Latest news with #Muzaffarnagar-based
Time of India
11-06-2025
- Business
- Time of India
Policy to help promote sale of ‘Made in UP' wines in retail stores soon
Lucknow: The state excise department is planning to make it mandatory for retailers to start stocking indigenous wines produced from fruits grown in UP on their shelves. Acting on the representation forwarded by the vintners (winery owners and operators), the department will soon present the proposal before the state cabinet to amend the existing policy and rules to create a minimum quota to promote its retail trade. Tired of too many ads? go ad free now The four winery operators in Lucknow, Muzaffarnagar, Saharanpur, and Noida would benefit from the move, as would hundreds of local farmers within the catchment area. Though provisions were made in the excise policy to start manufacturing wine from locally produced fruits in March 2022, the commercial operations of the wineries are yet to begin in the state. "The idea behind introducing local wine was to help farmers generate increased income. But until our products find space in the retail ecosystem, achieving financial viability will not be possible," said Muzaffarnagar-based Sanjay Gupta, who desperately wants to enter the retail market with five different local wines produced from mango, litchi, jamun, grapes, and mixed fruits for a year. Since the UP govt decided not to impose excise duty on 'Made in UP' wines, retailers showed no interest in stocking the products in the stores. "Every retailer has to provide a fixed income to the excise department through the liquor trade. Called MGQ (minimum guarantee quota), it is mandatory for retailers to purchase a minimum quantity of liquor bottles in a month to assure a certain fixed revenue to the state," said a Lucknow-based retailer. Over the sale of country liquor, English wine, and beer bottles, a hefty portion of the price is paid as excise duty to the state coffers, helping retailers achieve the MGQ. Tired of too many ads? go ad free now As the sale of local wine would not generate any excise duty for the state, retailers will not be able to achieve MGQ in return. "That is why no retailer shows interest in stocking local wines and instead focuses on the products which have higher demand," the retailer added. A senior excise officer said provisions need to be made in the existing policy to create a sub-quota within the MGQ to promote local wine. Lucknow: The state excise department is planning to make it mandatory for retailers to start stocking indigenous wines produced from fruits grown in UP on their shelves. Acting on the representation forwarded by the vintners (winery owners and operators), the department will soon present the proposal before the state cabinet to amend the existing policy and rules to create a minimum quota to promote its retail trade. The four winery operators in Lucknow, Muzaffarnagar, Saharanpur, and Noida would benefit from the move, as would hundreds of local farmers within the catchment area. Though provisions were made in the excise policy to start manufacturing wine from locally produced fruits in March 2022, the commercial operations of the wineries are yet to begin in the state. "The idea behind introducing local wine was to help farmers generate increased income. But until our products find space in the retail ecosystem, achieving financial viability will not be possible," said Muzaffarnagar-based Sanjay Gupta, who desperately wants to enter the retail market with five different local wines produced from mango, litchi, jamun, grapes, and mixed fruits for a year. Since the UP govt decided not to impose excise duty on 'Made in UP' wines, retailers showed no interest in stocking the products in the stores. "Every retailer has to provide a fixed income to the excise department through the liquor trade. Called MGQ (minimum guarantee quota), it is mandatory for retailers to purchase a minimum quantity of liquor bottles in a month to assure a certain fixed revenue to the state," said a Lucknow-based retailer. Over the sale of country liquor, English wine, and beer bottles, a hefty portion of the price is paid as excise duty to the state coffers, helping retailers achieve the MGQ. As the sale of local wine would not generate any excise duty for the state, retailers will not be able to achieve MGQ in return. "That is why no retailer shows interest in stocking local wines and instead focuses on the products which have higher demand," the retailer added. A senior excise officer said provisions need to be made in the existing policy to create a sub-quota within the MGQ to promote local wine.
