Steel industry knocks at Centre’s door for rationalisation of GST

Tribune News Service

Vijay C Roy

Chandigarh, February 17

Facing crisis, the secondary steel scrap recycling industry in Punjab as well as units spread across the country have requested the Centre to rationalise the GST structure on metal scrap, which is a pressing issue for the iron and steel sector.

The industry is under scrutiny as scrap dealers have been found guilty of claiming fraudulent input tax credits. Not only this, the extent of the input tax credit availed is irregular.

‘Derailed plans’

The measures to check errant scrap dealers also impact the industry adversely. It has derailed the existing plans of the industry to invest more in this sector. —Mohinder Gupta, president, Induction Furnace Association, Mandi Gobindgarh

There is an underpayment of tax, which eventually leads to revenue loss for the government. While government bodies have made efforts to curb tax evasion on account of fraudulent input tax credit, action taken by these bodies have also led to certainpractical challenges for manufacturers.

According to data, the industry in Punjab, which manufactures steel by recycling the scrap steel through induction furnace route is highly dependent on unorganised scrap dealers for raw material to the extent of around 60 per cent. Twenty per cent scarp steel is imported, 10 per cent is supplied by organised sector and another 10 per cent demand of the industry is met by the use of sponge iron.

Mohinder Gupta, president, Induction Furnace Association, Mandi Gobindgarh,said,“The measures to check errant scrap dealers also impact the industry adversely. It has derailed the existing plans of the industry to invest more in this sector and achieve the target steel production in the country as envisaged in the National Steel Policy, 2017. Therefore, the government should consider our recommendations at the upcoming GST Council Meet, scheduled to be held this month.”

The total scrap melting capacity in Punjab is around six lakh tonnes per month and around 150 units engaged are engage in this business.

The industry has suggested that the government should exempt the metal scrap sold by scrap dealers from the GST. The industry further suggested that GST should be levied on steel sold to manufacturers, separate entries in the GST schedules should be introduced and HSN code should be given to old scrap and new scrap dealers.

Sudhir Goyal,member, All India Induction Furnaces Association (AIIFA) said, “The current GST regime causes significant disruption in the supply of metal scrap, which is the main raw material. Several litigations are filed for the GST disputes, which costs the industry enormous amount and wastes time. The government should consider our recommendations for implementing reverse charges mechanism (RCM), introduce distinct HSN codes for old scrap and new scrapand notify old scrap under reverse charges mechanism (RCM) on sale to manufacturers.”