New Delhi, Oct 13 (KNN) The industrial sector of the state of Jammu and Kashmir comprising of a fair share of Micro, Small and Medium Enterprises along with other stakeholders has sent a memorandum to Prime Minister Narendra Modi demanding amendments in the DIPP notifications and refund rules under the Goods and Services Tax (GST).

In a letter to the PMO, the MSMEs demanded amendment of DIPP Notification with the refund of GST on invoice value instead of cash ledger. It further requested the issuance of the state government’s notification for the refund of GST on Invoice value as promised without any further delay

The industry informed that under the DIPP notification, the existing scheme of budgetary support under Goods & Service Tax (GST) regime to units located in the State of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim covers within its ambit only “Existing Units” which were eligible for benefit of ab-initio exemption prior to 01.07.2017.

MSMEs view that with such a categorization in place, it at the very outset discourages new investment in the state of J&K as well as proposed scale-up by existing industry.

Also the calculation of incentive benefit has been fixed on the basis of cash ledger payment after utilization of input tax credit of central tax and integrated tax.

The same is different from the refund/benefit availing method in erstwhile notification wherein the refund was sanctioned on lower of gross duty and Cash PLA payment.

The same will cost industry significantly in terms of revenue unless the same is recalibrated and refund fixed on the basis of transaction value (i.e. invoice value).

Budgetary support is also stated for availment on quarterly rest as supposed to the previous scheme under Notification No. 56/2002, 01/2010-CE, wherein the same was claimed suo-motu at monthly rest. Quarterly availment will cause a strain on working management as well as addition cost to operating units, the memorandum added.

Besides, the process of refund sanction still remains lengthy and not advantageous forcing intermittent compliance from the industry’s end. The refund documents filing should be routed through e-filing portal and approval also should be made electronically. There should also be a ceiling on the time period of refund sanction, they demanded

The scheme of budgetary support also introduces a concept of proportionate benefit exclusion for procurements routed from compensation dealers. The same will not only create revenue loss, process compliance but also dent the prospect of small and medium industry at State level.

The industries lamented that the budgetary scheme of support enforces multiple compliances including certification, special audits by Chartered Accountants apart from departmental verification. The same will create an environment of distrust, lengthy compliances, and delayed benefits to industry as well as undue gratification at local level.

Besides, separate formalities for availment of benefit (i.e. registration process) under new notification also create undue compliance hardship for the MSMEs

There is lack of transparency for units who are manufacturing under the brand name of others or undertaking contract manufacturing using own facility & technical know-how on P2P basis under the proposed new support scheme.

The memorandum said that the MSMEs are  already suffering from rate mismatch with ITC rates (.i.e. 18%) higher than Output rates of 12% and negative value addition needs to be separately addressed in the policy with clear guidelines on benefit refund/calculation.

The memorandum added that there is reference to special rate provision for units with higher value addition than prescribed. The procedural compliance and compliances in this regard needs to be simplified for timely compensation of benefit to suffering units.

Different MSME associations of the state including Federation of Industries Jammu (FOIJ), Bari Brahmana Industries Association (BBIA), Associated Chamber of Commerce & Industries, Udhampur, Association of Industries (AOI) and Kathua Industrial Units Association (KIUA) have collectively sent the memorandum. (KNN/DA)