Textile industrialists have hailed the Union government for accepting their long-pending demand regarding refund of the input tax credit (ITC) on fabric. Kamal Dalmia, chairman, Focal Point Industries Association, said it was a welcome step that ultimately government accepted to refund the ITC on fabric. The government restored the refund on fabric, covered under notification number 5/2017 Central Tax (Rate), dated June 28, 2017, as amended by notification number 20/2018, dated July 26, 2018.
As per the said provision, the accumulated input tax credit up to the inward supplies received up to July 2018 and after making payment up July 2018 shall lapse. “This means no credit of tax will be given on the fabric stock lying as on July 31. It was a draconian order and a big blow on the traders of fabric,” Dalmia remarked. The notification ordering lapse of unutilised balance of the input credit against fabric was against the provision of law.
Another textile industrialist, DS Goraya, said, “While issuing the said notification, it was never considered what would be the position of unsold fabric lying as on July 31, 2018 on which the duty had already been effected at the time of the inward supply.” He maintained that there couldn’t be double taxation. So, they had requested that accumulated ITC should be allowed in the interest of the traders.