Sources in the commercial taxes department said the stock was transferred according to the provisions of the Central Sales Tax Act of 1956. It permits an industrial unit in any state to transfer its stock at a place where the company's headquarters is located without paying interstate tax. "According to a rough estimate, the state suffers a loss of around Rs 300 crore every year because of stock transfer. By making necessary changes in the provisions of stock transfer, the state can earn tax and increase the revenue," said a source.

Deputy chief minister Hemant Soren, who is in charge of the finance department, is of the opinion that the state has suffered revenue loss because of stock transfer system. "It is hightime that we should impose tax on goods produced in the state," said Soren.

Sources said during the previous government also the state attempted to impose tax on stock transfer but had failed.

However, a senior official in the state commercial taxes department said it was too early to jump to any conclusion. A new tax system goods and service tax (GST) is likely to be implemented in the country in the near future. Under the GST, there is integrated goods and service tax (IGST) that is dedicated for interstate tax. "Once the new system is implemented, other states where FMCG, cars and other white goods are produced will also demand for their share of tax and then Jharkhand many not get the benefit which is eyeing," said the officer.

Source: Times of India, India,  dated 13/11/2011