"Today we have decided to exempt both the commodities from the VAT ambit, though we have not levied any tax so far. It was an error committed by the central government tax authorities. Since they had exempted the commodities from excise tax, we put the commodities under VAT," state finance Minister, Raghavji told Business Standard.

The state had earlier decided to levy VAT at 5 per cent on both the commodities.

State traders yesterday decided to observe a strike. Now they have welcomed the decision and have called off the strike. This is the second time when sugar traders have registered a protest against the government.

"We will welcome the government’s decision provided the officials of commercial tax department do not harrass us. They want written orders from the government," said Ramesh Agrawal, president of MP Sugar Traders Association.

"We will discuss the issue of orders in next the cabinet meeting, however, I have already assured the traders in Indore that the state has no intension to levy VAT on sugar and textile," Raghavji added.

Except for Andhra Pradesh, no other state levies tax on sugar.

Source: Business Standard, India,  dated 27/09/2011