JANUARY 30, 2018

By Jayant Gabale

1. CHAPTER Headings involved are 59.03 and 62.17.

2. Under the old tax regime -

a. Coated Textile falling under Chapter heading 5903 was exempt from central Excise duty vide Notification No 30/3004 C.E. dated 09-07-2004.

b. The VAT applicable up to a price of Rs. 100 per meter too was exempt and beyond Rs. 100/- was chargeable to 5% VAT.

c. Articles of Textile falling under Chapter 62 were exempt from payment of excise duty vide Notification No 30/2004 C.E. dated 09-07-2004 and was exempt from VAT.

3. Under GST

a. Coated Textile falling under Chapter Heading 5903 attracts 12% GST irrespective of selling price.

b. Articles of Textile falling under Chapter 62 upto a sale value of Rs. 1000/- per piece attracts 5% GST whereas beyond Rs. 1000/- attracts 12% GST.

4. Coated textile/fabrics are used as major inputs for manufacture of Articles of Fabrics and therefore small and medium traders have come under a situation of inverted tax structure. Players going in for composition needs to take entire GST as cost.

5. The situation has become very grave within the trade.

6. Suggestion:

Like we have value groups in Articles of Textile attracting lower or higher GST a similar group in the Coated Fabrics also may be created on the lines of earlier VAT exemptions. For example, GST on Coated Fabrics sold for a value of Rs. 100/- per meter may be taxed at 5% where as one beyond that may be taxed at 12%.