In a bid to recover arrears of taxes imposed on the cotton ginning industry several years ago, the government’s recent actions have resulted in the shutting down of cotton ginning mills across the state.
This move has been met with protests from the mill owners who argue against the taxation. The closure of these ginning mills occurred during the peak period of cotton arrival in the mandis, where the mill owners were typically the main buyers.
Adding to the industry’s woes, the Cotton Corporation of India has not purchased any cotton in the state, causing further concern. Bhagwan Das Bansal, the patron of the Punjab Cotton Mills and Ginning Association, explained that the issue traces back to 2005 when the Punjab Government imposed a 2% Punjab Infrastructure Development Cess on cotton mill owners’ cotton purchases.
The mill owners fought against this cess, and in 2013, a notification was issued to waive the cess. However, no decision was made regarding the outstanding arrears, resulting in the original cess of Rs 290 crore ballooning to nearly Rs 1,000 crore with interest.
To enforce the recovery of old dues from cotton mill owners, the Revenue and Excise Department has been designated as the nodal agency. The current standstill in the ginning industry not only affects the mill owners but also has wider repercussions on the cotton sector and the overall economy of the state.
