Raising their demand for early resolution of the 5 per cent GST under the Reverse Charge Mechanism (RCM), ginners across the country observed a day’s strike on Friday. As many as 4,300 ginning units from Maharashtra, Gujarat, Odisha, Telangana, Karnataka and Andhra Pradesh stalled their cotton processing activities opposing the Centre’s move of introducing RCM for the fibre under GST. Earlier, the Cotton Association of India (CAI), following its meeting on November 27, had decided to support the strike.
More action later
“If the RCM issue is not resolved by the GST Council in its upcoming meeting on December 21, the ginners may go on an indefinite strike from the next day,” said Atul Ganatra, CAI’s President. Under the Reverse Charge Mechanism, a recipient of goods and/or services is liable to pay GST, instead of the supplier. In this case, ginners — the buyers of raw cotton — are required to pay the tax instead of the cotton farmers.
Mixed response in Gujarat
Out of over 4,300 ginning units in the country, about 1,300 are spread in Gujarat, with major concentration in Saurashtra and North Gujarat. Even as most ginning units in most other States observed complete closure, the units in Gujarat gave a mixed response to the strike.
Ginners stated that even as the RCM on GST is refundable, “our experience is that it is not refunded timely. Our working capital gets stuck up due to the delay in refund. If ginners are not lifting cotton from the yards, farmers will suffer, which is not good,” said Rajnibhai Gandhi, a ginner from Bodeli in Chhota Udepur district, Gujarat.