CBEC, FTAPCCI clears industry concerns on GST Law

The Dollar Business Bureau

Central Board of Excise and Customs (CBEC) in association with Federation of Telangana and Andhra Pradesh Chambers of Commerce and Industry (FTAPCCI) organised an awareness programme on proposed Goods and Services Tax (GST) Law in Hyderabad on Monday.

CBEC Special Secretary and Member Ram Tirath, senior officers of CBEC, Commercial Tax Department, and FTAPCCI members have shared their knowledge and clarified certain apprehensions of the trade and industry stake holders about the upcoming GST Law through this programme.

Trading community in agri crops and commodities in Telangana and Andhra Pradesh operate through the system of commission agency. The agri commodities are currently taxed under the VAT law only upon sale. But, under Sec 3(2A) of the Model GST Law the transaction between a principal and agent is also deemed to be a ‘supply’ and would invite the levy of GST.

Both in Telangana and AP, this provision would have an effect on a large section of small and medium consignment traders. There is a need to re-look on this provision to protect the interests of the consignment dealers of commodities in the two states, the apex industry body FTAPCCI urged the Union government.

In the GST Law, it is stated that supply of goods by a taxable person to a job worker is not to be treated as supply of goods. Under the existing Rule 4(5)(a) of the Centvat Credit Rules, 2004 and the subsequent liberalisations direct supplies from job worker premises is permissible and they do not contemplate any prior approval of the Commissioner.

Besides the MSME sector, the large units in drugs and pharma that have a significant presence in Telangana and AP will be subject to this prior approval procedure. This should be revisited and the job worker manufacturer procedure should be made user friendly with least transaction cost burden, FTAPCCI said.

Under the GST Law Chapter V, payment of tax is required to avail input tax credit. This is as against to the three-month period under the current provisions as applicable to service tax and no such requirement in the case of capital goods. This will be a severe burden on industry and trade and will affect the working capital immediately. This provision requires to be reconsidered, FTAPCCI demanded.

Telangana Chief Secretary Rajiv Sharma, Prinicipal Secretary-Revenue Ajay Mishra, and Chief Commissioner of Customs, Central Excise and Service Tax R Shakuntala have also participated in the first open discussion in India on 'Model GST Law'. FTAPCCI Senior Vice President Gowra Srinivas, FTAPCCI Indirect Taxes Committee Chairman J S Karunendra and Pricewaterhouse Coopers Executive Director S Ananthanarayan have coordinated the programme.