An interactive workshop on ‘GST – One Nation, One Taxation – Learn Implementation’ was organized by World Trade Centre Mumbai on July 15, 2017. Mr. Jayant T. Falke, a leading chartered accountant in Mumbai conducted the workshop. Mr. Falke said, “All firms with an annual turnover of more than Rs 20 lakh must comply with the provisions of the Goods and Services Tax (GST) regime, which came into force from July 1, 2017. Companies will not prefer to engage dealers, contractors or goods suppliers who evade GST or who have not registered themselves at the GST Network. This is because, companies will not be able to claim input tax credit if they deal with such unregistered dealers, contractors or goods suppliers. Therefore, tax evaders will lose business and cannot survive under the GST regime,” said Mr. Jayant T. Falke, a leading chartered accountant in Mumbai at an interactive workshop on ‘GST – One Nation, One Taxation – Learn Implementation’.

Mr. Falke suggested entrepreneurs and companies to register all their existing branches, registered offices and factory locations at the GST Network. Companies were also advised to register the location of their warehouse agency, job work contractors, and other dealers in the supply chain as additional place of business at the GST Network. For companies that have not registered the above locations at the GST Network, Government of India has offered a chance to do so after July 17.

Mr. Falke also informed that suppliers of goods and services must raise invoice at each point of the supply chain and upload the same in the GST Network. This will enable agents at the subsequent point of supply chain to claim input tax credit. Transporters will not be ready to carry goods of manufacturers or distributors without the GST registration number. He cautioned that the tax department has the right to confiscate transporting vehicles and goods in case the transporter is not able to produce invoice.

“Companies will not attract any scrutiny or investigation from tax department if they adhere to norms of registration and uploading of invoices in the GST Network. Companies must also maintain all necessary internal documentations to support the information provided in the invoice. Under law, the tax department can attach the personal assets of the directors (whether executive directors, nominee directors, independent directors) of a company in case the company is caught evading GST.”

So far, 80 lakh traders, manufacturers and service providers across India have registered with the GST Network and Mr. Falke expects this to grow to 3.5 crore in the course of time.

Speaking on the hassles faced by the industry, Mr. Falke mentioned,” There are several ambiguities with regard to classification of goods and services under HSN code, determining the value of certain goods, procedures to be followed by exporters and importers, determination of place of supply and time of supply for certain transactions and so on. However, these issues will be resolved gradually.”

During the event, merchant exporters raised several issues related to the compliance with the GST regime. Exporters complained that the payment of integrated GST will increase their working capital requirement till the tax department makes refund of the same. The tax department may take anytime between 7 days and 60 days to refund the integrated GST paid by merchant exporters, depending on their status. For star exporters, refund is generally made in 7 days. For others, it takes 60 days to get refund. Therefore, exporters wanted government to exempt them from payment of integrated GST. Exporters also complained about the levy of 12% GST on sale of scrips under Merchandise Export Incentives Scheme (MEIS) scheme. MEIS is the duty credit reward scheme offered by Government of India under the Foreign Trade Policy 2015-20 to incentivize exports from the country. Under the scheme, exporters can encash their unutilized duty credit scrips by selling them in the market. Before the implementation of GST, the sale of these scrips attracted around 7% tax (including value added tax and other taxes). However, under the GST regime, sale of these scrips attracts 12% GST.

Responding to these issues raised by exporters, Mr. Prakash S. Kamble, Assistant Director General, Directorate General of Foreign Trade (DGFT) Mumbai said, “These issues are being considered at the highest level in the Ministry of Commerce and Industry. The mid-term review of the Foreign Trade Policy (2015-20), which is scheduled in September 2017, may address these issues.”

In Photo: Mr. Arun Sehgal, Chief Executive Officer, Chempro Group (right) felicitating Mr. Jayant Falke , Chartered Accountant (left).