The Bombay Sugar Merchants Association has urged the government reconsider or defer the decision to bring sugar, the only essential commodity proposed to be brought under the GST slab. In a memorandum to union finance minister Arun Jaitley, the association pointed out that bringing sugar under GST will increase tax related formalities for traders, a majority of whom have never gone through the procedures. They will take time to understand and practically implement the pre and post sales systems related with GST. We are afraid, this may impact the free availability of sugar across states, Mukesh Kuvedia, secretary general, Bombay Sugar Merchants Association said. Kuvedia said that with wafer thin margins that traders work with, it will be disastrous for the fraternity to take liability of the pre-seller defaulting on the payment of GST.
A sizeable chunk of sugar mills have defaulted in settling dues to cane supplying farmers, banks and cooperative societies, and any default in making GST payments by the millers who presently sell sugar on 100% cash payments to buyers will adversely affect the traders and wholesellers who have purchased the stock during the period. He said that the fixed tariff of Rs 71 per quintal works out to be roughly 2% on the prevailing ex-mill prices of sugar.
The proposed 5% GST may add up to the landed prices, which may have a negative impact on household prices. Under the present consumption pattern in the country, approximately 65% consumption is from the industry and a smaller chunk of 35% goes into the retail household.
Excise duty charged at mill gates is further taken as cenvat credit/modvat by the industrial user a marginal amount actually gets net credited to the exchequer. Thus actual revenue from the sweetener has been negligible. — main contributor being the household consumption. There is all the more panic among market participants on the issue of implication of GST on existing stocks which were earlier tax free disturbance on the free movement of goods post June 25, Kuvedia said.