Date:08/06/2004 URL: http://www.thehindubusinessline.com/2004/06/08/stories/2004060802220300.htm

Back Hosiery producers petition Chidambaram on CST amendments

G. Gurumurthy

Coimbatore , June 7

IT'S not just textile producers from the decentralised powerloom industry who are hoping for good news from the Finance Minister on their oft-repeated demand against the Cenvat duty. Their counterparts in the cotton hosiery industry, too, have their share of demands, in particular a plea against continuation of the amended Central Sales Tax (CST) Act of 2002.

Close on the heels of Mr P. Chidambaram's move seeking reports from the textile trade on Cenvat duty, domestic hosiery garment producers, under the aegis of the Federation of Hosiery Manufacturers Associations of India (FOHMA), have made a representation to the Minister seeking to reverse the amendments to the CST Act in 2002, relating to Section 8 that dealt with inter-state sale of hosiery products.

The FOHMA members, led by its President, Mr Mohan P. Kandasamy, called upon Mr Chidambaram to do away with the amendments to the Act. They claim that the amendments had rendered inter-state sale of hosiery goods difficult as they made submission of `C' form mandatory in all such sales and the `C' form-based sale is possible only to those buyers who are registered under the CST Act. Since the bulk of inter-state sales is carried out by small-time buyers and petty shop owners who are not registered, the hosiery garment sellers are barred from conducting any business with unregistered buyers, as sale without the `C' form invites huge penalty. This has greatly affected the trade, especially when the bulk of the merchandise involved in such trade is invariably the low-valued basic hosiery garments.

The hosiery producers have also used demanded that the Finance Ministry shift hosiery goods from the list of items coming under category-II goods of the uniform sales tax formula to category-I listed goods which are exempt from tax.

The representation has also drawn attention to the practical difficulties associated with the extension of the Cenvat duty to the hosiery sector. Hosiery, being predominantly under the small and decentralised sector, levy of the Cenvat duty since April 2003 has led to operational problems, both to producers and taxmen, since the production process has to pass through at least 12 to 16 stages of production.

Recalling the promises made during the run-up to the recent Lok Sabha elections by members of the United Progressive Alliance to do away with Cenvat duty on textile producers, the FOHMA memorandum has asked the Finance Minister to scrap Cenvat duty on hosiery goods.