More than 100 power loom weavers in Tamil Nadu, mainly in Erode and nearby areas, have demanded payment of GST refunds for the tax paid for nearly 13 months in 2017-2018.
B. Kandavel, organising secretary of Federation of Tamil Nadu Powerlooms Associations, told The Hindu recently that in Erode, 120 weavers should get ₹160 crores refund and they had all the required documents.
He explained that when GST was introduced in July 1, 2017, manmade fibre (MMF) and MMF yarn attracted 18 % duty and MMF fabric was levied 5 % duty. In November of that year, the duty on yarn was reduced to 12 %.
The weavers had paid the GST assuming that they would get refund of the duty paid (inverted duty structure). C. Jaganathan, a weaver, paid ₹50 lakh as GST in 2017-2018. But, in January of 2019, they were told that the input tax credit for the GST paid will be available only from August 1, 2018 and the weavers should make the input tax account (for July 2017 to July 31, 2018) nil to get the refund from August 2018. However, hoping they will get relief, many weavers did not make the required changes in the account. Hence, they were asked to pay 18 % penalty.
Mr. Kandavel said several weavers had no option but to shut down operations then because of this issue.
For almost a year now, the weaving sector is facing slowdown in orders and many units are in need of financial support. If the government refunds the tax paid during the 13 months in 2017-2018, the weavers will get relief.
Across the country, the government may have to pay ₹ 1,000 crores as refund to the MMF sector weavers, he said.
