GST mop-up less than Rs 1 trillion in August; Council to meet this month

Goods and services tax (GST) collections failed to touch Rs 1 trillion in August, which experts say may guide the Centre and states on rate cut demands from slowing segments of the economy at their meeting later this month.
The collections stood at Rs 98,202 crore in the month, against Rs 1.02 trillion in July. The figures indicate continuation of economic slow down which was reflected in the gross domestic product (GDP) growth which plummeted to a 25-quarter low of 5 per cent in the first quarter of 2019-20, experts said.
This was the second month in the current fiscal year that the collections could not hit the Rs 1-trillion mark, the first being June.
However, collections rose 4.5 per cent year-on-year over Rs 93,960 crore in August, 2018.
All major collections under GST recorded lower collections in August, as compared to July.
The Central GST (CGST) stood at Rs 17,733 crore in August against Rs 17,912 crore in the previous month, while state GST (SGST) at Rs 24,239 crore against Rs 25,008 crore.
Similarly, integrated GST fell to Rs 48,958 crore in August against Rs 50,612 crore in July. However, the IGST collected from imports was higher in August at Rs 24,818 crore against Rs 24,246 crore in the previous month.
The compensation cess collected in August was also lower at Rs 7,273 crore in August against Rs 8,551 crore in the previous month.
Returns filed were a bit higher at 7.58 million in August against 7.57 million in the previous month.

Abhishek Jain, partner at EY, said the GST figures in August may be linked to the general slowdown in the industry.
“The revenue collections in August may be a factor of consideration in the rate cut agenda, if any in the upcoming council meeting,” he said.
Pratik Jain, partner at PwC India, said slowdown in GST collections perhaps reflects the economic realities on the ground.
“Given the slowdown in collections, it would be interesting to see if GST council would consider rate cuts in its meeting, later this month, for automobile sector as the industry has been pushing for,” he said.
Amid the demand for cut in the rates for the auto sector, the Council would meet on September 19 and 20 in Goa. The main meeting is on the second day, while officers will meet a day before. The demand has assumed importance after the GST growth crashed to over six-year low in the first quarter of 2019-20. The private final consumption expenditure (PFCE), denoting demand in the economy, grew by a 17-quarter low of 3.1 per cent in the quarter.
The government has settled at Rs 23,165 crore to CGST and Rs 16,623 crore to SGST from IGST as regular settlement. After this, total GST revenues collected by the Centre stood at Rs 40,898 crore and those by the states at Rs 40,862 crore in August. The GST collections by the Centre has to be Rs 43,833 crore a month to meet the target of Rs 5.26 trillion in the Budget Estimates for 2019-20.
States were released Rs 27,955 crore from the compensation cess for June and July.
GST collections grew by 6.38 per cent in the first five months of the current financial year compared to the corresponding month of the previous year. The domestic component of GST rose by 9.11 per cent. In these months, while the one on imports fell by 1.43 per cent.

NCLAT rejects govt claims of $314 mn from Videocon for Ravva offshore

The National Company Law Appellate Tribunal (NCLAT) has rejected the oil ministry's plea seeking $314 million (around Rs 2,245 crore) from insolvency-bound Videocon Industries in unpaid profit petroleum from the Ravva oil and gas fields in the eastern offshore.
The ministry had on October 22 last year sent Videocon a demand notice for payment of government's share of profit petroleum, which is calculated after all capital and operating cost is deducted from the sale of oil and gas.

