Details from the 2017-18 fiscal year, when the goods and services tax (GST) was implemented, have been requested, as has information on the payment of GST for commercial transactions involving organic food.
In a notice issued a month ago, the department requested that these entities produce relevant documents such as transaction certificates issued by certification bodies, agreements with growers, scope certificates — a written assurance from a certification body that norms have been followed, farmers' reports, and rejection reports.
The department requested that these entities provide information about farmers and farm identities. It justified its notification by using GST laws that grant the "power to request information." Based on a thorough investigation and information received from farmers, the government sought these details. It has also requested test results for certain organic products. The notifications, according to sources, were issued in response to a probe report filed by the Khargone district collector.
The Agricultural and Processed Food Products Export Development Agency (APEDA), the nodal agency in charge of overseeing organic farming and exports in the country, had recommended that the Madhya Pradesh government investigate claims of irregularities in organic farming and certification a few months ago. The action is significant in light of a letter sent to Prime Minister Narendra Modi by the Chennai-based Sri Swamy Vivekananda Trust (SSVT) claiming "various irregularities" in the organic certification.
Some of the alleged violations include farmers being enrolled in organic groups without their knowledge or consent. The trust had urged the Prime Minister in January to overhaul the process of certifying organic goods. Bangladesh, one of the buying countries, had complained about inconsistencies in the organic cotton imported from India. APEDA informed a certifying organization last year that organic farming standards were not being fulfilled, with farmers even utilizing chemicals. The Commerce Ministry responded to SSVT in the third week of February, stating that the Centre will take additional measures to combat irregularities in organic farming.
"The MP Department of Commercial Tax issuing notices to these entities for two reasons." One, it will ensure that farmers who have followed the protocol and are members of an organic producers group receive a premium for their organic produce. Two, it will assist the exchequer generate a big quantity of income," an anonymous trading source claimed. According to sources, some of these businesses might have acquired merely one tonne of organic cotton from a farmer while claiming to have purchased more.
"It is a proactive move to ensure farmers get their due and the government gets its revenue," added the source. The sale of organic produce in which illegalities are alleged to have occurred could cost tens of thousands of crore rupees. In light of the MP tax department's move, the Centre may stand to gain tens of thousands of crores in income. "In fact, the notice will now reveal whether these entities purchased regular cotton from the agricultural produce marketing committee (APMC) yards and labelled it as organic." "It's a kind of due diligence," the person explained.
Other Central Agencies are now stepping in to check the discrepancies, according to trade sources, because foreign transactions are involved. Meanwhile, SSVT requested Modi in another letter to implement organic Aadhaar for the identification of organic farmers, which will be based on personal Aadhar and a unique land parcel identification number. According to the statement, this would serve as a basis for the integrity of India's organic agriculture.
