Kerala: Rice mills in Palakkad on brink of closure due to outstanding GST dues amounting to crores .

Eleven rice mills in Palakkad district have come under scrutiny for failing to pay Goods and Services Tax (GST), with authorities issuing notices demanding payment of dues amounting to crores of rupees.

The mills are being asked to clear GST liabilities for the period between 2017 and 2021,covering costs such as sack prices, vehicle rentals, and handling charges, all the money received from Kerala State Civil Supplies Corporation Limited (SUPPLYCO) during rice processing.The mills have been instructed to pay amounts ranging from ₹1.5 crore to ₹4 crore, with the total outstanding sum approaching ₹30 crore. A notice has also been served to Paddico, another cooperative institution involved in the transactions.

According to the notice, the mills are required to pay GST on the amount received from SUPPLYCO for rice milling. The handling cost for processing one kilogram of rice supplied to SUPPLYCO is ₹2.12, and after deducting all expenses, the mills report a profit margin of just ₹0.20 per kilogram. While the mills have already paid GST at a rate of 5%, the authorities have clarified that, under GST law and as per the SUPPLYCO-rice milling agreements, all activities related to the rice milling process are subject to GST.

Since 2021, SUPPLYCO has been paying the GST for costs related to sack prices and vehicle rentals. However, the notice currently being served covers dues from 2017 to 2021, along with penalties and interest for delayed payments. The GST Intelligence Department, which identifies areas for tax recovery, has chosen the rice milling sector in Palakkad for scrutiny, although similar investigations have not been conducted in other districts.

V.R. Pushpangadan, the district president of the Kerala Rice Mill Owners Association, has stated that the mills will have no choice but to shut down if they are forced to pay these amounts. He emphasised that SUPPLYCO should bear the GST liability and that the association plans to approach the court for resolution.

The situation brings attention to the ongoing tensions between cooperative institutions and local rice mill owners over the payment of taxes and the the financial viability of milling.

This article has been republished from The Mathrubhumi.