Videocon, which holds 25 per cent stake in Ravva oil and gas fields, had been admitted to insolvency and the resolution professional (RP) overseeing the process approached the Mumbai-bench of the National Company Law Tribunal (NCLT) against the demand saying the company cannot be asked to part with any money, including share of profit, during the moratorium period.
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NCLT upheld the RP's plea, which was challenged before the NCLAT.
A three-member NCLAT bench headed by chairperson Justice S J Mukhopadhaya also upheld the same and said that the petroleum ministry could not recover these proceeds during the moratorium period from Videocon Industries, against whom insolvency was initiated in June 2018.
"NCLT rightly held that during the period of moratorium, the Ministry of Petroleum and Natural Gas cannot recover any amount nor can issue demand notice to the corporate debtor through 'interim resolution professional' to pay any amount," said the NCLAT.
The appellate tribunal also upheld the NCLT order staying the demand note by the ministry and directing to approach the RP for recovery of the amount.
"We hold that NCLT rightly stayed demand notice dated 22nd October, 2018 during the pendency of the resolution process as long as the 'moratorium' is applicable on the corporate debtor," said the NCLAT.
As per Section 14 of the Insolvency & Bankruptcy Code (IBC), no recovery can be enforced from the corporate debtor, once the moratorium period comes into force once the insolvency is initiated by the NCLT.
The matter is related to a 'Production Sharing Contract' executed between the government and ONGC, Videocon Industries, Vedanta and Ravva Oil (Singapore) on October 28, 1994.
While state-owned ONGC had a 40 per cent participating interest, Videocon 25 per cent and Vedanta had a 22.5 per cent in the production sharing contract.
A dispute between the government and Videocon arose in 2002, which was initially referred to the International Arbitration Tribunal, which partially upheld the company's contentions.
The Government of India filed an appeal on May 10, 2005 before the High Court of Kuala Lumpur, Malaysia and Federal Court of Malaysia, where on May 16, 2016, it failed to get any relief.
Both admitted Videocon's contention that the courts had no jurisdiction to decide on the issue and award of the International Tribunal in favour of Videocon became final.
However, the petroleum ministry had on October 22, 2018 sent a demand notice to Videocon asking it to allocate USD 314 million as "government share of profit petroleum".
Following this, Videocon's RP had approached the NCLT, contending that company could not be asked to part with any money, including share of profit, during the moratorium period.
The NCLT in its order had said: "It was judicious to direct the ministry not to press for implementation of the said demand notice.

Trade war: China, US to collect additional tariffs on each other's goods

China and the United States will begin imposing additional tariffs on each other's goods on Sunday, the latest escalation in a bruising trade war despite signs talks would resume sometime this month.
A new round of US tariffs on some Chinese goods and Chinese tariffs on US goods is scheduled to take effect from 0401 GMT on Sunday.
The Trump administration will begin collecting 15% tariffs on more than $125 billion in Chinese imports, including smart speakers, Bluetooth headphones and many types of footwear.
As part of its retaliation, Beijing will begin imposing a 5% tariff on US crude oil from Sept. 1, the first time US oil has been targeted since the world's two largest economies started their trade war more than a year ago.
US President Donald Trump last month said he was increasing existing and planned tariffs by 5% on about $550 billion worth of Chinese imports after Beijing announced its own retaliatory tariffs on US goods.
Tariffs of 15% on cellphones, laptop computers, toys and clothing are to take effect on Dec. 15. The U.S. Trade Representative's Office said on Thursday it would collect public comments through Sept. 20 on a planned tariff increase to 30% on a $250 billion list of goods already hit with a 25% tariff.
ALSO READ: Could a US recession end the trade war?
Trade teams from China and the United States continue to talk and will meet in September, but tariff increases on Chinese goods set to go in place on Sunday will not be delayed, Trump said on Friday.
For two years, the Trump administration has sought to pressure China to make sweeping changes to its policies on intellectual property protection, forced transfers of technology to Chinese firms, industrial subsidies and market access.
China has consistently denied Washington's accusations that it engages in unfair trade practices, vowing to fight back in kind and criticising US measures as protectionist.
China has pressed the United States to cancel the tariff increase, but said last week that a September round of talks was being discussed between the two.
The trade war further strains Beijing-Washington ties, already overshadowed by US freedom of navigation exercises near Chinese-occupied islands in the disputed South China Sea, and US support for self-ruled and democratic Taiwan, which China claims as its own.

Apple planning to set up three physical outlets, an online store in India

Apple plans to set up up to three brick-and-mortar outlets in India besides an online store as the iPhone maker looks to further cement its position in one of the world's largest smartphone markets.
According to sources privy to the development, Apple has conveyed to the government its plans to set up physical as well as an online store, in line with its 'global experience' centres for Apple-branded products.

