Over 37,000 chemists and druggists in Andhra Pradesh will close the shutters in the entire State on April 1 and 2, 2005 following a strike called by Andhra Pradesh Chemists and Druggists Association (APCDA) and Federation of Drug Traders of Andhra Pradesh (FEDTAP), to protest against the implementation of VAT.

The traders have urged the Sate Government that it should collect tax at first point of sale in the State. If the tax is collected at first point of labelled price there will not be any evasion of intermediate sale. The retail traders are ready to pay the taxes at first point.

Dr Ghisulal Jain, president, APCDA, said, this will neutralize the Government revenue and also generate more revenue as its covers the exemption given to small dealers with a turnover of Rs 5 lakh and hospitals where in house consumption is there. The government will get only nominal revenue on tax paid under proposed VAT regime.

If the tax is not imposed on first point the price will vary from dealer to dealer as one may be a VAT dealer and other may not be so. It will create confusion among the consumers about the MRP of the medicines and the chemists will have to explain the consumer why the prices are varying, he added.

In the VAT regime the chemists will be forced to collect the VAT which will increase the cost to the consumer. APCDA thus urged the government to exempt medicines from VAT and to look at hassle-free tax revenue model to the government exchequer.

He opined, the VAT will not only confuse the consumer but also increase the burden on the chemists as it will lead to huge paper wok and the State Law would overlap the Central Law. It is difficult for chemists to document and record the component of tax paid on each drug as they purchase medicines daily or on alternate days from numerous suppliers.

Dr Jain informed, if the State's chemists don't get a favourable decision from the Govt by April 4, 2005, they will join other states in the Southern part of the country and may even opt for a nationwide bandh.

The FEDTAP's general secretary, Krishna Reddy, said when other States such as West Bengal, Maharashtra, Kerala, Orissa and Assam are open to implement VAT at first-point of sale, there should not be any reason for AP Govt to shy away from exempting medicines from the proposed form of VAT regime.

The Federation of Andhra Pradesh Chamber of Commerce and Industry alleged that VAT would trigger tax war among States, as VAT is not being implemented uniformly in all the States. It may lead to migration of businesses from VAT States to non-VAT States, besides burdening the customers with extra tax.