Business Owners in Ludhiana Struggle Over GST Refund Delays

1.Introduction

The business community in Ludhiana is in distress due to prolonged delays and withholding of GST refunds by the state government. Industrialists allege that this delay is unlawful, affecting their working capital and hampering operations.

2.Refunds Held Back Without Clear Reason

Many industrialists have been waiting for five to six months to receive their GST refunds, with no transparent explanation from the GST department. This has resulted in funds getting stuck, severely impacting cash flow and disrupting business planning.

"The industry’s money is held up without cause, and this is hurting growth and daily operations," said Badish Jindal, President of FOPSIA and World MSME Forum.

3.The Real Cause: Crackdown on Bogus Billing

Officials believe the rise in fake GST claims through bogus billing may be the reason for the scrutiny.

While the verification process is crucial, business owners argue that genuine taxpayers are also getting caught up in the process.

"In the name of fraud checks, honest taxpayers are also suffering due to the department’s over-cautious approach," Jindal said.

4.What is the “Inverted Duty Structure”?

The refunds in question are primarily linked to the inverted duty structure — where the GST paid on raw materials (input) is more than the GST on final goods (output).

According to Section 54(3) of the CGST Act, 2017, such refund is a legal right, not a benefit or concession.

By delaying refunds, the state is violating statutory obligations, defeating the government’s "Ease of Doing Business" mission.

5.Rising Harassment and Frequent Inspections

Pankaj Sharma, President of the Association of Trade and Industrial Undertaking (ATIU), highlighted that post-election pressure on GST officers to meet targets may be causing harassment.

"Instead of daily visits to our premises, officials should ask us to visit their office with documents if clarification is needed," Sharma suggested.

Such regular inspections and surveys have now become a source of stress and loss of productivity for business owners.

6. Populist Spending and Cash Crunch?

Some businessmen suspect a deeper issue: the state may be unable to release refunds because of a cash crunch created by populist freebies and unsustainable spending.

This situation has damaged investor confidence, and some industries are now considering relocation due to the unfriendly tax environment.

7.GST Department Response

Despite repeated efforts, Deputy Excise & Taxation Commissioner (DETC) did not provide any comment, leaving taxpayers without official clarification or a timeline for resolution.