No VAT will be imposed on dyes and chemicals used by processing units in Amritsar. These processing units were inspected and asked to deposit the tax. But they contended that dyes and chemicals used in the processing of clothes were not liable to tax. They say dyes and chemicals used in the process of washing, printing, coloring and dyeing of cloth are consumable and are, therefore, not liable to tax. The chemicals and dyes which are used are manufactured in other states. As of now the units have got temporary relief.

There are approximately 40 industrial houses in Amritsar which are engaged in the processing of grey cloth into finished fabric on job-work basis. The process involves coloring, printing, bleaching, washing and dyeing of grey cloth. The finished goods are the property of textile manufactures and returned to them on collection of job charges. There is no sale of fabric or cloth on the part of the processing units and the end product is tax-free in the state.

A final decision would be taken by the excise and taxation department whether the tax should be imposed. The dyes and chemicals are used in the process of job work undertaken by these units.