Repugnance of Check Posts

 

The objectives behind setting up of the check posts to check evasion of tax was a misnomer. I felt there was no necessity of check gates. The purpose of the check gates was to check evasion and collect taxes from registrants and casual dealers. The tax evaders escaped the gate in connivance with the officers manning the posts. The officers and inspectors were in the monthly pay roll of the transport agencies. They were afraid of the local goons of the villages or towns adjacent to the check posts and did not touch, out of fear, the vehicles of the dealers of the locality. The officers of Girisola at Andra border and Lohurachati at Chhatisgarg border let the vehicles pass unchecked of the dealers, those who were notorious, of Berhampur and Bargarh, to give example.

To show the check posts functioning and earning revenue, the check post people collected taxes from the registered dealers. What the registered dealers paid at the check posts, they adjusted against their due tax payment while filing monthly or quarterly returns. The government did not gain. The gates had always allegations of corruptions against the officers. MLAs raised questions in the assembly; the newspapers, time and again, published alleged corruptions of the officers. The department earned a bad name.

Haryana had check posts under Sales Tax Act. They abolished in 1994. I, in a team of six officers, had gone to Haryana in 2004. We saw, within four years, their tax collection had doubled. Abolition of check posts, of course, had not increased the revenue; but, the abolition did not have any negative impact on revenue collection, for sure.

G.C.Pati, when he was commissioner, abolished twelve internal check posts in 1999-2000. There was no impact on the tax collection the next year or years after.

The state went for VAT in 2005. There was absolutely no necessity of the check posts under the new Act. Under the VAT, the buyer got the credit of tax paid on purchases when he sold, in other words, he availed of input tax credit. To give an example, if a buyer purchased goods worth Rs.100 and paid tax Rs. 10 @ 10%, and sold the goods at Rs.150 and collected tax on sale Rs. 15, he would pay to the government Rs.5. To avail of input tax credit he should have invoice. The assessing officers or the audit, in case of suspicion, could cross verify the invoices, the purchase invoice of the buyer with the sale invoice of the seller, to prove authenticity of the transactions. The dealer got waybills from the office to bring goods from outside the state. The office had the information of the dealers’ business since the latter produced a copy of the waybill. The way bill mentioned the quantity and value of goods. An alert officer had all the information, if he desired, to know the integrity of a dealer.

Not only in Odisha, but in all the states, ten percent of the dealers contributed more than eighty percent of the total tax.  In Odisha, around fifteen hundred of about one lakh and fifty thousand registered dealers paid ninety percent of tax. These dealers did not evade tax; they might avoid paying on some legal loophole. The law or legislature had to plug the loophole.

One day I proposed A.P.Parhi, the commissioner, to consider abolishing the gates, referred to the nuisance the check posts caused and argued against their continuance. He told me to draft a letter to the government with the proposal. He was, all on a sudden, transferred before I prepared and put up the draft.

T.K.Pandey recommended the government to abolish all the remaining internal check posts in 2008-09.

The senior officers had vested interests, and were not in favour of abolition of gates. Some were in a dilemma; the abolition might boost evasion, but their vested interest weighed in favour of this argument and the gates.

The file on recommendation of the commissioner was with the minister. A few officers and inspectors, those who had access to the minister pressured him not to approve the abolition. At this time, state vigilance raided the house of an officer of Jagatpur check post on disproportionate assets (DA) charges. The gate where he was working then located after Cuttack on the Balasore route. The vigilance unearthed huge property, much more than his known sources of income. The print and electronic media highlighted the raid. The minister inquired. Pradeep Biswal, then working in the finance department, told the minister about the officer and reminded the file for abolition of gates was with him. The media might raise a question, the gates bred corruption, the department had suggested for abolition, but the minister kept the file pending with him. The minister signed the file.

There was no impact on revenue collection after abolition of all the internal check posts.

Border check posts, seventeen in all, located at borders with different states stayed. I wrote a few articles on no-necessity and the need for dispensing with the gates in newspapers. The Prameya published my article ‘Kua O Tanakhiphatak Upakhyana’ (The Episode of Well and Check Posts) on August 1, 2015. The Pioneer published my article, ‘Abolish the Checkgates for Ease of Doing Business’ on October 1, 2016. My articles, of course, discomfited the seniors and my colleagues.

Manoj Ahuja, the commissioner was against the check posts. One day I told him about the issue I had discussed with A.P.Parhi. Mr. Padhi had told me to draft the letter, but he was transferred. Mr. Ahuja told me to draft the proposal. He recommended to the finance department to abolish all the check gates.

The government abolished all the check gates from April 1, 2017. With introduction of GST from July 1, 2017, all the states abolished the gates.

[An excerpt from my book Anichhuk Prasasak (A Reluctant Bureaucrat)]

                                                                   ******