AHMEDABAD: A high rate of Goods and Services Tax (GST), with no provision for its refund, threatens to kill the aluminium recycling industry, a majority of which are MSMEs, its representatives said here today.
“The aluminium recycling industry, which is represented by around 5,000 Micro Small and Medium Enterprises, is severely affected by the accumulation of GST due to over-valuation of imports of aluminium scrap by the Customs,” said Mahendra Shah, president of the All India Non Ferrous Metal Exim Association.
The All India Non Ferrous Metal Exim Association represents the aluminium recycling industry and largely depends on imported metal scrap. Gujarat accounts for around 40 per cent of the industry, association members said.
GST on metal scrap at 18 per cent is compounding the problem of the industry, he said, adding that the industry has demanded that it be reduced to 5 per cent at par with GST on other kinds of scrap.
“Reduction of GST on metal scrap to 5 per cent will lead to no accumulation and, at the same time, the government will not incur any revenue loss as it will not affect tax collection. The government would get GST on finished products. Reduction of GST on scrap will help the industry survive,” Shah added.
Kishore Rajpurohit, the past president of the association, said that 20-40 per cent extra duty was being paid on the import of aluminium scrap due to the Customs assessment being done on the basis of an alert published by the Directorate General of Valuation.
“The custom duty should instead be assessed at transaction value as per section 14 of the Customs Act, 1962. GST on ocean freight on imports and on intermediary services are acting as double taxation and this is greatly hurting the industry,” Rajpurohit said.
Further, with value addition on metal scrap being less at around 12 per cent, effective value addition under the GST regime remains only at around 8-12 per cent, leading to accumulation of balance GST, he explained.
“While the government refuses to hear our appeal, a majority of MSMEs which are into aluminium recycling business are getting economically and operationally weak. If the situation persists, many units will turn into NPAs (non performing assets)as bank loans will get accumulated along with GST,” Rajpurohit said.