GST impact: Firms face jail term for not printing revised MRP on inventory

Manufacturers have been allowed to clear pre-GST unsold stocks by September 30 with the new MRP

The government has warned companies to depict the revised Maximum Retail Price (MRP) of their products' unsold stocks in the goods and services tax (GST) regime.

If not, stated consumer affairs minister Ram Vilas Paswan on Friday, there could be a penalty of up to a year in jail, for breach of the Legal Metrology (Packaged Commodities) Rules.

"Non-compliance of this will attract a fine of Rs 25,000 for a first offence, Rs 50,000 for a second time and up to Rs 1 lakh penalty for the third offence onwards and even imprisonment of up to one year," the minister said. He did not share as to who in an errant company could be jailed-- the tax parlance is 'principal person in default'.

Manufacturers have been allowed to clear pre-GST unsold stocks with the new MRP by September 30.

Under the GST regime, Paswan said, some prices of goods have fallen and some have risen. "We have told companies to reprint revised rates on unsold goods. Stickers of the new MRP should be pasted on products so that consumers are aware of the change in rates after GST," he said. The new rates, he added, should be communicated to his ministry and also advertised for better awareness of consumers.

M S Mani of consultancy Deloitte said imprisonment would be a drastic step, as many things go into revising prices, not only taxes. There is also the intensity of competition, how others see the products in a post-GST scenario, input tax movement and so forth.

Also, this could also be looked into by the anti-profiteering body to be set up, he said. "Is there any need for this measure, when an anti-profiteering clause is there?" he asked.

Companies will get input tax credit for pre-GST stocks. If they don't have receipts of the central excise tax, they will get input tax credit in the range of 40-60 per cent on taxes paid, depending on the incidence of GST rates.

The government says it is monitoring the price and supply situation and has deployed 175 senior officers to ensure a smooth transition to GST. These officers, of the ranks of joint secretary and additional secretary, have been given charge of four or five districts each to oversee. They are to receive feedback from link officers in the districts on the availability of essential commodities and retail price movement. The officers will then report to a central monitoring group, chaired by Cabinet Secretary P K Sinha, and comprising 15 other secretaries who will meet every Tuesday to monitor.

"We are keeping an eye on the prices and supply of essential and daily-use items, in particular," said Revenue Secretary Hasmukh Adhia.

A committee of the consumer affairs ministry has been set up to address consumer grievances on GST and helplines have been increased to 60 from the earlier 14, to address queries, added Adhia.

Around 700 queries have been received by the consumer helplines and the ministry has sought help from its finance counterpart to resolve these.

"There are initial hiccups while implementing GST but all those will be resolved soon. All ministries concerned, including finance and consumer affairs, are alert and a redressal mechanism is in place to resolve the concerns of consumers and traders," Paswan said.