The traders came out in thousands on the Ring Road and chanted slogans like "GST hatao, saral tax lao" (remove GST and bring in a simple tax).
The protest was held in support of an indefinite bandh called by the GST Sangharsh Samiti against Goods and Services Tax on textiles.
The police wielded batons to disperse the agitators who allegedly engaged in stone-pelting.
"We had to resort to lathi charge after some protesters pelted the policemen with stones, injuring one personnel," Surat Police Commissioner Satish Sharma said.
The traders, however, maintained that they were protesting peacefully.
They alleged that the police action came unprovoked as the administration was working at the behest of the ruling BJP's Lok Sabha member from Surat, C R Patil, who held a meeting with traders on Sunday.
They said some traders sided with Patil after the meeting on Sunday, and decided to keep their shops open against the indefinite bandh called by the protesting association.
"Some traders had yesterday met Patil who asked them to open shops and promised to provide them police security against those who insisted on continuing with the indefinite bandh. The police started beating up the protesting traders even when they were carrying out their protest peacefully," trader Gaurav Shrimali alleged.
Reacting to police's action, senior Congress leader and Rajya Sabha member Ahmed Patel tweeted, "Shocking that police has used brutal force against Surat traders protesting against GST. Govt must reason with them, not suppress them."
The GST Sangharsh Samiti called for an indefinite bandh yesterday in Surat textile market, which is one of the largest in the country.
The traders are protesting the imposition of five per cent GST on textiles.
Several cloth markets in the state remained closed as most traders have not registered for the new tax system and do not have the GST number. They are hoping that the central government will come out with some solution to the five per cent GST.
Some of the small traders have said the tax is adversely affecting their businesses. They have contended that the time period given to them for GST compliance is short.
They are of the view that the GST should be imposed on ready textile products and not on cloth.