J&K High Court notices to Centre, GST Council and state govt over refunds

The Jammu and Kashmir High Court issued notices to the Centre, the state government and the GST Council over reduction in refunds of the taxes paid after the new indirect tax system was rolled out.


Companies such as Jindal Drugs have moved court saying there are less refunds under the GST system for inter-state movement of goods than was under the previous regime.


An order in the case may have ramifications for other states such as Himachal Pradesh, Uttarakhand and Sikkim which have incentives schemes. J&K had come out with its industrial policy in 2002, promising 100 per cent refunds on excise duty paid for 10 years to companies setting up manufacturing units in the state.  This was reduced to 75 per cent, against which petitions were filed in courts. The case is pending in the Supreme Court.  However, under the GST regime, refunds for intra-state movement of goods were reduced to 29 per cent of the integrated GST (IGST) paid. 


Abhishek Rastogi, counsel for Jindal Drugs, said, “The unintended omission of continuing tax benefits has virtually made doing business in these areas economically unviable.”


Agrieved by this, industrial units approached the high court as a last resort to address their woes, he said.  For intra-state movement of goods, there is no such problem at the outset since the state gives total refund of state GST (SGST) paid. On the other hand, the Centre gives 58 per cent refunds for Central GST (CGST) paid.


The state also gives 42 per cent refund of CGST paid, Rastogi said.


However, the procedure for getting refunds is not time-bound, leading to delays. All these have adversely affected the investment climate in the state and are likely to hit job creation, said experts.

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