Amidst all the hoopla, GST problems remain

Last Sunday, the government celebrated the completion of a year since the Goods and Services Tax (GST) was launched.

As expected, there was widespread appreciation that the GST Council had taken all its decisions unanimously, prices had not gone up, the government had quickly responded to problems faced by the trade, more entities have registered under the GST laws, the GST Network (GSTN, the system’s information technology backbone) had addressed most of the glitches in filing of returns, direct tax collections have gone up, logistics costs gone down and so on.

In an overall assessment, the problems faced by a section are unlikely to get much attention. Hardly anyone talked about the difficulties exporters continue to face. Also, on many difficult issues such as invoice matching, single return, reverse charge on procurement from unregistered dealers, etc, the government is still trying to find workable solutions.
 

On refund of the Integrated GST (IGST) paid on export of goods, the government says mismatches have gone down, since  exporters have now learnt to file the details properly in the shipping bill and GST returns. Also, special camps have helped clear the pending cases where mismatches had held up refunds. Even so, many exporters, especially small ones, have not got their refunds. The government should give out the amount not disbursed, take each case where the claims are stuck and find ways to expedite. It should also review the condition that an exporter claiming refund should not have procured inputs from a supplier which had availed of the benefit of certain notifications.

Refund of unutilised input tax credit are stuck due to demands for different documents by different authorities. The government could give a circular clarifying the documentation requirement. In some cases, where GSTN has debited different amounts of Central GST (CGST) and State GST (SGST) in the electronic credit ledger, the jurisdictional authorities have refused to clear refunds on the ground that the same amount of CGST and SGST should have been debited. How is the exporter responsible for that? In such cases, they get no help from either the authorities or GSTN. The government must call for details of denial in such claims and find ways to break the impasse.  

The exemption from IGST granted under advance authorisations contain unreasonable conditions on ‘pre-import’. The department of revenue intelligence has sent innumerable notices and summons alleging violation of this condition, making exporters pay IGST and interest. IGST exemption is denied on import under advance authorisation for deemed export. The process of paying GST upfront on deemed export and claiming it back through a cumbersome procedure causes unnecessary blockage of funds.
 

On import under Export Promotion Capital Goods (EPCG) authorisations, IGST exemption is available subject to the condition that deemed export cannot count towards discharge of an export obligation. There is confusion on credit/refund of additional duties of customs paid towards regularisation of default under advance authorisation and EPCG authorisation.

So, amidst all the celebration, the genuine problems of exporters should not be swept under the carpet. The government should make it easier for them to claim their entitlements.  

E-mail: tncrajagopalan@gmail.com