Earlier, the State government decided in principle to abolish octroi following foreceful representations by all chambers of commerce led by Gujarat Chamber of Commerce and Industry, but did not officially disclose the alternative arrangement of taxation.

Surprisingly, the industrial houses did not make their opposition clear though they had a hint of the proposed alternatives. But now that the government is about to make final announcement they have increased the pitch and are soliciting support from other small and medium industries as well to oppose it.

Representatives of leading industries from Hazira held a closed-door meeting with local trade and commerce associations in a bid to impress upon the government the negative fallouts of the new system, if it were to enforce it. The local associations, however, are firm on their demand to abolish octroi and ready for a nominal surcharge of sales tax.

They were reportedly told that the State government will have to raise more than Rs 1009 crore if octroi was to be abolished. The estimated figures of Entry Tax and Turnover Tax will not exceed Rs 848 crore, which will leave the government still short of Rs 160 crore.

They were also told that Entry Tax will be applied even on items that do not fetch Sales Tax and the overall taxation will increase from two to three fold. However, the local industries are not impressed with the argument.

Interestingly, the big houses had absented themselves from all but one meeting called by the regional body to discuss the issue.

The big houses, however, seems to have found an ally in South Gujarat Texturisers Association, which submitted a memorandum to the chief minister on Monday saying the proposed taxation will give a body blow to them. The memorandum said about 3500 units set up rural areas of South Gujarat had total investment to the tune of Rs 1000 crore and were providing employment to thousands of workers.

The memorandum also listed the difficulties and disadvantages faced by local industries in comparison to industries from the neighbouring Union Territories and States.