Hyderabad: The Indian steel industry has called upon the government to reevaluate certain provisions of the Goods and Services Tax (GST) Act, citing challenges in the procurement of steel scrap.
Under the current GST Act of 2017, input tax credit (ITC) is granted to buyers as they discharge their output tax liabilities, based on the 'value addition' at each stage. However, the industry asserts that some sections of the Central GST Act are unjust to genuine buyers.
The 2nd meeting of PAN India GST resolution committee, constituted by All India Induction Furnaces Association was held recently at Hyderabad.
In the meeting, association president Yogesh Mandhani said Sections 16(2)(c), 37, 38, and 73 of the CGST Act pose a concern. These sections allow ITC reversal for buyers if their suppliers fail to properly claim ITC or remit taxes through their returns. Buyers argue that they have no control over supplier compliance and should not be penalized for their suppliers actions. Furthermore, buyers are burdened with the responsibility to repay the reversed ITC along with interest, treating them as offenders rather than victims.
The steel industry asserts that these issues have led to a loss of over Rs 10,000 crores annually for the government. Despite buyer penalties, real offenders, who collect taxes from buyers but do not remit them to the government, often evade detection.
The industry's recommendations include revising Section 16(2)(c) to protect buyers from ITC reversal due to supplier actions, distinguishing between fraud and technical issues, and immediate corrections in the GST system to prevent further losses.