Trade resents losses due to government's faults

Every now and then, the government makes some mistakes and their consequences are borne by businesses through unnecessary losses. Now, some voices are rising in a protest demanding accountability and compensation.

The Customs department introduced the system of duty payment through electronic cash ledger from the beginning of this month. The system did not work properly with the result that the importers could not clear their goods. After a week, the Customs restored the facility of granting manual out of charge order, duty payment through other modes, as earlier, and waiver of interest for late payment of Customs duty. The system took another week to stabilise, and in the meantime, importers suffered heavy demurrage and container detention charges. The Customs requested the custodians and shipping lines to waive such charges, but they are under no obligation to do so, as held by the Supreme Court in the case of International Airport Authority of India vs.Grand Slam International of India [1995 (77) ELT 753 (SC)]. So, the importers had to bear the losses.

When the government ushered in the Goods and Services Tax (GST) in July 2017, without adequate preparation, the businesses deployed large manpower resources to cope with improper functioning of the electronic system.

The messy roll-out of the new regime caused heavy losses to businesses. Also, many defects were found in the drafting of the laws that were later rectified, but in the meantime, trade struggled with the defective laws. The trade had to bear the consequences. 

In October 2017, the government needlessly introduced the ‘pre-import’ condition for imports under the Advance Authorisation Scheme, only to realise its mistake and withdraw that condition in January 2019. However, the withdrawal was with prospective effect with the result that all imports during the intervening period attracted the ‘pre-import’ condition.

Now, a large number of exporters are busy dealing with demands and litigations for alleged violation of the ‘pre-import’ condition. Similarly, on the issue of export on payment of Integrated Goods and Services Tax (IGST) under refund claim by exporters who had availed of IGST exemption on their imports under advance authorisations also, numerous litigations are pending at various stages. Consequently, the exporters are suffering heavily.

 The latest problem is the decision of the Directorate General of Foreign Trade (DGFT) to issue Export Obligation Discharge Certificate (EODC) under the Advance Authorisation Scheme, and EPCG (export promotion capital goods) authorisation scheme. Exporters who have already submitted the details manually are now being asked to re-submit their EODC applications electronically. Also, there are many difficulties in fetching the shipping bills from the repository and with the system of electronic filing of EODC applications. Again, the exporters have to deploy additional resources to cope with difficulties.

The overall attitude of the government towards the trade can be summed up as ‘if you make a mistake, you have to suffer, and if we make a mistake, you have to suffer’.  Increasingly, the trade is resentful of such an approach and there is no dearth of persons who want the erring elements in the government to be held accountable for their mistakes, and the government to find ways to compensate for the losses inflicted on the trade. It is now for the industry associations to agitate the matter before the government.

Email: tncrajagopalan@gmail.com