Industry against cess to revive sick units

NEW DELHI: The Assocham has suggested the government to reconsider its proposal for imposition of cess on industry to finance revival of sick units.

In a statement, its president, Mahendra K Sanghi said the chamber had information that the government intends to levy 0.2-0.5% cess on companies gross turnover through the enactment of a new legislation.

The chamber chief, however, suggested that instead of this levy, the sick industries should be allowed to close down after paying statutory dues to workers. In the draft Company Bill, 2004, the government has incorporated Section 140 to facilitate imposition of cess, which is being opposed by all quarters of industry.

He sought the removal of this Section, arguing that the companies, having large turnover or gross receipts, need not necessary have surplus resources or liquidity to pay cess.

Moreover, industry does not expect the government to make the modified Company Act for revenue raising exercise for the government.

Therefore, there is no rational for this clause to be incorporated in the new Act, for it will erode the liquidity base of strong companies, not only in the private sector, but also in the government.

He also suggested that the revival and rehabilitation process of the sick and weak companies should be funded through investors protection fund as mooted in the draft Companies Bill, 2004.

Mr Sanghi has called for review of penalty chapter, introduced in the draft Bill, for non-compliance of some of the provisions of the Companies Act, arguing that the chapter confers absolute powers on authorities for imposing stiff penalties.