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For exporters, GST whips up more storm in a tea cup

For exporters, GST whips up more storm in a tea cup

For exporters, GST whips up more storm in a tea cup

COIMBATORE, NOVEMBER 27:  GST is not as “simple” as was it perceived, but “complex and complicated”, feel tea exporers..

“And it’s not just about tax refunds. The relaxation given to exporters vide certain notifications will not work due to the conditions laid down for claiming exemptions. “Further, due to the peculiar nature of the trade, it is impossible to fulfil some of the conditions,” said Dipak Shah, Chairman, The South India Tea Exporters’ Association (SITEA).

When asked to explain, he said: “Given the nature of the trade, the procurement of tea is through public auctions, and from multiple sellers. We subsequently mix these teas to create blends for specific export markets.

“The issue starts here. Condition (V) of GST notification 41/2017 says that ‘a registered recipient shall place an order with a registered supplier for procuring goods at concessional rate and a copy of the same shall also be provided to the jurisdictional tax officer of the supplier’. As the teas are bought at auction (pan India), how can the exporter place a prior order? Our contention is when the buyer places a bid on the auction platform, it should be presumed as an order to buy. But they say that it cannot be accepted under GST. This is absurd, considering that 70 per cent of the teas are routed through auction.”

“Further, how would it be possible for the buyer to provide copies to the jurisdictional tax officer of the supplier in a pan India auction, as the seller might not be from this region,” Shah asked.

There is yet another condition, vide notification 41/2017, which says that the recipient should indicate the GST Identification Number of the seller plus the tax invoice number in the shipping bill or bill of export.

“This is a laborious process as the teas are bought from 30-40 sellers to make a specific blend. The paperwork demanded is mind boggling. First, there is no space for such an exhaustive report in the shipping bill. But the commissioner says, ‘put it in addendum’.

It does not end there. We have to disclose the identity of each supplier in the shipping bill, which is tantamount to revealing the unique composition of the blends. This is a trade secret, which each of us would like to safeguard. Commissioners agree with our viewpoint; it stands there,” lamented Shah.

He said that SITEA representatives took up the issue with the GST Commissioners at Coimbatore, Chennai and Kolkata as also the Tea Board, but a solution remains elusive.

More trouble confronts merchant traders with the government extending the returns filing date; traders say they are unable to get refund of the taxes paid.

“Over ?100 crore has been stuck with the government as the refund mechanism is still not in place, even after three months of GST implementation. We are now thinking of sourcing working capital requirements from private financiers as we have exhausted bank limits. The interest burden will be huge, but we will honour our commitments,” the SITEA Chairman said.


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