Generally, while drafting any law, provisions made through various sections are grouped under one subject matter commonly called as chapters. A chapter deals with a particular subject matter. Relevant sections and subsections are provided under that chapter. However, there are certain provisions unique in nature and are single but equally important. Such provisions are grouped generally under one Chapter-Miscellaneous provision
In Model GST Law, provisions relating to following matters are provided in chapter XXIII – Miscellaneous Provisions.
1.GST Compliance Rating.
3.Power to collect statistics & its disclosure.
4.Test purchase of goods.
5.Drawl of Samples.
6.Burden of proof.
7.GST Authorities to be Public Servants.
9.Disclosure of information by public servants.
10.Publication of certain information.
11.Assessment proceedings not to be invalid on certain grounds.
12.Rectification of mistakes & errors.
13.Bar on Jurisdiction of Civil Courts.
14.Levy of Fees.
15.Power of Central/State Government to make rules.
16.Power to make regulations.
17.Delegation of powers.
18.Instructions to GST Officers.
19.Removal of difficulties.
20.Service of Notice.
21.Rounding off tax
22.Effect of Amendments of Rules, Notification, Orders, etc.
23. Publication of Rules, Notifications and layingof Rules before Parliament or State Legislature.
Similarly, miscellaneous provisions in Model IGST Act are provided in chapter IX. This chapter deals with ‑
1. Application of certain provisions of the Central GST Act in IGST Act
2. Power to make rules
3. Interest on delayed payment of tax
4. Wrong collection and deposition of IGST
Now let’s discuss the miscellaneous provisions in Model GST Law and Model IGST Law –
A. Miscellaneous Provisions in Model GST Law:
1. Compliance Rating :
The new concept of “Compliance Rating” would be introduced in GST Act. Section 116 of Model GST Law provides that there will be compliance rating of each tax payer based on his compliances with provisions of the Act. This rating will be updated periodically and published in public domain. Exact parameters of this rating will be provided in the rules.
GSTN may be given the responsibility of deciding rating based on parameters, its periodic updating and publication of updated list. High rated taxable person may get certain privileges. Whereas, as the rating will be made public, lower rated taxable person may lose his credibility. Intention of concept of “Compliance Rating” is to create healthy competition amongst taxable persons.
2. Information return :
In GST, every taxable person would be required to file monthly returns. Only in cases, where he has opted for compounding scheme, return filing periodicity will be quarterly. Section 45 of Model GST Act provides for scrutiny of returns and section 49 provides for audit. The sole purpose of scrutiny or audit is to ascertain the appropriate tax liability and to verify the correctness of self-assessed tax admitted in return by the tax-payer. To achieve the purpose of ascertaining the appropriate tax, outside information of tax-payer lying with other authorities or agencies has always proved to be of immense help. The section 117 of Model GST Law provides for filing of “Information Returns” by a taxable person, certain Government / Semi-Government authorities, banks and other agencies. Particularly State VAT authorities, Central excise / service tax authorities, Income tax authorities, banking companies, RBI, stock exchanges, GSTN, etc. will be required to file information returns as per the periodicity and in the format provided in the rules. Such practice is prevalent in administration of many taxation acts. E.g. Income Tax Department ask for annual information return (Form No. 61A) from banks, non-banking financial companies, Post-masters etc. Information received from various such agencies can be used for selection of cases for audit and can further be useful for assessment of appropriate tax due from a tax-payer.
3. Power to collect statistics and its disclosure) :
For proper administration of taxation laws, hands on information of related statistics should be available with tax-administration. The section 119 of Model GST Law empowers Board or Commissioner administering Central GST, Integrated GST or State GST laws, to collect statistics from various agencies, organisations, persons, etc.
The Board or Commissioner shall first notify the matters for which collection of statistics is required to be done. The Formats, particulars and the interval of furnishing such statistics to Board or Commissioner would be provided in the rules.
The section 120 of Model GST Law provides for certain restrictions on Board / Commissioners regarding disclosure of information collected under section 119. Board or Commissioner is barred from disclosure of any information related to any person or taxable person without his consent. This restriction is of prime importance because the information provided may contain such particulars which when made public, may cause harm to his business. Information provided to tax authority can be regarded as provided in fiduciary relationship and hence require trust and confidence. To protect this trust and confidence of the information provider, Board or Commissioner is barred to disclose the information without his consent. Further, the section provides for limited access of such information to tax-administering authorities and goes ahead to provide for fine and imprisonment for wilful disclosure of such information. However, in the public interest or for many other reasons, sometimes it is required by the tax administrators to disclose trend of any particular business, analysis of certain trade and industry with respect to growth, revenue collection etc. Hence, the section also carves out exceptions to disclose the statistics of class of tax-payers or class of transactions.
