Raw cotton traders in the Khammam cotton market are shocked to see that 28 of them obtained GST notices via the department for Rs 33 cr payment of the general sales tax on the cotton they bought through market means in the year 2017-18.
Complying notices the traders would cease purchasing the raw cotton from the farmers asking to resolve the problem.
A trader explained: “We have already paid GST on raw cotton lifted from farmers in 2017–18. As we had not been informed by GST officials, we paid GST under the sales head account, instead of the purchases account. It is not our mistake.”
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“It is the fault of the government. GST officials should show us a way out by making available an adjustment option in payments. Our payment under a different head should not be considered fraud but a mistake,” he emphasized.
A penalty would be imposed along with the notice for Rs 33 cr payment of the general sales tax.
Under headings 5201 and 5203 of GST, the cotton comes beneath the 5% tax slab. However, the farmers would not be obligated to furnish the taxes and not be registered under GST, raw cotton purchasers would be needed to pay the tax on the grounds of reverse charge.
On buying the raw cotton a GST must be paid from the farmers and not its sale to ginning mills and cotton industries, traders contend.
The GST council has furnished the notices in Khammam, Mahbubabad, Warangal, and Karimnagar districts. Rs 100 cr is the approximate amount levied to be paid in Telangana.
Telangana State Cotton Traders Association vice-president Godavarthi Srinivasa Rao stated that “We have already paid GST for the said year. The money has already gone to the Central government’s exchequer. It is only that we have paid it under a different head, as GST officials had not educated us properly.”
In that concern, the traders would represent before Telangana finance minister T. Harish Rao and Union finance minister Nirmala Sitaraman. However, the problem does not being solved till now. The case is pending with the Ranga Reddy GST commissioner.
No cotton purchase will be there from the trader’s end of the market until the problem of GST would get solved. N Anand, Export Cell in charge of Khammam Chamber of Commerce, mentioned that “It is unjust on part of GST Council to impose a penalty on the amount already paid.
GST may take the amount from our bank accounts on the pending tax. This will affect our payments to be made to farmers,”
