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Pre-GST Stock Receives Govt Stamp of Approval


Manufacturers and retailers can sell old stock for 3 months after stamping new prices

Manufacturers and retailers can stamp new prices on their preGST stock of goods and sell them till end September, the government has said, ending the confusion over the stock that was left unsold on July 1, and checking potential malpractices. But a section of industry was upset that the government had not issued this clarification earlier.

“If we would have known this earlier, the industry could have planned the transition better. Retailers would have not have been under pressure to liquidate old stock at almost cost price and primary sales from companies to trade would not have declined the way it did in June,” said Videocon chief operating officer CM Singh.

Any increase in maximum retail price (MRP) due to GST on the older inventory will have to be advertised in two national papers, but there is no such requirement if the new MRP is lower, said a notification issued on Tuesday. The government has also sought to cap the price increase because of the transition to new GST rates by explicitly stating in the notification that the difference between pre-GST retail price and the revised price “shall not, in any case, be higher than the extent of increase in tax”. The same principle will also apply in the case of imposition of fresh taxes.

“We have granted relaxation till 30.9.17 to industry under Packaged Commodities Rules to write new MRP on items of reduced prices due to GST,” consumer affairs minister Ram Vilas Paswan tweeted.

The minister added that fall in prices due to lower GST should be passed on to consumers and that the government would take legal action against vendors who did not declare revised MRP.

“This is basically to curtail potential malpractices by trade and manufacturers who may want to tweak pricing and make higher profit,” said B Krishna Rao, deputy marketing manager at Parle Products, the country’s largest biscuit maker.

Tax experts said the move to allow sale of old stock at revised prices will particularly help those companies whose products now fall in a higher tax category. “MRP may need to be revised in certain cases, specially where the GST rate is now 28%,” said Pratik Jain, leader-indirect taxes, PwC. Jain said even after factoring in the 60% deemed credit on the Central GST component allowed on existing stock, there would be a loss of 6-7% at retail level.

“This is a welcome relief for the industry. However, while increasing the MRP, it needs to be ensured that benefit of deemed credit is appropriately factored in,” Jain said. The old MRP will have to be necessarily displayed on unsold inventory and stickers specifying the revised prices can be pasted alongside, said consumer affairs secreta- ry Avinash Srivastava.

SMOOTH GST ROLL-OUT


Revenue secretary Hasmukh Adhia said the new tax has been accepted in the country and that as of now, there had not been a single case where there had been any problem. He said the government was keeping a close watch on prices and the supply situation. Over 200 officials of the rank of joint secretary and additional secretary have been assigned 4-5 districts each to closely watch the implementation process. In addition, central monitoring committee of 16 secretaries will meet every Tuesday to keep a tab on supplies and prices. The revenue secretary said toll, mandi charges, fee on vehicle entry into states will continue but there will be no levy of any entry tax on goods movement. About 2 lakh new registrations have been done on the GST Network of which 39,000 have been already approved. Move to allow sale of old stock at revised prices will particularly help those cos whose products now fall in a higher tax category

The Economic Times New Delhi, 05th July 2017

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