The move comes at a time when global smartphone manufacturers have reiterated their commitment to the Indian market and are looking to significantly ramp up their manufacturing capabilities in the country.
Apple, which works with Taiwanese contract manufacturer Wistron in India, currently makes iPhone 6S and 7 here. One of the sources said Apple is looking at assembling more models in the country. Apple did not respond to a query on this issue.
In a major push to single-brand retail, the government last week had relaxed FDI norms, offering players more flexibility on local sourcing norms. It also did away a provision that required companies to mandatorily set up a brick-and-mortar store before getting into online retail trading.
Following the announcement, Apple had said it is keen on offering online and in-store experiences to Indian users that are at par with its global standards and aims to open its maiden retail store in India.
While the company has remained mum on the locations of its stores, reports suggest that Mumbai could become home to India's maiden Apple retail store.
India is looking to galvanise smartphone manufacturing and position itself as a global hub, dishing out incentives to sweeten the deal for international brands.
Amid growing concerns around US-China trade war, India now has an opportunity to woo companies that had so far concentrated their manufacturing operations in China.
The government has been engaged in a dialogue with key players to understand their concerns and requirements.
A recent report by industry body IAMAI had pointed out that India's mobile manufacturing lacks scale and depth despite its ambition to become global production hub, and the country needs to "think big" by manufacturing at scale, producing high-end phones, and incentivising exports.
The Internet and Mobile Association of India (IAMAI) report had also noted that the global handsets market is worth about $467 billion (about Rs 32 lakh crore), and this demand is being met almost entirely by China, Vietnam, South Korea and Taiwan.
The same report stated that in 2018-19, India exported mobile handsets worth $1.4 billion compared to $2.7 billion in 2012-13.
The production of mobile handsets had reached 225 million units in 2017-18 and India has the potential to manufacture one billion handsets annually, it had said.

Foreign investors pull out Rs 5,920 cr in August despite surcharge rollback

Foreign investors pulled out a net amount of Rs 5,920 crore from the Indian capital markets in August even as the government rolled back enhanced surcharge on FPIs last week.
The withdrawal from the capital markets (both equity and debt) in August is "contrary to the expectation" since the Centre last week announced revocation of enhanced super-rich tax on foreign and domestic equity investors imposed in the Budget, said Himanshu Srivastava, senior analyst manager research at Morningstar.

According to the latest depositories data, foreign portfolio investors (FPIs) withdrew a net amount of Rs 17,592.28 crore from equities and pumped in a net sum of Rs 11,672.26 crore in the debt segment, translating into a total net outflow of Rs 5,920.02 crore during August 1 - 30.
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In July, overseas investors had pulled out a net amount of Rs 2,985.88 crore from the capital markets.
Prior to the announcement of enhanced super-rich tax in the Union Budget for 2019-20 in July, FPIs were net buyers for five consecutive months.
FPIs had infused a net Rs 10,384.54 crore in June, Rs 9,031.15 crore in May, Rs 16,093 crore in April, Rs 45,981 crore in March and Rs 11,182 crore in February into the Indian capital markets.
"Concerns over slowing domestic economy, volatility in the global markets and increased fears of global recession due to escalating trade war tension between US and China overshadowed the positive move of withdrawal of surcharge," Srivastava added.

Maruti reports 33% drop in August sales at 1,06,413 units; exports down 11%

The country's largest carmaker Maruti Suzuki India on Sunday reported a 32.7 per cent decline in sales at 1,06,413 units in August.
The company had sold 1,58,189 units in August last year, Maruti Suzuki India (MSI) said in a statement.

Domestic sales declined by 34.3 per cent at 97,061 units last month as against 1,47,700 units in August 2018, it added.
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Sales of mini cars comprising Alto and WagonR stood at 10,123 units as compared to 35,895 units in the same month last year, down 71.8 per cent.
ALSO READ: Maruti Suzuki seeks better lending terms for dealers amid liquidity crunch
Sales of compact segment, including models such as Swift, Celerio, Ignis, Baleno and Dzire, fell 23.9 per cent at 54,274 units as against 71,364 cars in August last year.
Mid-sized sedan Ciaz sold 1,596 units as compared to 7,002 units earlier.
However, sales of utility vehicles, including Vitara Brezza, S-Cross and Ertiga, rose 3.1 per cent at 18,522 units as compared to 17,971 in the year-ago month, MSI said.
Exports in August were down by 10.8 per cent at 9,352 units as against 10,489 units in the corresponding month last year, the company said.

'All-round mismanagement' by govt slowed down economy, says Manmohan Singh

Former prime minister Manmohan Singh on Sunday said the state of the economy was "deeply worrying" and that "all-round mismanagement" by the Modi government has resulted in this slowdown.
In a statement, he said the last quarter GDP growth rate of 5 per cent signals that "we are in midst of a prolonged slowdown".

The Congress leader said India has the potential to grow at a much faster rate.
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"India cannot afford to continue down this path. Therefore, I urge the government to put aside vendetta politics, and reach out to all sane voices and thinking minds, to steer our economy out of this man-made crisis," he said.
Singh said it is particularly distressing that the manufacturing sector's growth is tottering at 0.6 per cent.
"This makes it very clear that our economy has not yet recovered from the man-made blunders of demonetisation and a hastily implemented GST," he said.
"Investor sentiments are in doldrums. These are not the foundations for economic recovery," he added.