The Congress-led UPA government at the centre seems to be jealous of the success of Vibrant Gujarat, as the income tax department has sought details of the memorandums of understanding (MoU) signed at the January event. The move, however, can boomerang if chief minister Narendra Modi makes it a political issue.

This website had reported right at the time of the investor summit that the finance ministry was attempting pressure tactics to scare off the potential investors. Read the report: Hands off Vibrant Gujarat, banks told

Read below Gujarat opposition leader Shaktisinh Gohil's letter to finance minister Pranab Mukherjee in this regard

The income tax department has initiated an inquiry into around 8,000 MoUs signed by several investors and the state government at this year's high profile Vibrant Gujarat Summit(VGS) to bring in an anticipated Rs 21 lakh crore investment, according to a PTI report .

Minister of state for industries Saurabh Patel while revealing the IT decision in the state assembly on Tuesday blamed the Congress for this and asked why the BJP-ruled state was being targeted by the centre as a "special case".

"We have received a letter from the income tax department seeking information about all the memoranda of understanding signed during the VGS 2011," Patel told the house. Details of VGS held in 2009 too have been sought, he said.

The minister alleged that this was proof that opposition Congress was creating hurdles in Gujarat's progress.

The IT department's letter states that an inquiry in connection with the VGS 2011 is pending, and "the details of the MoUs signed by various corporate entities with the government of Gujarat need to be examined".

The letter, dated February 17, signed by deputy director (investigations) Anurag Sharma, further says the inquiry is being conducted under section 131 (1A) of the Income Tax Act.

"It is unfortunate that because of the attitude of leader of the opposition (Shaktisinh Gohil) and his constant complaints to the centre, the I-T department has sent us a letter," Patel told reporters after coming out of the assembly.

"I want to ask the central government, has it sent such letters with regard to the investment proposals in all the states, or has Gujarat been taken as a special case," Patel said.

When asked if the state had replied to the I-T letter, Patel said, "We will get into action now."

"The country and the world... all have appreciated the success of VGS 2011. It is unfortunate that I-T department of the country has initiated an inquiry and asked the state to furnish details of MoUs and investors where investment above Rs 1000 crore was pledged," he said.

"This is injustice to the state and the people of Gujarat," the minister added.

As many as 7,936 MoUs, drawing investment to the tune of Rs 20.83 lakh crore, were signed by the state government at the VGS 2011, held on January 12-13.

TEXT OF GUJARAT OPPOSITION LEADER SHAKTISINH GOHIL'S LETTER TO FINANCE MINISTER PRANAB MUKHERJEE

"The Gujarat government holds Vibrant Gujarat Global Investment Summit (VGGIS) every alternate year since 2003. Next summit is scheduled on January 11-12, 2011. In the summits in past, all leading corporates and industrial houses have inked MoUs worth lakhs of crore, expressing their interests in making investment in the state in their respective fields.

In the last VGGIS, total MoUs inked were worth of Rs 12 lakh crore and all leading industrialists had announced investment for thousands of crores either in expansion of their existing projects or setting up new projects in the state.

With this background, it is matter of great concern to the government of India and also income tax authorities to scrutinize the accounts of corporates who sign MoUs with the Gujarat government in the summits.

When industrialists, builders, trading companies and others,  make open announcements and sing MoUs with respective departments of the state, they clearly display that they have funds on hands or will raise the funds in order to honour the commitment for making investments in the state.

These calls for detailed scrutiny of the accounts of those companies by the tax authorities to check whether there are any irregularity or tax evasion by them. The income tax department must undertake a comprehensive survey about the companies which have inked MoUs, investments committed and actual investment made and whether they have paid taxes.

The tax authorities must recover the taxable amounts in case of any irregularity or tax evasion is detected.

Secondly, what has also come to light is that many companies, after signing MoUs with the state for setting up new projects, approach the nationalized banks seeking loans worth thousands of crores based on MoUs.

The nationalized banks must be careful in lending to such companies which just sign MoUs for raising financial resources from the nationalized banks and then divert in other businesses.

It is pertinent to note that salaried class and middle class people having average income diligently pay income tax and other taxes due from them but corporate houses, industrialists and businessmen having transactions running into thousand of crores do tend to fudge their accounts in order to hide actual taxable incomes from the authorities.

I want the union finance ministry to pass necessary instructions to the various authorities to remain extra vigilant on such business deals which are transacted based on MoUs signed during such summits.

The centre collects income tax and the revenue collected is used for funding welfare schemes and programmes and nation building. The centre also shares revenues collected as income tax and other central taxes to the states proportionally.

Therefore, it is very important that unaccounted for money is not allowed to float in the system.
 
I sincerely hope that your ministry will do the needful regarding above-mentioned issues."