SME Times News Bureau | 06 Jan, 2020
Industry body Federation of Indian Export Organisations
(FIEO) said on Monday termed it unfortunate that the e-wallet scheme aimed at
easing liquidity problem in the wake of GST roll-out in 2017 has not been
operationalised yet.
"Unfortunately, the scheme of e-wallet, which was
recommended by the GST Council as early as October 6, 2017, which was expected
to be put into operation in April 2018 and then deferred to October 2018, has
not yet been rolled out," FIEO President Sharad Kumar Saraf said in a
statement.
"The scheme may have helped in easing the liquidity problem of
exporters," he added.
The e-wallet scheme is basically the creation of electronic e-wallets, which
would be credited with notional or virtual currency by the Directorate General
of Foreign Trade (DGFT). This notional or virtual currency would be used by the
exporters to make GST/IGST payment on goods imported by them so their funds are
not blocked.
Saraf, however, admitted that GST has imparted much needed competitiveness to
exports.
The statement came in response to reports which, FIEO said, singled out
exporters for GST fraud. It noted that painting all exporters with the same
brush was unfair and damaging.
The report quoting unnamed Finance Ministry officials said that some of the
"star" export houses had fraudulently claimed IGST refunds. The
reports said that there were instances where an exporter with over Rs 50 crore
exports of readymade garments had taken refund of Rs 3.90 crore while the
entity's total GST payment in cash was merely Rs 1,650.
In another case, it was claimed that tax payments in cash had been found as Rs
51,201 while the exporter had obtained refund of Rs 9.59 crore.
The Finance Ministry official also claimed that nine star exporters were not
traceable at their addresses. In two cases, the premises were found sealed and
seized by the banks as the exporters had been declared as non-performing assets
(NPAs).
Reacting to this, the FIEO chief said that exporters have import export code
number based on PAN and bank accounts. Further, they have obtained GST
registration through KYC cross verifying their email and mobile number.
"The (star) status holders have submitted the CA certificate certifying
the specified exports while claiming the coveted status. Due diligence has been
done by all the authorities issuing such documents. If an exporter is not found
at his registered address, the possibility is that he would have changed his
place of business and records may not have been updated," Saraf said.
In what appears a point-by-point rebuttal, FIEO said that there are many
instances where actual payment of GST to government is very low as compared to
IGST refund since while few goods are subject low GST, many services used by
exporters have high GST.
"Therefore, if a merchant exporter has taken goods at 5% and services at
18%, he has sufficient ITC at his credit to pay for 5% IGST at the time of
exports. He may not either pay IGST in cash or pay only a fraction of that
while claiming complete refund of IGST," it said.