SURAT: High court’s order that input tax credit (ITC) accumulated up to July 31, 2018 will not lapse had provided relief to powerloom weavers in Surat, but delay in its implementation by central government and GST department is troubling them.
At present, the man-made fabric (MMF) sector comes under inverted duty structure where duty on raw material or input as well as duty on finished products is higher. For example, man-made fabric manufactured by powerloom weavers attracts Goods and Services Tax (GST) at 5% and that input material, including yarn, attracts duty of 12%. The difference of 7% is to be refunded as input tax credit (ITC).
Central Board of Indirect Taxes (CBIC) had issued a notification saying refund of ITC will be possible from August 2018 and that accumulated ITC from the date of GST notification till July 2018 will lapse. This particular circular was challenged by powerloom weavers, including Federation of Gujarat Weavers’ Association (FOGWA) in the high court.
In the first week of August, the high court quashed the CBIC circular declaring it ultra vires and beyond the scope of section 54(3)(ii) of the CGST Act.
FOGWA president Ashok Jirawala said, “Even after the high court’s order, the GST department is yet to work out distribution of the lapsed ITC credit to powerloom weavers. The release of ITC will pump in fresh investment in the sector.”
Pandesara Weavers’ Association president Ashish Gujarati said, “We are going to meet GST commissioner in a day or two to appeal him to issue trade notice with regards to the high court order.”
Source- Times of India.