Retail supply limps back to normal after GST chokehold

PANAJI: A fortnight after GST was rolled out in the state, several grocery stores, supermarket chains and retailers are finding it difficult to keep their shelves stocked. With manufacturers and distributors still grappling to upgrade their systems to the new Goods and Service Tax (GST) regime, deliveries have taken a hit and supply has yet to return to normal, say stakeholders.

Aside from supply, confusion over the taxation category and improper Harmonized System of Nomenclature (HSN) codes are also adding to the problem. According to retailers, supply has dried up with distributors still trying to get the hang of the system. The MRP on packaging has to be changed while databases have to reflect the GST rates, thus delaying distribution.

Supermarket shelves bore partially empty looks with retailers saying that stock was around 45-55% of the normal stock that stores keep on an average.

"We faced a lot of problems in the initial week and supplies have resumed only from Friday. All the corporates, whether it is their suppliers or distribution companies were not ready for GST," Delfinos HyMart promoter Prakash Pereira said.

 

  

Deliveries have been impacted because of delays in software upgradation across the supply chain, which resulted in reduction of manufacturing and sales of fast moving consumer goods (FCMG). Anticipating the slack and as part of the transition, manufacturers waited for GST to push new stocks with fresh price tags in the market.

"Quite a few suppliers have still not supplied as they are yet to update their systems. This situation was anticipated by us and we were well-stocked and prepared. Currently, we not facing any supply shortage," Newton's Supermarket proprietor Newton Azavedo said.

While large supermarket chains have space and the financial strength to store stock in advance, smaller retailers said they avoided taking additional stock ahead of GST roll out due to fear of losses.

"Selling old stock at GST prices would have hurt us. I have still lost money but there was no option. The sales had to happen otherwise the losses would be more," a small retailer said on condition of anonymity.

Confusion over HSN codes and the applicable tax rates have also confused some retailers. "Is chili a spice or a vegetable? If it is a spice then it is 5% GST and if it is a vegetable, then 0%. Sometimes the HSN codes are not proper and it becomes difficult to calculate the tax," Pereira said.

Source::: The Times of India, dated 21/07/2017