4. Test Purchase of goods and drawl of Samples
GST is an account based taxation system. A periodic return, based on records of inward and outward supply, is required to be filled by each taxpayer. This return is treated as self-assessment as per section 44 of Model GST Law. Thus self -assessment of tax and further audit, assessment, revision etc. entirely relies on accurate recording of tax-invoices in the accounts. A test-check of this recording is envisaged in GST to increase tax-compliance by taxpayer. Section 121 provides for test-purchase of goods by tax-authorities. This will help tax-authorities to check if tax-payer is involved in practice of under invoicing or not accounting of invoices in the books of accounts, etc. This power is a great deterrent and as a result, issue and recording of correct tax invoices would be encouraged. Tax authority will get the refund of test-purchases after goods are returned back & invoice is cancelled.
Similarly, while assessing the appropriate tax due, disputes regarding classification of commodities are bound to happen as tax authorities always tend to interpret of commodities for higher rate of tax and tax-payer claims it at lower rate. This needs further analysis and authentication by experts. e.g. in VAT Act, Medicines are taxed at lower rate but certain chemicals are taxed at higher rate. Sometimes there are disputes if certain product is medicine or not. This requires expert’s opinion. So to send samples of commodities for further analysis and opinion by experts, drawl of samples is required. Section 122 of Model GST Law allows tax authority for this drawl of samples.
5. Burden of proof:
It is a general rule in direct taxes statutes that for levy of tax, onus is on tax-authority, whereas, for exemption from tax or for claim of deduction from taxable turnover, onus is always on the claimant tax-payer. Same principle is followed in Model GST Law and section 123 speaks about the issue.
6. GST authorities to be Public Servants:
Section 21 of Indian Penal Code, 1860 describes the person to be Public Servants. One of the clauses under this section reads as –
Every officer whose duty it is as such officer, to take, receive, keep or expend any property on behalf of the Government, or to make any survey, assessment or contract on behalf of the Government or to execute any revenue process, or to investigate, or to report, on any matter affecting the pecuniary interests of the Government, or to make authenticate or keep any document relating to the pecuniary interests of the Government, or to prevent the infraction of any law for the protection of the pecuniary interests of the Government;
All persons discharging functions under Model GST Law can well be covered under above description and thus are public servants.
All persons discharging their functions under Model GST Law would be Public Servants. While discharging quasi-judicial functions and implementing the Act, GST authorities would be required to take decisions. So Section 125 of Model GST Law provides for certain immunity to the authorities for properly carrying out the purposes of the Act. No legal proceedings against GST authority is allowed, if he has acted in good-faith. Good faith here means any act done not prejudicially but with the intention to administer the Act and to protect the revenue. E.g. If names of Directors of a defaulter company are published in public domain, the directors cannot file a defamation suit against tax-authorities.
8. Disclosure of Information:
Every tax-payer, TDS collector, ISD etc. is required to furnish return under the Act. Some Govt. or semi authorities, agencies, banks etc. are also required to furnish information return under the Act. Moreover, Board or Commissioner are empowered to collect statistics under the Act. This information of various persons from various agencies is available with GST authorities and this information is supplied in accordance with or under any proceedings of the Act. As this information is of personal nature and its disclosure can hamper the business interest, it is treated as confidential under section 126 of Model GST Law. This section also bars courts to ask for production or give evidence with respect to this information.
But disclosure of above information is required in some situations which are carvedout to be exception for such disclosure.
e.g.(i) Disclosure to court or Tribunal where hearing of dispute arising out of any proceeding under the Act is going on,
(ii) Disclosure to enquiry officer conducting enquiry of GST Officer,
(iii) Disclosure to authorities taking disciplinary action against a CA or a Advocate, etc.
Also, fine and Imprisonment is provided for wilful disclosure of information by any GST officer.
9. Publication of Information of persons in certain cases:
Section 127 of Model GST Law provides for judicial discretion to the competent authority for disclosure of information of persons. Many times, it is demand of the situation to use “Naming and Shaming” Concept. This technique is widely used by banks to recover its dues from defaulters. Name of directors/ partners of the firms are published in newspaper by bank. Apparently, same concept is adopted in Model GST Law. Thus names and information of frequent defaulters, tax evaders, persons involved in issuing of fake invoices, etc. can be placed in public domain. This facilitates recovery of arrears from defaulters and also discourages other persons to get involved in such activities.
10. Assessment proceedings not be invalid on certain grounds:
Section 128 of Model GST Law provides immunity to the authority so that mere technical or inadvertent mistakes do not result the proceeding to be bad in law. Similar provisions are available in almost all VAT Acts.
If a tax-payer has responded to a notice served in any earlier case, now he cannot question service of notice in similar manner. Further, mentioning of wrong section in the notice or order does not vitiate the action unless substantial right of the assessee is affected.
Hon. Bombay High Court in the case of M/s. Clip Nail Care (STR 4 of 2009) held that though service of notice is in the name of firm and not in the name of proprietor, notice can be treated as properly served.
