GST is new tax regime in Indian economy because of its very recent and fresh execution. The conceptual existence dated long before its actual presence among people. As it is said, every coin has two sides. Similarly, GST has faced both side of arguments. There has been relief from enumerable and cumbersome indirect taxes like VAT, Excise, service tax, tolls and many more. This has also brought double taxation effect down to zero, reduced rate of taxes resulting in reduced prices of goods and services, much more transparency and more. But when talking about the other side of the coin, some issues have been raised frequently by not just common people but also professionals and authorities. These are few of the extremely pertinent requisites must be brought to the knowledge of GST Council as well as the Think-Tank which is very efficiently and dedicatedly developing and implementing GST in the country, so that some suitable solution could be urgently implemented.
1. Responsive Judicial System for redressing issues under GST:
Lack of dedicated judicial system at ground level for addressing legal issues poses the question that-Whether there is well placed ‘Rule of Law’ in the area of Goods & Service Tax?
After almost 11 months have passed since introduction of GST from 1st July 2017 neither the 1st Appellate Courts nor Tribunal has been formed or put in place as required under any good law. These judicial forums have been envisaged in CGST/SGST or IGST Acts passed by the Parliament as well as the State Legislatures. Professionals who are practicing in the field of Indirect Tax Law observing that ‘How the Government of India or the State Governments wants to implement the GST Law in our democratic country without structuring and putting in-place the system of judicial redressal?
Every legal action taken by any implementing Authority of the Government should be open to judicial scrutiny for which proper prescribed structure must be in-place from the very first day when law has been implemented, but unfortunately lot of water have already flown in Ganges in the last more than 11 months, but the Government and the persons responsible for implementation of GST Law have not provided proper judicial forum in-accordance to the Constitution of India. We believe that Government must not ignore this important requisite of judicial forum under GST.
Proper forums for ‘Appeals and Revision’ has been provided in Chapter-XVIII U/s 107 to 121 of CGST/SGST Acts which was put in force w.e.f. 1st July 2017, but unfortunately citizens of the country and the tax payers even after 11 months not yet have forums for 1st Appellate Courts or Tribunal where they can approach judicial authorities for addressing their legitimate issues. The Government is collecting huge revenue from GST since July 2017 which has now touched the mark of almost Rs. One Lakh Crore per month.
What is in the mind of the Government? Should it not be deemed that the Government want to take away constitutional right of the tax payers and dragging the Indian tax payers away from ‘Rule of Law’? A strong and authenticated judicial forum is always the back-bone of the successful implementation of any Law for governing the Society.
The Government must understand that even though in-accordance to the provisions of Constitution of India every citizen of this great country has a right to approach Hon’ble High Court or Hon’ble Supreme Court of India, but will it be practical to approach these courts for each and every wrong interpretation or wrong deed of proper officer working for implementation of GST. Most of the tax payers either have no courage or have little means or no time to approach the Hon’ble High Courts or Hon’ble Supreme Court.
Further, whether the Government wants more burden on our already burdened Hon’ble High Courts or Hon’ble Supreme Court by not putting in-place the system of 1st Appellate Authority or Tribunal for redressal of regular issues for the implementation of Indirect Tax Law.
2. Advance Ruling mechanism under GST:
The benefit of new regime of GST in the Indian Economy is based on the ‘Input Tax Credit Mechanism’ and its veracity as well as authenticity in the chain of supply transactions. The intricate provisions of GST Law needs minute analysis for understanding and compliance, unless the liability of tax on Outward Supply is correctly self-assessed by the tax payer, the ‘Input Tax Credit’ cannot be correctly claimed by the recipient in the chain of transactions. If at any earlier point some wrong decision is taken by the tax payer, it effects the whole chain of transaction resulting its rappelling adverse effect. Thus, to correctly understand and pay the liability of tax under GST by a tax payer at every stage in the chain of transaction is very much essential for the success of GST and its good effects for the economy of the country. The core benefits as envisaged at the time of introduction of GST can only be achieved when the tax payer seriously understand its correct liability of GST and makes payment of right amount of GST.
The concept of ‘Advance Ruling’ in Chapter-XVII have been provided in the GST Law with an aim to remove the doubts and ambiguities in the mind of tax payers about its tax liability and the correct procedure to be followed. The present provisions contained in Section 103 to 107 are not elaborate and do not provide the sufficient guidelines which a good law for this purpose should have, it needs detailed analysis, scrutiny and re-drafting to achieve the real aim of ‘Advance Ruling’ under GST.
Further, during the short history of ‘Advance Ruling’ under GST, it has been found that the Joint Commissioners appointed as Members of Advance ruling Authority are dictating the judgments with an absolute pro-revenue mind ignoring the arguments and well established ratios of law arising out of already held verdicts of Hon’ble High Court and Supreme Court of India. It is extremely sorry state of affairs that ‘Advance ruling’ passed are decided in most of the cases in favour of revenue with a prejudiced mind which vitiated the whole scheme of GST mechanism.
