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South India tea exporters hit as Rs 100-cr GST refund still stuck with govt

02-Dec-2017
South India tea exporters hit as Rs 100-cr GST refund still stuck with govt

South India tea exporters hit as Rs 100-cr GST refund still stuck with govt

At least Rs 100 crore worth of goods and services tax (GST) refunds of tea exporters from South India are stuck, impacting working capital and outbound shipments, say industry representatives. 

South India Tea Exporter's Association Chairman Dipak Shah said the government is continuously extending the date of filing returns and, as such, no merchant exporter is able to get refund of the taxes paid.

"This is a failure of the total system," he alleged, adding that the Centre has brought about notification to give relief to exporters but the refund option is still not available on the Goods and Services Tax Network (GSTN).

Shah said that around Rs 100 crore of input tax credit remains unavailable and that tea exporters were in a state of crisis.

Agreeing with Shah, one exporter said that players in the sector were now looking to meet their working capital requirement through private financing other than their exhausted bank limits.  

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"Undoubtedly, this happens at an interest burden, which is sometimes 24-30 per cent against the usual interest rates of about seven-eight per cent given by banks. This is purely to honour the export commitments," said the exporter. 

Tea exporters are running from pillar to post to find a solution to their problems. The GST commissioner's office at Coimbatore, Chennai, and Kolkata and the offices of the chairman of Tea Board have not been able to find any solution to the problems. Exporters are eagerly waiting for the GST offices to fix a time with the concerned people in Delhi to express their plight, said Shah. 

Tea exporters are in a dilemma over whether they should conclude future export contracts or not due to their financial constraints. This, they fear, might lead to lower demand and a drop in tea prices. This would ultimately lead to lower price transfer to small growers.  

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While tea exports from North India rose by 8.57 per cent to 100.59 million kg in 2017 (January to September), South India exports dropped by 1.07 per cent to 65.77 million kg compared to the same period last year.

Exporters also explained that there were other challenges, including issues in auctions. They also asked how an exporter could issue a prior order since the teas are bought on the auction platform. Is it implied that once we bid on an auction platform, it should be treated as a prior order, they argued.

About 70 per cent of tea produced is consigned to various tea auction centres by the producers and offered through brokers to traders through public auction, which is an electronic auction platform under the aegis of the Tea Board of India.

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While traders welcome permitting sales at zero rate, exporters feel that the conditions to comply with this kind of zero-rated transactions are impossible and impractical to work with. 

They also add that permitting sale for export at reduced rate has been done in haste without consulting traders. Further, according to them, no exporter is in a position to avail of such a concession due to the conditions required to be fulfilled being impossible and impractical.  


Source:- Business-standard.com

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