that as long as the whole taxation scenario was not streamlined and acted on, as a house cleaning operation, the business of checking the unscrupulous traders making undue profit would remain out of control.
HPC urged upon the government to view its report in a more focussed manner to identify other important issues which had otherwise not been incorporated in the prioritised Findings and Recommendations.