The 53rd GST Council meeting is scheduled to be held on 22nd June’2024. This meeting is the first of this calendar year. There was no meeting from January’2024 to till the date i.e. in the first six months of this calender year. Although it was decided that the Council will meet every quarter, but unfortunately from the year 2022 till now the Council has met only six times. I remember that the last meeting of the GST Council (52nd meeting) was held about eight and a half months ago on 07th October 2023. So if there is such a long gap then naturally the unresolved issues in GST will definitely increase. During this intervening period, the taxpayers have faced many serious problems. But in the absence of the council’s meeting no proper resolution was possible. This delay, perhaps, could be due to the Elections at the Center. Nevertheless, this forthcoming meeting of the GST Council, which is taken place in the ninth month since last meeting, is no less than a lifesaver for the struggling taxpayers. Therefore, this meeting is expected to be very important and decisive. Also Read in Hindi: जीएसटी कौंसिल की 53वी मीटिंग: आशाएं एवं अपेक्षाएं
Following are some key suggestions for the better compliance of GST law:
1. Relief from dual jurisdiction:
Under the present scheme of the GST law taxpayer is covered under the jurisdiction of both the Central GST and the State GST, irrespective of the fact that whatever may be the actual territorial/administrative jurisdiction. It means any GST officer can issue notice, summon, raid taxpayer or investigate any other matter related to taxpayer at any time. It is fine as long as one department (whether central or state) takes action, but the problem arises when officials of both the departments (central and state) are parallelly issuing notices and taking action on the same subject matter. In such a situation, a taxpayer has to run from pillars to post, spend his precious time and pay hefty fee to the tax consultants. Above all, many agencies under both the Central GST & State GST departments like DGGI, ANTI-EVASION, BIEO, EIU, AUDIT etc. also takes jurisdiction on that taxpayer and send notices. In such a situation, the taxpayer is totally helpless. Courts are consistently taking the views that such parallel and multiple jurisdiction is illegal. But despite this, the problem of multiple jurisdiction is getting increased day by day. Therefore, the government should ensure that no multiple or concurrent jurisdiction should be exercised on the taxpayer.
2. Need for improvement in the system of issuing notices:
For issuing GST notices, the Central GST authorities currently rely mainly on reports generated by DGARM & ADAVAIT software of CBIC. Whereas State GST notices are issued from different software used by the States. If we talk about the state of Assam, then IIT BIG DATA software and BIFA software are in vogue here. However, questions of data security have also been raised in IIT BIG DATA SOFTWARE. Many people believe that the state government cannot hand over the data of GST taxpayers without their permission to any third party/agency which is not associated with GST in any way. Due to this, the possibility of their data being compromised also cannot be ruled out. Due to different softwares followed by the Centre & the States the taxpayers are facing problems. The Central GST software issues an alert on one point, while the State GST software issues alert on some other point. In such a situation, notices are issued to the taxpayer from both the departments at different point of times. Thus taxpayer has not only to reply to all those notices but also has to run from pillar to post to settle them. Therefore, the government should work in this direction so that a common software can be prepared and the slogan of “One Country One Tax” can be truly implemented.
3. Control on increasing Litigation:
After the introduction of GST, legal actions and lawsuits have increased a lot. Even for a smallest issue, be it an error in the GST return, be it registration cancellation, be it blocking of input tax credit, be it an e-way bill issue, the taxpayer does not get any relief without going to the court. The appellate authority also hesitates in giving relief. In such a situation, GST cases are increasing day by day in the Courts and this is putting pressure on the judiciary as well. Therefore, the government should take special care that the appellate officer plays his role as an impartial judicial officer and not as a tax department officer while disposing off the appeals. Also, to control and curb these increasing cases, the government should show big heart and issue some kind of “amnesty scheme” or clarification on the disputed matters so that such cases can be automatically settled out of the court.
