In fact, Vala welcomed the decision to put an end to sales tax-based incentive schemes. The decision would greatly help Gujarat, for the state was incurring huge sales tax revenue due to tax evasion through billing from the Union Territories of Diu, Daman and Dadranagar-Haveli, the minister said.

It will also help Gujarat attract entrepreneurs in view of the better infrastructure facilities and industrial peace available in the state, he said.

Vala has the estimated loss of Rs 1,070 crore due to the proposed implementation of VAT would be mainly because ofprovisioning for set-off of input taxes, rationalisation in the rates, cost of restructuring the sales tax administration and its computerisation.

In his speech at the conference of Chief Ministers and Finance Ministers in Delhi earlier this week, Vala had urged the Centre to suitably compensate the state for its losses. A system based on VAT in sales tax could not be successful unless preparatory steps were effectively implemented before its introduction, he said.

The minister also stressed the need for suitably amending the Central Sales Tax Act, keeping in view the requirement of VAT, adding, ``It will be ideal if all states draw up a common blueprint for preparatory work and effective implementation of VAT''.

Vala said the Centre was `positive' about Gujarat's request to allow it to levy consignment tax on good manufactured in the state, but sold outside. This would help the state to partially offset the losses due to the VAT regime, he said.