India Today
11-06-2025
- Business
- India Today
GST: The rising cost of compliance
(NOTE: This article was originally published in the India Today issue dated June 16, 2025)In December 2022, Muzaffarnagar-based entrepreneur Neeraj Kedia, managing director of zinc sulphate manufacturing firm Chakradhar Chemicals, received an unexpected notice from the Goods and Services Tax (GST) department, raising a tax demand of around Rs 95 lakh and interest of Rs 1.15 crore for the period from July 2017 to March 2018. It stated that the Input Tax Credit (ITC), which allows businesses to get reimbursement for the taxes they paid on their purchases, should not have been claimed by Kedia, as his supplier had not filed Form GSTR-3B, the monthly return to declare GST liabilities. The notice further alleged that Kedia had failed to file the form back in 2017. He was stunned. Like many small and mid-sized business owners, such a notice triggered not only a legal alarm but also operational disruption. Kedia responded swiftly, highlighting a key point: the Form GSTR-3B functionality wasn't even available on the GST portal at the time in question. The case was finally settled in September 2024. But addressing a show-cause notice years after is no easy task—it involves combing through old records, rechecking financial data and reconciling accounts. 'You have to jog your memory, track down data from years ago and build your case from scratch,' Kedia though, is only part of the ordeal. Other hassles could include multiple visits to the GST office, pleading your case with officials and, finally, succumbing to the one solution that magically gets files cleared—paying a bribe. This is the common reality entrepreneurs encounter routinely, overwhelmed by the growing complexities of GST compliance and notices. However, of the more than 10 entrepreneurs India Today spoke to, none wanted to go on record, for fear of retaliation. Photo by: Chandradeep Kumar advertisementGST was undoubtedly a landmark reform in India's taxation system. Founded on the principle of 'one nation, one tax', it was designed to promote ease of doing business. The regime streamlined a host of indirect taxes previously levied separately by the Centre and states, such as sales tax, excise duty, VAT, and central sales tax, thereby significantly reducing the compliance burden. GST also eliminated inter-state barriers, introduced IT-based compliance mechanisms, and minimised tax rate disputes, drawing more businesses into the taxpayer net and accelerating formalisation. Under the earlier VAT and excise regimes, businesses often resorted to overbilling or underbilling to save on taxes that amounted to 18-20 per cent. Honest businesses found it difficult to compete, as others could sell their products for cash at significantly lower prices. GST changed that by reducing incentives for tax evasion and creating a level-playing field, says Prashant Patel, director, R.K. Synthetics, an Ahmedabad-based dyes and chemicals manufacturer, and former president of the Federation of Indian Micro and Small & Medium Enterprises. Over time, businesses began to accept GST and saw its benefits. It is no surprise that GST collections have risen year after year, with net revenue touching Rs 19.56 lakh crore in FY25—an 8.6 per cent increase over Rs 18 lakh crore in now that the system has largely stabilised, the government seems to be adding more rules, creating new challenges and reversing some of the progress made toward ease of doing business. Frequent amendments and increasing compliance requirements have added significant cost and burden, especially for Micro, Small and Medium Enterprises (MSMEs), which are resource-constrained to begin not simple, taxGST was meant to simplify taxation. However, in its current form, the system has become complex. This is because GST is levied on every transaction for intra-state supply of goods and services by both the Centre and state. The Centre levies what is called Central GST or CGST on intra-state supply of goods and services, while the states impose State GST or SGST. Integrated Goods and Services Tax or IGST is levied for inter-state every company must obtain a separate GST number for each state in which it operates. Each registration in turn requires the company to file two forms (GSTR-1 and GSTR-3B) and reconcile another (GSTR-2B) every month. So, if a company operates in 10 states, it must submit 20 forms monthly, amounting to 240 GST forms annually, according to Mumbai-based chartered accountant Kush Vora, partner at accounting firm SC Vora & Co who specialises in GST for MSMEs. In addition, two annual returns (GSTR-9 and GSTR-9C) must be filed by businesses exceeding a turnover of Rs 2 crore and Rs 5 crore, regulations are added every few months, making it harder for entrepreneurs to keep up. First came e-invoicing, which was made mandatory in August 2023 for businesses with a turnover above Rs 5 crore. Then, in October 2024, the government introduced the Invoice Management System on the GST portal, says Rajat Mohan, senior partner at Delhi-based tax consulting firm AMRG & Associates. 