The power loom weaving sector has unanimously decided not to file the GST return with the central government still adamant on not allowing the refund of the accumulated input tax credit (ITC).
The decision has been taken by the Federation of Gujarat Weavers Association (FOGWA) at a meeting held on Monday.
According to the power loom industry leaders, weavers have till date not passed on the credit accumulation to the buyers and has treated as the part of its asset.
However, any attempt to deny to carry forward of the accumulated credit will amount to huge unbearable loss to the industry as the weavers will not be able to expand or modernise their units.
For example, a power loom weaver manufacturing man-made fabrics with turnover of Rs 5 crore for the period July 2017 -July 2018. The GST payable thereon is Rs 25 lakh (5%). Assuming that the net input tax credit (ITC) availed on inputs i.e., yarn during this period was Rs 30 lakh, the inverted duty structure comes to Rs 5 lakh. In other words, the manufacturer has accumulated Rs 5 lakh on inputs because of inverted duty structure during the same period.
If the ITC balance lying unutilized with the manufacturer is more than this amount, say Rs 10 lakh, the ITC equal to Rs 5 lakh will lapse. President of FOGWA, Ashok Jirawala told TOI, “There is no section under the GST law to block the ITC credit. The Central Government and the GST Council have blocked Rs 400 crore worth of accumulated ITC credit of the power loom sector from July 31,2017 to July 2018. If the textile processors are getting the ITC credit, the power loom weavers are also eligible for the same”.