J&J’s cosmetics plant remains idle for 3 years
Foreign portfolio investors (FPI) have pulled out a net Rs 6,399 crore from the capital markets in May so far on the back of election-related uncertainty and the US-China trade tensions. FPIs pulled out a net Rs 4,786.38 crore from equities and Rs 1,612.62 crore from the debt market during May 2-17, taking the total net outflow to Rs 6,399 crore. NMDC Ltd is mulling owning 100 per cent stake in Australian arm Legacy iron by acquiring the remaining 24 per cent shares and delisting it from the Australian Stock Exchange. Amitava Mukherjee, Director (Finance), NMDC, said the iron ore miner currently holds 76 per cent in Legacy Iron Ore, focussed on development of iron ore, gold and base metal deposits. The revenue department is mulling the idea of setting up a national bench of the Appellate Authority for Advance Ruling (AAAR) as the Authority for Advance Ruling (AAR) mechanism in its current form is not serving the purpose of providing certainty to the taxpayers under the Goods and Services Tax (GST) regime, according to a finance ministry source.
"There has been a view that a second AAAR needs to be set up soon. It would be a national bench only to reconcile divergent verdicts passed by state AARs. We will present the proposal before the GST Council, which is expected to meet in June," said the source.
The government move comes in the wake of taxpayers facing uncertainty and confusion over various tax dues, which are often presented with contradictory claims.
The appellate authority currently has two members-the Chief Commissioner Central of Tax as designated by the CBIC and the Commissioner of State Tax. The appellate authority has been mandated to pass the order within 90 days of filing an appeal.
However, the AARs in different states have passed about 470 orders while AAARs have disposed of around 69 cases till March 2019. Out of the orders passed by AARs, contradictory orders were passed in about 10 cases, a couple of which were later clarified by the Central Board of Indirect Taxes and Customs (CBIC).
The source said the GST law would have to be amended for setting up a second appellate authority since the Act in its present form does not provide for a centralised authority.
Setting up a national bench of AAAR would help bring certainty in the GST era as divergent rulings by AARs leave the industry flummoxed about the tax implication of a particular decision.
"The composition of the national bench of AAAR would be decided after the states agree to the proposal," the source said. The GST Council, chaired by Union Finance Minister and comprising state counterparts, was scheduled to discuss it in the July 2018 meeting, however, it did not arrive at a decision on this. Under the GST law, each state is required to set up an AAR comprising one member from the central tax department, and another from the respective state. An aggrieved party can file an appeal against an order to the AAAR within 30 days, which may be further extended by a month. Industry experts, however, feel that as both AAR and AAAR have only tax officers as members, the ruling is most cases is tilted towards the revenue side. Therefore, a quasijudicial decision-making process of AAR is needed. business It was supposed to be Johnson & Johnson's biggest manufacturing plant in India. It was to eventually employ at least 1,500 people and help bring development to a rural area near Hyderabad.
Yet, three years after the US healthcare company completed construction of production facilities for cosmetics and baby products on the 47-acre site, they stand idle.
Two sources familiar with J&J's operations in India and one state government official told Reuters production at the plant, at Penjerla in Telangana, never began because of a slowing in the growth in demand for the products.
One of them said that demand didn't rise as expected because of two shock policy moves by Prime Minister Narendra Modi: a late 2016 ban on high-value currency notes, and the nationwide introduction of the GST in 2017.
J&J spokespeople in its Mumbai operations in India and at its global headquarters in New Brunswick, New Jersey, declined to respond to a list of questions from Reuters.
Modi's office did not respond to a call and an email with questions.
In the first month after demonetisation, some business surveys showed that sales of products such as shampoos and soap fell more than 20 per cent.
The groundbreaking of the J&J facility in Penjerla, its third in the country, was carried out with much fanfare in 2014, attended by Telangana's Chief Minister Chandrashekar Rao, who hailed the foreign investment as a big win for local communities.
A document dated April 2017 that lists products the company planned to make at the facility, submitted to the Telangana government names baby oil, baby shampoo, baby lotion, baby hair oil, face wash and creams.
At the local pollution control board office, the member secretary Satyanarayana Reddy said the J&J plant had all the required approvals and he was not sure why it hadn't started production.
"It is unusual for such a big plant to stay idle for so long," he said. "But there is no problem from our side."
Chandrasekhar Babu, an additional director at the Telangana industries department, said a J&J company official told him the plant hadn't started due to lack of demand.
The second source familiar with J&J's plans said the company miscalculated Indian market demand.
On a recent visit by a Reuters reporter to the J&J plant, plush, furnished conference rooms and cubicles sat inactive; M. Sairam, the site manager, said production areas with machines were idle too.
— Reuters