GST and its Effects on Sugar Mill Machinery Manufacturers

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How has GST affected the Sugar Industry?
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• The implementation of GST on July 1st 2017 has
  added a lot of chaos to every industry. Sugar
  traders reduced purchasing sugar in June due to
  the uncertainty regarding the new tax system and
  are now claiming that there is shortage of
  supply. While most of the industries have
  welcomed GST, sugar industry is still awaiting
  clarity on the tax that sugar mill machinery
  manufacturers need to pay.

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• In India, sugar industry is one of the top
  generators of employment at front as well as back
  ends. And it is a sad scenario that there is
  still no clarity about how GST will affect them.
• Ashok Ranavat, president of Bombay Sugar
  Merchants Association, said, We are still not
  sure if we will get back Rs.124/quintal cess that
  was purchased till 30th June 2017. The
  association did not add any rate on its commodity
  on 1st July and instead declared that they had no
  stock. Due to this uncertainty, sugar wholesale
  traders stopped purchasing it and claimed that
  there was no supply.

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• As per the previous tax rules, an excise duty of
  Rs.71/quintal was applicable which was about 2
  percent of the sugar price. Also, a cess of
  Rs.124/quintal was applicable. Now, the new
  regime has applied a GST of 5. To this, Sanjeev
  Babar, MD of the Maharashtra State Co-operative
  Sugar Factories Federation Ltd said, 5 GST on
  sugar will cause sugar to get expensive.
• However, consumers in Tamil Nadu and Andhra
  Pradesh have some relief as sugar will get
  cheaper. This is due to the fact that these two
  states have phased out VAT.

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• However, A. Vellayan, Chairman of Murugappa
  Group, which is one of the largest sugar traders
  in South India feels that for some time, the
  demand for sugar will be low in Tamil Nadu as
  buyers will wait for clarity on GST than pay out
  the high VAT rate.

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• According to most sugar traders, the real problem
  is in case of sugarcane fibre, press mud and
  bagasse which do not attract VAT but have 5 GST
  applicable to it. This has caused the traders to
  challenge the authorities as even the Supreme
  Court has upheld the fact that bagasse is a waste
  product and not manufactured. Also, by products
  of bagasse such as steam and power is partly used
  to manufacture few taxable goods, electricity,
  etc which are all outside the GST bracket.

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All these points have caused uproar and sugar
traders as well as sugar mill machinery
manufacturers feel that GST procedure needs to be
worked out and be more precise.
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