Committee recommends more changes in GST Act

The GST Law Advisory Committee’s recommendations will now be examined in the next meeting of the GST Council likely to take place in January.

The GST Law Advisory Committee has recommended some more changes in the GST Act which is expected to ensure its ease of compliance and bring more relief to the traders’ community.

The committee has submitted its report to Revenue Secretary Hasmukh Adhia. The recommendations, more than 100, include making the refund process automated and one consolidated return in place of many types of return.

A member of the panel, Praveen Khandelwal, said the committee has suggested abolition of reverse charge mechanism and deferment of e-way bill till 2019. The panel wants an alternative method in place of e-way bill. The GST Council, in its meeting on 6 October, had decided that e-way bill system would be introduced in a staggered manger from 1 January 2018 and would be rolled out nationally from 1 April. The panel also wants that inter-state transactions be allowed in the composition scheme.

The panel was set up by the Finance Ministry and was asked to submit its re- port by 30 November on the proposed changes in the GST Act. The panel, chaired by Gautam Ray, has Praveen Khandewla, Arghys Sengupta, Ajay Sahai, Om Prakash Mittal and Vinod Jain as members. Sources said the report of the committee will now be examined in the next meeting of the GST Council which is likely to take place in January.

Talking about the return process, Khandelwal said it is complex and, therefore, it should be simplified and rationalised. Moreover, the return should be filed quarterly but the tax may be paid on monthly basis, he added.

Classification of items should be such that the raw material and finished products are in the same slab. This would make refunds faster, the panel has rec- ommended. Search or raid should be conducted only if the authority is having credible evidence against a person and that too only after orders of the commissioner, it says.

The recommendations are based on more than 700 representations, received by the panel, on problems faced by the industry over return filing, the e-way bill, input tax credit, and exports. Steel Strips Wheels Ltd is engaged in the manufacturing of steel wheel rims catering to different segments of the automobile industry. Its products include steel and alloy wheels used by two and three wheelers, tractors, high speed trailers, passenger cars and trucks. It offers a broad range of wheels which can be modified as per application and needs of the customers. Steel Strips Wheels has three production facilities located in Punjab, Chennai and Jamshedpur. The company produces passenger car wheels at Dhappar in Punjab and Oragadam in Chennai and truck wheels in Jamshedpur in Jharkhand. It supplies steel wheels to the world’s top names in the original equipment manufacturer area, catering to the auto parts and equipment industry. It has taken a balanced view in the commercial vehicle wheel segment, with two new plants starting production during the current year. The Indian passenger car market is huge with a potential revenue close to Rs 3,000 crore during the next few years and this will make the company take advantage of the potential growth and traditional shift in the wheel industry. Since a lot of international manufacturers are making India a manufacturing hub, Steel Strips Wheels expects the Indian export competitiveness to improve considerably in the future. The acceleration of structural reforms, move towards a rule based policy framework and low commodity prices have provided a strong economic growth impetus. Even the foreign investments have improved due to recent deregulation measures and efforts to improve the ease of doing business. The auto sector has done well in the last decade, with new product launches keeping the customers, technology and brand in mind. GST implementation has the potential to generate huge employment opportunity and multi layered growth, bringing in productivity led gains for the country. Analysts expect the auto industry to consolidate further with increase in volume growth backed by decline in fuel prices, pick-up in economic activities, thrust in infrastructure investment, low inflation and interest costs. All these factors are positive for Steel Strips Wheels and should drive domestic passenger vehicle and commercial vehicle volume growth sales to grow CAGR of 14% and 20% respectively over the next three years. Despite demonetisation, the country’s exports grew at a fast pace during FY2016-17 to achieve volume sales of $274 billion. There is a strong possibility that the exports may reach $330 billion in the next 18 months. The Steel Strips Wheels management has recently released a volume guidance for the Q4FY2017-18. It is expecting the highest ever quarterly volume growth with a confirmed wheel order book of 40 lakhs, thereby registering an 11% growth. Similarly, the order book for the truck segment is rising rapidly, with new products portfolio and a larger imprint in the export market. The next financial year also looks extremely bright for the truck segment, with the addition of the new Chennai truck plant adding huge capacity to cater to the rising global truck wheel demand. The stock, currently quoting at Rs 1,025, can be bought for a six-months’ investment view, for a 22% price appreciation. Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.