GST: First day sees traders react with nationwide protests, downed shutters

Business Standard By T E Narasimhan Vinay Umarji Sohini Das Avishek Rakshit July 1, 2017. 23:05 IST

Several industries, MSMEs downed shutters in Tamil Nadu to protest the GST

Kashmiri traders and transporters stage a sit-in protest against the implementation of the GST in Srinagar on Saturday. Photo:PTI

The goods and services tax (GST), at the break of dawn on Saturday, ran up against strikes, protests, and apprehensions across the country, reminiscent of the manner in which the value-added tax received resistance more than 10 years ago.

Tamil Nadu: Fear of imports revives

Several industries, mainly micro, small and medium enterprises (MSMEs) — from movie theatres, multiplexes, units making firecrackers and matchboxes, and weaving and knitting factories — downed shutters in Tamil Nadu to protest the GST.

Movie theatres in Tamil Nadu will remain shut from Monday to protest the lack of clarity on the tax that would be levied even though the state government has said it will discuss the issue of the local levy of 30 per cent over and above the 28 per cent GST. Multiplex theatres in Tamil Nadu have suspended online booking for the weekend.

Units making matchboxes and firecrackers in Virudunagar, Kovilpati, Sivakasi, and surrounding areas have decided to remain closed indefinitely to protest against the GST rate of 28 per cent. Their apprehension is that while small and medium manufacturers in India will vanish, the import of Chinese crackers will increase.

According to the Fireworks and Amorces Manufacturers Association (TANFAMA), there are 821 fireworks factories in Virudhunagar. Of those, 51 factories, which comprise 10 large groups, pay a central excise duty of 12.5 per cent and 14.5 per cent VAT. Smaller industries paid the 14.5 per cent VAT and were exempt from all taxes.

Weaving and knitting factories in Karur also downed shutters, protesting the move to levy the GST on multiple production processes of the industry.

S Surendhar, secretary, Karur Weaving and Knitting Factory Owners’ Association, said the GST proposals would badly hit textile units and other micro, medium and small enterprises. While cotton yarn would attract 5 per cent GST, 18 per cent would be levied on synthetic yarn. Besides, the GST has been proposed on various processes of production including dyeing, bleaching, colouring, and packing.

Gujarat: Diamond traders to meet deputy CM

In Gujarat, small-scale ceramic tiles manufacturers of Thangadh, near the Morbi cluster, went on strike from Saturday, protesting against the 28 per cent GST rate, which, they say, might spell the death-knell for the units.

According to Suresh Songadh, president, Thangadh Ceramic Association, as against an exempted excise duty for the ceramic units with an annual turnover of less than Rs 1.5 crore, a duty of 28 per cent will impact manufacturers severely. In Thangadh, there are roughly 200 units manufacturing ceramics worth Rs 300 crore.

In addition, the units may also not be able to avail themselves of 15 per cent input tax credit on the natural gas supplied by Gujarat Gas Ltd because the fuel was removed from GST purview.

On the other hand, diamond traders of Gujarat plan to meet Deputy Chief Minister Nitin Patel on Monday to discuss the issue of customs duty on imports of rough diamonds.

Dinesh Navadia, president of the Surat Diamond Association, told Business Standard according to the new customs duty structure, the duty on unassorted rough diamonds is 3 per cent while that on assorted rough diamonds is 0.25 per cent. India imports mainly unassorted rough diamonds. Traders, thus, plan to open a dialogue with the government on the matter.

Kashmir: Opposition parties support traders

Most of the shops and other business establishments were shut in Kashmir. Traders and opposition parties said that the GST would erode the special status granted under Article 370. The strike call was given by the Kashmir Traders and Manufacturers (KTMF).

Madhya Pradesh: Confusion reigns

In Madhya Pradesh, wholesale markets wore a deserted look. “Wholesale traders and customers in Madhya Pradesh are confused over the GST and don't have any knowledge of the levies on different goods," Ahilya Chamber of Commerce and Industry President Ramesh Khandelwal told PTI. As a result, he said, wholesale markets were empty.

West Bengal: Traders apprehensive

Traders in West Bengal were back in business after a one-day strike on Saturday, but with a lot of apprehensions.

"According to rules, we do not come under the GST, but inspectors might harass us and ask for bills and invoices,” said Montu Naskar, a trader in Kolkata, with an annual income of less than Rs 20 lakh.

The Federation of West Bengal Trade Association (FWBTA) shares this apprehension. At least 25 per cent of the 300,000-odd traders in the state fall under this category.

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