Karnataka Chief Minister Basavaraj Bommai on Monday said he will seek the intervention of the GST Council to issue a clarification to dealers not to pass on the new GST levy on ‘pre-packaged and labelled” goods to consumers.

These levies were not meant to be passed on to consumers, he told media-persons, responding to a volley of questions on the sudden increase in prices of a range of essential items of daily use including puffed rice and milk-based products such as curd and lassi.

The government came under heavy shelling on social media after the price of a range of retail items of daily consumption such as rice, wheat, flour, and milk-based products went up Monday.

The chief minister maintained that the companies were earlier not getting input tax credit on the packaging material used for items that did not attract GST. With the levy of GST now, they can claim ‘reimbursement' of the input taxes paid, he said.

When told that his own government-controlled Karnataka State Cooperative Milk Federation (KMF) too has increased the retail price of a range of its products with immediate effect,

Bommai said he will seek the GST Council's help to issue a clarification. The KMF, however, partly rolled back the hike in the late evening.

The Finance Ministry has defined “pre-packaged commodity” as a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a predetermined quantity.

The Karnataka Chief Minister's clarification, however, baffled GST experts who found it misleading. There are barely any major taxable inputs in most of the items that have now been slapped with a 5% levy, they say.

Source: The Economic Times
https://economictimes.indiatimes.com/news/economy/policy/traders-cant-pass-on-new-gst-levy-says-karnataka-cm-gst-experts-disagree/articleshow/92962592.cms

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