4. Provisions related to ITC should be streamlined:
Input tax credit has always been a bone of contention between the taxpayers and the government since the beginning of the GST. Tax evaders have committed many frauds through input tax due to which the government had to make major changes in the rules of input tax credit. As a result, these frauds have now been curbed to a great extent. But still, there are many points which seems unfair from practical perspective and thus the scope for changes in the ITC provision is still there. The government should pay attention to all these points so that no innocent taxpayer is adversely affected. Mainly the following changes are expected in input tax credit:
(i) In most of the cases, if the seller does not file the return or does not pay the tax, the tax department collects input tax, interest and penalty directly from the buyer, which is completely unwanted. In such a situation, there should be amendment in the law making compulsory on the part of the tax officer to first contact the seller in such cases and try to collect the tax due. Offlate, the government has shown great strictness in alloting new GST registration. If we talk about the State of Assam, here for GST registration the businessman has to appear before the Judicial Magistrate and file an affidavit of his business address. On the one hand, the government makes the strictest rules for new registrations, while on the other hand, if any discrepancy is found in the input, it does not collect tax from those sellers to whom the tax department had given registration after thorough investigation, but instead demands tax from the buyer. This action is not justifiable and logical. If any nexus between the seller and the buyer is found, then only in such cases it is mandatory to collect tax from the buyer. However, there is also a press release issued by the Government in which it has been said that the tax should be demanded first from the seller instead of from the buyer. But since a press release has no legal validity, the tax department does not accept it. However, many Courts have mentioned such press release in their decisions and have consequently provided relief to the respective taxpayers. Therefore, the government should suitably amend Section 16 of the GST Act so that the tax officers can follow proper procedure regarding the ITC provisions.
(ii) The government should also review the provisions of the blocked ITC under section 17(5) and give its benefit to the taxpayers in certain cases. Due to this, cascading effects of tax is orginating which is in contrary to the objects of the GST law. The author believes that the blocked ITC should be reconsidered in areas like hotel industry, infrastructure projects, commercial properties etc. which generate GST revenue subsequently.
(iii) The government should also provide clarification on the input tax credit taken under Reverse Charge Mechanism (RCM). There is a misconception regarding RCM input tax credit in the tax department. As per GST provisions, RCM ITC can be taken only after actual payment of tax. Many taxpayers believe that if RCM payment for past period is made today, then such input can be duly taken without any hindrance. But the opinion of the tax department is exactly the opposite and according to them such input cannot be taken on expiry of time limit as stipulated under section 16 (4) of the GST Act. For example, if RCM liability of March 23 is paid today and subsequently credit has also been availed then according to the tax department such credit is required to be reversed as the credit has been taken after the last date as stipulated under section 16 (4). Therefore, it is important that the government should issue proper clarificaition on this matter.
5. The amount of penalty should not exceed the tax payable:
Under Section 73 of the GST Act, there is a provision to impose penalty of either 10% of the tax payable or Rs 10000/- whichever is higher. Now in such a situation, if the tax payable by a taxpayer is say CGST –Rs 500/- and SGST is Rs -500/-, then in such a situation the penalty is 10%, CGST is –Rs 50/- and SGST is Rs 50/-. But since Rs 10000/- is more than Rs 50/- then the penalty will be CGST – Rs 10000/- and SGST – Rs 10000/- only. So in such a situation the total tax deposited is Rs 1000/- (Rs 500 + 500) where the penalty will be imposed Rs 20000/-. This provision is beyond one’s understanding. But this is the reality. Such provisions do not seem logical from the point of view of social justice. Therefore, the government should make suitable amendment in the law and make sure that the penalty should not exceed the tax payable found.
6. Cancellation / Suspension of Registration should be exceptional:
Under Section 29 of the GST Act, the tax officer has been given powers to cancel GST registration. This provision is being used in most of the cases without any valid reason. Cancellation of GST registration has become a common practice nowadays. Tax officials cancel the registration for any reason, whether there is delay in filing the returns, whether wrong inputs have been taken, whether e-way bill has not been generated, etc. Many cases of GST registration cancellations are filed and pending in several Courts. In some of the judgements, the Court have taken consistent view and clearly stated that the tax department cannot cancel GST registration merely because of delay in filing the returns. The tax department cannot play with the livelihood of any citizen. This is completely unconstitutional and against Article 21 of the Constitution of India. But despite this, it seems as if cancelling registration on even the smallest issue has become a tradition. Therefore, the government should take care that registration should be cancelled only in exceptional and extraordinary circumstances.
****
Note: The author is a chartered accountant by profession and this article has been prepared based on his experience during his profession and information received from businessmen and taxpayers. All the views given here are personal and the views of others may differ, which the author respects.
Author Bio
“If we talk about the state of Assam, then IIT BIG DATA software and BIFA software are in vogue here. However, questions of data security have also been raised in IIT BIG DATA SOFTWARE”.
Please explain in detail how data security is in question. Please elaborate on this issue.