It must be appreciated that the prospective demand or prospective refund would result in distortion in the chain of the business transactions as the chain in real time would not be able to encompass the desired effect of the right conclusion if it is coming out of prolonged legal battle. An assessee/tax payer cannot wait for long to transact business as this would be against its own interest as well as against the interest of the country which is passing through the development phase.
The system of ‘Advance Ruling’ must be strong and unbiased as well as must be very-very sensitive towards the time frame. The very nomenclature of ‘Advance ruling’ signifies that the ruling is provided in advance i.e. prior to the actual transaction which is in offing, but the present experience of ‘Advance ruling’ decisions given by Authorities of the rank of Joint Commissioners are absolutely ridiculous and of no use for the tax payers. The ‘Advance Rulings’ given by the Junior Officers as mentioned above are clearly tilted towards the interest of revenue rather than non-biased logical opinion on the issue and fully devoid-off accepted judicial norms. Most of these ‘Advance Rulings’ are non-speaking and have not addressed the arguments placed in writing by the applicant tax payers. Any system of ‘Advance Ruling’ cannot achieve its true aim unless an un-biased logical conclusion is given by the authority, in most of the cases the applicant do not have any time to approach Hon’ble High Courts or Hon’ble Supreme Court due to the time constraint for effectuating the actual business transaction. A casual approach towards ‘Advance Ruling’ is vitiating the whole concept and will create irreparable damage to the GST mechanism. It needs to be corrected otherwise the faith will vanish very soon.
3. Lack of upgraded software and technical infrastructure
Whatever may be the compulsion for hurried introduction of GST w.e.f. July 2017, but now after more than one year the backbone i.e. GSTN (the Information Technology Platform) has not been established in-line with the technical or software requirement?
It is absolutely wonderful that Government has desired to implement GST through a digital platform, whereby personal interaction is minimized containing corruption to a large extent. The absence of a robust digital platform for GSTN is most serious problem creator for GST tax professionals across the country. There could be reasonable excuses, but the Indirect Tax Collection Platform cannot efficiently function without a fully competent digital platform. Now, the citizen of India and the Indian Economy must get due benefit of such huge reform. The stabilization of GSTN is presently a single most important issue for success of GST.
We, Tax Professionals of the country are under a great stress due to deficiencies of non-technology system used for generating GST Number. The Tax Professionals have to put extra hours and have to exert much more than the erstwhile manual system resulting in health problems of the functioning in their offices.
You will appreciate that we 7,500 individual members as well as members of 122 Tax Bar Associations spread across the country are the most important link between treasury and tax payers. The Government must keep our well-being in mind and prove smooth and hassle free function for GST.
4. Answer ability/Accountability of the Officers of CGST and SGST Department:-
The present system of collection of GST at the field level seems to be in auto-mode where there is no responsible or answerable Authority or Officer of the Central or State GST Department. They neither have any administrative powers which could be practically exercised nor do they have proper access to digital platform for the solution of the day-to-day issues raised by their jurisdictional assessee/tax payers through the tax professionals. Most of the Officers do not take any responsibility and are creating a situation which suggest that they do not have any effective mechanism to solve routine/regular issues of the Tax Professionals. This grave situation is experienced throughout the country by every professional who are everyday raising their concern to the ‘Indirect Tax (GST) Representation Committee’ through their e-mails, SMS and Watsapp messages etc, but the Tax Professionals get a routine reply of the officer’s inability to access the data and thus no solution of the issue is forthcoming. If the Government thinks that there is no need of any human interaction in implementation of GST, then why these Officers in large number are paid out of the scarce tax payer’s money, the officers are just sitting ideal with no help to the tax payer. The true benefit of the policy of the Government to have least official interaction with the tax payers can only be achieved with robust and vigilant digital platform. The initial problem should be addressed and resolved by some human interaction between tax payers and tax collector, so that issue could be timely and properly addressed to the satisfaction of tax payer’s assessee.
Keeping in view that each and every penny/ paisa of the tax due should be brought to the tax net, it is desired that proper scrutiny, verification and reconciliation of the returns especially of ‘Input Tax Credit’ claimed be regularly made, so that errors do not happen or repeated as well as unscrupulous business could not distorted the developing economy. The genuine business in the country could be flourished with proper adherence of GST which needs a surveillance by implementing officers over the business transactions of the tax payers. Present laxity in many of the GST aspects may not be in the larger benefit for our economy as such laxity is creating some dip in the economy and also difficulty for the Revenue Authority to collect the legally due amount of revenue, which may lead un-reasonable litigation to the dis-advantage to the country.
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