GST roll-out: Jute sector at the end of invoicing tether

Notification issued to stop all despatches from June 28-July 3

Barely two days to the roll-out of the goods and services tax (GST), the jute industry is grappling with invoicing worries in migrating to the new regime.

Jute transactions are usually through commercial invoice, mandated by the office of the jute commissioner. These invoices are required by the commissioner’s office for release of payments and recovery of reimbursements. Excise invoices wouldn’t do, as the freight amount is known only upon issue of railway receipts (RRs). 

However, under the Central GST and State GST rules, only a GST tax invoice may be issued; commercial invoices are not allowed. 

“The industry is now in a complete standstill. The stakeholders are not aware of the billing procedures. More clarity is needed,” said a leading mill owner. 

Several changes need to be made in the billing module to make these GST-compliant. So, the commissioner’s office issued a notification stopping all despatches from Wednesday till Monday, inclusive. “No bills would be accepted after June 30,” Dipankar Mahato, deputy jute commissioner, stated in the notification.

Indian Jute Mills Association (Ijma) has organised a meeting on Monday to discuss these billing modalities. Presently, sale of jute goods attracts local value added tax of five per cent and a jute cess of one per cent, an effective tax rate of six per cent.

Mill owners are worried that after the GST roll-out, the commissioner’s office is likely to decline any release of payment on multiple GST invoices against a container or wagon load. Moreover, the GST invoices are unlikely to carry the RR numbers. 

“If jute goods manufacturers are permitted to issue tax invoices within a specified time period after issue of RRs, the difficulty would be addressed. This would enable the commissioner’s office to release payments without the additional commercial invoices,” suggests the mill owner quoted earlier.

Ijma has urged that these billing issues be taken up with Ministry of Textiles, for flagging before the GST Council. The Council can recommend to the Union government to invoke Section 31 (1) of the Central GST Act, to notify jute products as a specified category which can be removed from a factory for supply to government entities through a government challan. This would enable the manufacturers to raise a single tax invoice against railway or container receipts. Around 70 per cent of jute products are sold to government agencies - the latter purchase jute packing material, by law. 

Jute bags sold to government agencies are transported through the railways, Container Corporation of India (Concor) and by road transport. Multiple excise invoices are issued at the time of removal from a factory to a railway siding or container yard. Then, a consolidated RR or container receipt is issued by the railways or Concor.