'With changes happening every 6-8 months, most business owners no longer feel confident filing GST returns on their own. They're forced to rely on professionals just to stay compliant.' For example, in 2023, the government issued notices to several MSMEs in Gujarat, demanding 18 per cent GST on the sale of leasehold industrial land with retrospective effect. This meant that any such land sold after July 2017—when GST was implemented—was now subject to the tax. There was no such provision under the previous VAT and Service Tax Typically, when such significant amendments are introduced, the government ensures extensive communication through advertisements, circulars and newspapers. Quoting the finance ministry spokesperson, Shashank Priya, member-GST, Central Board of Indirect Taxes and Customs (CBIC), says the GST Council and its subordinate bodies actively engage with industry and trade associations to ensure that recent amendments and clarifications are effectively communicated to MSME stakeholders. However, in the Gujarat case, though the GST provision technically existed, it was not clearly communicated to stakeholders. The Gujarat Chamber of Commerce & Industry moved the state high court, finally securing a favourable judgment in January this though, defends the multiple changes. GST, he says, is a newer tax system and, like any large-scale reform, is in a continuous process of fine-tuning. 'As the government, businesses and tax professionals interact with the system, many new issues, inefficiencies, or unintended consequences come up. Rules are then amended/clarifications issued to fix these gaps,' he adds. Systemic challengesUnder the current GST regime, businesses are required to file three common returns in a month. The first is GSTR-1, a statement of total sales made, and the second is GSTR-3B, a record of net GST liability. The third, GSTR-2B, is a monthly auto-generated statement that captures the details of all purchases made in a given month. Businesses, essentially, get tax credit on the purchase of raw materials. So, once a seller files their sales return in their respective GSTR-1, the data automatically reflects in the buyer's GSTR-2B, allowing them to claim ITC on raw material as it sounds, the process is far from straightforward. The rigidity in the system makes it difficult for the less tech-savvy entrepreneurs to navigate the returns independently, says B.C. Bhartia, president, Confederation of All India Traders (CAIT), forcing them to hire professional services for the firm, which adds to their costs. 'It is a clear case of a good law poorly implemented,' he says. For instance, since GSTR-2B form is system-generated and auto-populated based on the supplier's filing of GSTR-1, any error or omission on the supplier's part can result in significant tax liability for the buyer for no fault of their own. Kedia demands a mechanism for entrepreneurs to report such discrepancies, with the government resolving another example, Kedia points out how if a supplier's GST registration is cancelled, the authorities often issue a notice to the buyer for 'wrongly claiming' ITC, calling the transaction a fake deal, instead of pursuing the defaulting supplier. 'Why should an entrepreneur be penalised for issues with the supplier's GST registration?' he asks. 'The responsibility lies with the government to ensure that GST numbers are issued only to verified and compliant vendors. And if a GST registration is cancelled, such vendors should be barred from making sales altogether,' says Rakesh Chhabra of RAI Industries Association, Sonipat, Haryana. He emphasises that this is a common problem for MSMEs—many are accused of falsely claiming ITC. However, not everyone has the resources to challenge it in big problem with GST is that it leaves too much room for interpretation. HSN (harmonised system of nomenclature) codes determine how products are classified; often, a single product can fall into multiple categories. Who can forget finance minister Nirmala Sitharaman's popcorn math when, during the 55th GST Council meeting, she revealed that the ready-to-eat salty popcorn is taxed at 12 per cent, while the caramel variety would attract 18 per cent GST. 'Even after seven years of GST implementation, so many products are still open to interpretation—with the Centre, the state and the entrepreneur each having their own way of reading the law,' says Bhartia. The bigger issue, he adds, is that there is no central authority to conclusively resolve these ambiguities. The government did set up the Authority for Advance Ruling (AAR) to help taxpayers seek clarification on tax matters. However, since each state has its own AAR with differing interpretations, it defeats the very purpose of 'one nation, one tax'. Siloed approachWhile GST is a completely digital system, the scrutiny and resolution processes are offline. CA Rajat Mohan points out a glaring issue: 'Take the example of Gameskraft, which received a GST notice worth Rs 20,000 crore, or Zomato, which was slapped with a demand for Rs 803 crore in outstanding tax. Even to file an appeal, the company must first deposit 10 per cent of the demand with the government. No entrepreneur has that kind of cash just lying in the bank,' he says. What's more, any notice above Rs 5 crore carries the risk of compulsory arrest. 