No Repeal, But Indian Gov’t Reassures Retailers on Proposed Tax
March 08, 11A jewelry retail delegation told Union Finance Minister Pranab Mukherjee that the word ‘brand’ has in the past been loosely defined to constitute any piece of jewelry with an identifying mark on it. Many Indian retailers use some identifying mark on the jewelry they sell to help in case repairs or refurbishment are required and make valuation easier. In the past, this led to revenue officials seeking stock seizures and a general disruption of business, accompanied by a slew of contentious litigations.
While it got no repeal of the proposed tax, the minister and other government departments said that the government’s intent was to levy the duty only on those products that were clearly ‘brands’ as described under law, Gems & Jewellery Trade Federation (GJF) chairman Vinod Hayagriv, told IDEX Online.
The government departments said that the new levy was intended only for those who wish to continue selling jewelry under specific product brands and would distinguish between a branded product and a retailer’s name, which stands as a ‘brand’ for many consumers. Such brands would include Nakshatra, Asmi and Sangini.
Hayagriv used Tanishq as an example. “[It] is a chain store brand — the product it sells is itself unbranded. Why should the name Tanishq be considered a brand any more than the name of any other reputed jewelry retailer?”
Hayagriv added that excise duty is levied only on manufacturers and never on retailers. Thus, the determination of whether or not a product is a brand needs to be made upstream, when the jewelry is fabricated.
This is a problem in the Indian jewelry retail industry, where a vast majority of retailers has some in-house fabrication. “This duty can’t really be applied to jewelry retail and it will become a forced levy,” said Hayagriv. “This is exactly what the government doesn’t want,” he added, referring to the delegation’s recent talks in Delhi. “They have asked us not to litigate but to refer any contentious levies to the Central Excise Board in Delhi, where it will expeditiously be dealt with.”
A nervous industry still wants to convince the government to repeal the proposed tax.