Open House Session & Council Meeting at Kolkata

FADA held its 219th Council Meeting and Open House Session on 7th January 2005, at Kolkata.

The programme on 7th January 2005 started with an Open House Session. Binod Agarwal, Chairman, Motor Industries Association (MIA), Kolkata welcomed the guests and participants, while Jayendra Kachalia touched on the activities of FADA and issues of concern to retail automobile trade.

The Open House Session had the presence of distinguished guests, namely, Bimlendu Chakraborty, Chairman, National Insurance Co Ltd; Asim Barman, Principal Secretary, Environment Department, Govt of West Bengal; and C M Bachhawat, Commissioner of Commercial Taxes, Govt of West Bengal. Interaction with the guest speakers was quite lively and revealing.

Bimlendu Chakraborty, Chairman, National Insurance Co in his address said that with the advent of private sector, radical changes were sweeping the insurance sector as in the case of automobile sector. Customer today has choice, voice and right to exit. Observing that motor vehicle insurance constituted 40% of the general insurance business, Chakraborty informed that insurance companies were moving towards cashless settlement and that many more products were in the offing.

Responding to a question raised from the floor as to why insurance companies were not reimbursing the full repair bill, Chakraborty said that motor vehicle insurance in India was based on the concept of contract of indemnity. In other words, accidental vehicle has to be restored to the same condition as it was before the accident. Full reimbursement should be possible if the law was changed.

Members urged Chakraborty to adopt transparent guidelines for deduction.

He revealed that tie-up of National Insurance Company with Maruti Udyog had reduced repair and settlement time from three weeks to just four days.

C M Bachhawat, Commissioner of Commercial Taxes, Govt of West Bengal gave an overview of the scheme of impending VAT and its mechanics. Regarding the issue of tax on sale of used cars by registered dealers under VAT regime, Bachhawat agreed to consider a different tax treatment for sale of used cars under VAT regime at a lower rate not exceeding 1% of the value of sale transaction in West Bengal. He offered that various queries of automobile dealers in West Bengal on VAT could be consolidated by Motor Industries Association, Kolkata and sent to him for clarification.

Asim Barman, Principal Secretary, Environment Department, Govt of West Bengal, during his interaction with the members, spelt out the following steps to be implemented w.e.f. 1st Apr' 05 for improving air quality in the Kolkata Metropolitan Area:

(i)	All three wheelers will have to convert to LPG.
(ii)	All four wheelers will have to comply with Bharat Stage-III norms.
(iii)	All two/three wheelers will have to conform to Bharat Stage-II norms.
(iv)	Diesel and petrol sold in Kolkata Metropolitan Area, will have sulphur content not exceeding 0.035% and 0.015% respectively.
(v)	Taxis registered prior to 1991 will either have to go off the road or will have to be upgraded to meet the current norms.

 
He agreed to consider the suggestion put forth by FADA for a progressive higher tax for the older vehicles on the lines of "Green Tax" levied by the Tamilnadu Government.

Open House Session was followed by FADA's Council Meeting in the afternoon at the same venue. Important decisions taken at the Council Meeting are:-

(i)	Regional Convention of automobile dealers, viz. Western Region Auto Convention on 26th February 2005 at Hotel Grand Hyatt, Kalina, Mumbai.
(ii)	Commissioning B2B site for transaction/exchange of obsolete/dead stock inventory among FADA members at the earliest.
(iii)	Expediting Systems Audit of select car dealerships in north India already undertaken by FADA.
(iv)	Reviving FADA academy programme.
(v)	Educating Automobile Dealers on High Security Registration Plates notified for implementation by 1.6.2005

 
Council also took note of the stay granted by the Madras High Court, on a petition filed by FADA, against collection of service tax on incentive received by automobile dealers from the banks/finance companies for arranging vehicle finance.

Regional Meeting at Bhubaneswar

The next day i.e. on 8th January 2005, a Regional Meeting at Hotel Mayfair Lagoon, Bhubaneswar was organised.

After a welcome address by Tutul Kishore Das, President, Orissa Automobile Dealers Association (OADA), OADA made a presentation on loss accruing to the State exchequer by diversion of trade to the neighbouring States due to comparative higher tax burden on motor vehicles registered in Orissa due to levies of entry tax and turnover tax.

The participants at the Regional Meeting had a fruitful interaction with K N Khatae, Additional Commissioner of Commercial Taxes, Govt of Orissa. Various issues concerning VAT, including VAT on sale of used cars, raised by automobile dealers were clarified by Khatae.

Jayendra Kachalia, President, FADA took this opportunity to brief the participants on the activities of FADA and to get their feedback on the issues and problems facing them for appropriate action at the level of Central and State Governments.

Meetings at Kolkata and Bhubaneswar were well-organised and well-attended, thanks to the excellent arrangements and the efforts put in by Binod Agarwal, Chairman, MIA; Vinay Nevatia, Past President FADA; Tutul Kishore Das, President, OADA; and Jay Prakash, Council Member, FADA.