11. Rectification of mistakes apparent from the record:
Section 129 of Model GST Law provides that simple calculations mistakes, errors or mistakes apparent from record can be rectified within 6 months. These corrective measures are available for tax—payer as well as tax-authorities. But the principle of natural justice is to be followed by tax-authorities if such rectification is adversely affecting any person. Any decision, order, summons, notice, certificate or any other document issued by a authority can be rectified by the same authority. But change in application of mind, conscious decisions taken earlier cannot be affected or changed subsequently under rectification.
12.Bar on jurisdiction of Civil Courts:
Except appeal to High Court and appeal to Supreme Court, section 130 of Model GST Law puts a bar to civil courts to decide the issues under GST Law.
13. Levy of fees:
Section 131 provides for levy of fees for copy of any order or document. The exact fees will be provided in the rules.
14. Power to make rules:
Section 132 of Model GST Law empowers State or Central Government to make rules on the recommendation of the GST Council. Government can give retrospective effect to these rules and also includes power to issue notifications. Penalty provided for breach of any rule is at Rs. 10,000 if it is not provided elsewhere.
Section 132 provides for general power to make rules with respect to any matter, but also provides specific subjects with respect to which rules can be made. Those 48 subjects includes registration, return, deemed registration, assessment and collection of tax, manner of recovery of dues, charging & payment of interest, refund, inspection and audit etc.
15. Power to make regulations :
Board or Commissioner is empowered to make regulations under section 132A of Model GST Law.
16. Delegation of powers:
Section 133 of Model GST Law provides for delegation of powers. Delegation of power must be exercised by notification in the Gazette along with conditions, if any.
17. Instruction to GST officers:
Section 134 of Model GST Law empowers the Board or Commissioner (competent authority) to issue order, instructions or direction to GST officers for the purpose of uniformity in implementation of the Act. Such orders, instruction or directions are generally issued through circulars. It is established fact that these circulars are binding on lower authorities in the procedural part as far as implementation of Act is concerned. However, many courts have upheld that no such orders, instructions or directions are binding on lower authorities while interpreting provisions of law. Thus instructions, orders or directions by higher authorities are not binding while taking decisions in assessment or appeals. Section 134 of Model GST Law speaks the same. For proceedings such as assessment or appeal, the authorities have independent quasi-judicial powers.
18. Service of Notice:
Section 136 provides for manner for service of any decision, order, summons, notice etc. The procedural law for service of statutory notices, orders, summons etc. is generally derived from CPC (Civil Procedure Code, 1860). But the provision of section 136 in Model GST Law encompasses all types of conventional and modern methods of communications, so that any method of service should not be declared as invalid or illegal.
19. Rounding off tax:
Section 137 of Model GST Law provides that any amount of tax, interest, penalties, fines or any amount payable as well as any amount refundable should be rounded off to the nearest rupee.
20. Effect of amendments of Rules. Notifications or orders:
Provision of section 138 of Model GST Law are made to generally protect the position of law earlier to amendment unless the amendment is expressly retrospective.
21.Publication of Rules. Notifications. etc. and laying of Rules before Parliament or State Legislature:
Section 139 of Model GST Law says that all rules, notifications, etc. should be published in the Gazette and should be placed before Parliament or State Legislature as soon as possible. This section further says that if Parliament or State Legislature suggested any modifications or rejected the rule or notification, the effect of such modification or deletion will be prospective.
B. Miscellaneous Provisions in Model IGST Law:
1. Applications of certain provisions of CGST Act:
There are certain machinery provisions like registration, return, assessment, adjudication, recovery, audit etc. which are not incorporated in Model IGST Act. They are rather not required to be provided as the same can be imported from parent act (CGST Act). Such provisions are mutatis-mutandis to parent act. Section 27 of Model IGST Act provides for such mutatis-mutandis provisions.
2. Power to make rules:
Section 28 of Model IGST Act empowers Central Government to make rules on recommendations of GST Council. The Section speaks about rules to be made for all matters of IGST and specifically that for settlement of cases under chapter VIII. Chapter VIII is regarding settlement of cases by National GST Settlement Commission. Section 28 of Model GST Law says that rules should be made to prescribe qualifications, eligibility conditions and manner of selection & appointment of Nation / State Chairman and members of Settlement Commission. Further, the section also requires to make rules to prescribe powers and functions of National and State Chairman of Settlement Commission and to prescribe form and manner of application for settlement of cases.
3. Interest on delayed payment of tax:
Section 29 of Model IGST Act is about provision for levy of interest in two contingencies.
(i) Taxes not paid within time
(ii) Dues accrued on account of wrong or excess Input Tax Credit.
4. Wrong collection and deposition of IGST:
If local supply is wrongly treated as inter-State supply by tax-payer and IGST is collected and deposited, then section 30 of Model IGST Act provides for refund of such IGST. This section further says that the refund will be granted as per provisions of section 38 of CGST Act (Refunds) after making payment of appropriate CGST & SGST.
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