The Gujarat Chamber of Commerce & Industry (GCCI) asked Nirmala Sitharaman, the union finance minister, to waive interest and penalties for the Integrated Goods and Services Tax (IGST) due in accordance with notification No. 54/2018 dated October 9, 2018.
The GCCI stated that it has heard from a number of its member units who claim to have received summonses, along with interest and penalty, for IGST that is due in accordance with the notification. These businesses imported goods using the advance licence programme, but because the IGST was not reflected in the Bill of Exchange (BOE), they failed to pay it when the shipment was cleared.
In a letter to Sitharaman, GCCI President Pathik Patwari said: “Many units in Gujarat were not aware of the new notification issued by the GST Council, which stated that IGST had to be paid at the time of clearance of the consignment and then claimed as a refund through Input Tax Credit (ITC), or a Letter of Undertaking (LUT) was required to be submitted for not paying the IGST. As a result, they cleared their consignments without paying IGST, assuming it was not applicable and no LUT was submitted. The Customs Department also cleared their consignments without the LUT or payment of IGST.”
The GCCI said that it believes that the units in question did not intend to deliberately evade payment of tax, but this was an inadvertent error committed on their part. Furthermore, the GST Department did not incur any revenue loss due to this transaction. As per the revised notification, the units would have paid IGST in advance and then claimed a refund through ITC, resulting in the same outcome for the GST Department in terms of revenue collection.
However, due to the accumulated interest and penalty, many of the units are unable to pay the outstanding tax amount. This could have adverse financial consequences for these units, as most of them are MSMEs, it said.