'Big corporates can hire top lawyers and fight it out in court. But even mid-size firms don't have that kind of bandwidth or deep pockets to manage prolonged litigation,' he to the complexity is the fact that there are state and central GST departments. And within each, there are different wings such as the jurisdictional office, the anti-evasion wing and the audit team; they do their scrutiny independently and send notices. 'Each vertical follows its own set of parameters, which are not aligned with one another. As a result, businesses often find themselves being assessed by multiple GST departments from the Centre or state or both simultaneously for the same issue,' says CA Kush Vora. Take a recent case in the Delhi High Court: in Dinesh Kumar Varma vs Sales Tax Officer, Class II AVATO, Varma received two orders (December 17 and December 25, 2023), both demanding a tax liability of Rs 15,53,240, and pertaining to the same tax period—July 2017 to March 2018. What is ironic is that two different officers within the same jurisdictional office had raised it.'Of the 100 companies we handle each year, we've dealt with approximately 350 GST notices over the past 3-4 years on their behalf. As a result, our salary costs have risen by 50-70 per cent in the past three years, primarily due to the workload from GST notices,' says Vora. Naturally, this increase has been passed on to the MSMEs—Vora's firm has raised its retainer fees for GST clients by 30 per MSMEs confirm that while audits and raids conducted by the CGST department are generally done after due diligence, the same cannot be said of SGST departments, where harassment remains common. A company in Uttar Pradesh is currently fighting a case, in which 7-8 officials from the SGST department arrived at its factory, demanding Rs 2 crore in GST liability—without providing any explanation—and even threatening with an FIR and arrest. 'Thankfully, our GST consultant knew the law and clarified that an FIR cannot be registered for a GST notice involving less than Rs 5 crore,' says the owner on condition of anonymity. However, the ordeal didn't end here; they threatened to seal the factory. 'It was pure extortion. We had no choice but to comply,' he says. At 3 am, the company deposited Rs 75 lakh with the department just to keep the factory operational. 'While raids are intended to curb evasion, often they are conducted solely based on preliminary findings. Also, the way they are carried out equates business owners with criminals, which can severely damage a company's reputation and business,' he rues. The ordeal of AuditsThe GST audit period can extend up to 5-6 years after the end of the financial year. That's a very long window—accountants change, staff changes and memories fade, says Chhabra. In contrast, he points out customs cases cannot be reopened after three years. Similarly, for taxpayers with annual incomes under Rs 50 lakh, the audit window is limited to three years. 'So, why not apply a similar rule here?' he asks. CBIC's compliance management department didn't respond to india today's queries on raids and show-cause notices. Chhabra suggests that the government consider reducing the audit period gradually to four, then to one. 'In today's age of AI and automation, discrepancies can be flagged in real time. There's no need to leave files open for years—it only leaves room for harassment,' he a business and keeping it profitable in these uncertain times is no mean feat. Despite this, businesses have to constantly fight the system to prove that 'entrepreneur chor nahin hai'. Sitharaman has reiterated that the government is working towards creating a trust-based compliance system for businesses. But, as Patel says, 'The government should be supporting entrepreneurs, not policing them. We need a system that helps improve productivity and clarity—not one that constantly looks for where we went wrong.' The FM needs to heed their to India Today Magazine
India Today
06-06-2025
- Business
- India Today
Rising cost of compliance
In December 2022, Muzaffarnagar-based entrepreneur Neeraj Kedia, managing director of zinc sulphate manufacturing firm Chakradhar Chemicals, received an unexpected notice from the Goods and Services Tax (GST) department, raising a tax demand of around Rs 95 lakh and interest of Rs 1.15 crore for the period from July 2017 to March 2018. It stated that the Input Tax Credit (ITC), which allows businesses to get reimbursement for the taxes they paid on their purchases, should not have been claimed by Kedia, as his supplier had not filed Form GSTR-3B, the monthly return to declare GST liabilities. The notice further alleged that Kedia had failed to file the form back in 2017. He was stunned. Like many small and mid-sized business owners, such a notice triggered not only a legal alarm but also operational disruption. Kedia responded swiftly, highlighting a key point: the Form GSTR-3B functionality wasn't even available on the GST portal at the time in question. The case was finally settled in September 2024. But addressing a show-cause notice years after is no easy task—it involves combing through old records, rechecking financial data and reconciling accounts. 'You have to jog your memory, track down data from years ago and build your case from scratch,' Kedia explains.
