While the central government is yet to take any decision regarding the utilization of the accumulated input tax credit (ITC), the power loom weavers have decided to knock the doors of Gujarat high court for justice. The Federation of Gujarat Weavers Welfare Association (FOGWA) is taking the opinion of the industry leaders and associations for filing write petition against the central government over the issue.
FOGWA president Ashok Jirawala told TOI, “We are in the process of filing a writ petition in the Gujarat HC for justice. The central government has published a notification wherein they have stated that the accumulated credit on the GST ‘shall lapse’. This means that the power loom weavers won’t be able to utilise the accumulated credit in their book of accounts. However, it is going to be a big loss to the power loom sector.” Jirawala added,
“We have taken the advice of the high court advocates and that they are of the opinion of filing a petition. The decision of the Gujarat HC will be binding on the central government and that if need be we will knock the doors of the Supreme Court as well.” FOGWA stated that the GST Council had decided in its 28th meeting to allow refund on ITC in the textile industry with effect from August 1 which was non-refundable earlier.
However, when the new notification was issued it stated that the accumulated ITC lying unutilized in balance, after payment of tax for and up to month of July 2018 on the inward supplies ‘shall lapse’. Due to the usage of the word ‘shall lapse’, weavers are unable to use their unutilized ITC credit.
Leader of the power loom sector Ashish Gujarati said, “The power loom sector is sitting at a loss of Rs 600 crore due to the lapse of the ITC credit lying unutilized in their accounts so far. When GST Council allowed the refund of ITC credit, the decision was reversed by the tax authorities in the notification. Hence, the decision is not in line with the intention of the central government. However, we have sought the intervention of PM to resolve the issue.” Gujarati added, “In September, we wrote a letter to PM for sorting out the ITC credit issue for the benefit of the power loom sector. It has been almost two months now that the PM is yet to react. However, we are left with no option, but to file a PIL in the Gujarat high court.