IntroducedLok SabhaDec 07, 2005
ReferredStanding CommitteeDec 19, 2005
ReportStanding CommitteeJun 18, 2006
PassedLok SabhaMay 15, 2007
PassedRajya SabhaAug 22, 2007
Highlights of the Bill
- Warehouse Receipts (WRs) are issued by warehouses on deposit of goods with them. These receipts allow for transferring the title of goods without physically moving them. Currently, trading in WRs is limited as they are not negotiable instruments.
- The Warehousing (Development and Regulation) Bill, 2005 seeks to establish WRs as negotiable instruments, and outlines the necessary terms and provisions. These Receipts may be in physical or in electronic form.
- This Bill establishes a Warehouse Development and Regulatory Authority (WDRA) to regulate the WR system, establish accreditation agencies for warehouse registration, and handle arbitration related to WR disputes.
- The Bill defines the duties, rights and liabilities of Warehousemen.
Key Issues and Analysis
- Establishing WDRA to regulate WRs, and providing the Forward Markets Commission powers to regulate the exchanges on which these trade could lead to lack of regulatory coordination.
- Sales tax laws do not permit applicability of Value Added Tax (VAT) on inter-state trades. These trades attract Central Sales Tax (CST). This treatment would impede inter-state trades in WRs.
- Excise duty credit on input material is available only for the first three transactions. This would necessitate tracking the history of each WR (to verify tax applicability), which contradicts the very idea of negotiability.
- The Bill lacks clarity in its treatment of WRs in a dematerialised form with a depository.
- The specific contents of WRs are proposed to be included in the text of the Act. Prescribing these details through rules and regulations may provide greater flexibility in developing the instrument.