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It has been more than 5 years since GST has been implemented in India and now this tax should be completely established in India but according to the news coming continuously from the business sector, problems are still there. GST was first discussed mainly in India in the year 2006 when the then Finance Minister Mr. P. Chidambaram discussed GST in the Indian Parliament. Since that time some professionals related to tax laws have been associated with GST and Sudhir Halakhandi is one of them. Let’s talk today with Sudhir Halakhandi about GST.

Question:– Sudhir ji, you have been associated with GST since its inception and now it has been 5 years since GST was implemented in India. How was the GST journey in your opinion?

Sudhir Halakhandi – There are three sides to this journey of GST. First – Government, Second – Taxpayer and Third – Professionals. Let us discuss the impact of this journey of GST on all the three stakeholders. See, as far as the Government’s side is concerned, the revenue part of the GST comes into focus and the revenue to the Government from GST is increasing continuously, then according to this aspect, GST is a successful tax. Though the Lawmakers has not declared their expected targets but it appears that the situation is satisfactory, because the revenue is increasing from year to year.

As far as the other two stakeholders are concerned i.e. dealers and professionals , the complexities of this tax law still there and if we consider the case of  input credit, RCM and other procedural parts of GST the complexities are increasing. GST still needs a lot of reforms and improvement. The number of GST notices being issued shows that the GST procedures are not still simple and stable.

Question :- By the way, what should be done regarding input credit in GST so that all the parties can be satisfied.

Sudhir Halakhandi :- See, from the very beginning I have my opinion that  once the GST has been collected by a person , it should be the sole responsibility of that person who has collected it to pay it  to the Government or compelled by the Government to do it  and when this is done in GST, then only the purchasing dealers will be satisfied and the real problem of the ITC will be solved.   If this is happened , then the ITC will be seamless , as promised by the lawmakers at the time of introduction of the GST.

Restricting the input credit of the buyer in this matter is not a solution to the problem, nor it is  an ideal situation. This is the easiest way for the Government to get revenue for its side and to put it simply, it is a wrong way which needs to be changed.

GST Still Needs a Lot of Improvement

Question :- How much relief will be given from the circular which has been issued for the input credit mismatch of Financial Year 2017-18 and 2018-19.

Sudhir Halakhandi :- This circular is only in relation for the input credit held withheld due to technical mistakes and will give benefit or relief only for these technical mistakes, but the real problem is that  when the seller has not paid the tax and in such a situation the Government should take up the case with these defaulting  sellers. These defaulters should be punished and tax should be collected from them. If the input credit of the buyer is withheld in such a way, then it will be double burden of tax on him in a way because he has already paid one-time tax to his seller.

Question :- You have also written a lot about the problem of RCM. After all, what is this problem and why is it not being solved till now.

Sudhir Halakhandi – RCM was first imposed on all goods and services purchased or received from unregistered persons, then some exemption was given and ultimately it was removed after about 4 months of introduction of GST but it remained applicable on some of the notified goods and services. If it had remained in the same way as it was introduced in the beginning, it would have created so many troubles because whatever part of it is left is proving to be very dangerous for the taxpayers at present. What the government should do is to free the tax payers from the side effects of that RCM where RCM had no financial effect or is where input credit is available after payment of input credit and the taxpayer has not paid the same, the taxpayer should not be penalized for this technical mistake. Anyway, it was a short-sighted and impractical provision whose side effects were not thought about when it was made.

Question :- What was the biggest advantage of the introduction  of GST in India?

Sudhir Halakhandi :- Input credit of tax levied on trade between two states is now available and the problem of collecting C-forms under CST tax levied during VAT has been relieved. Now no C-forms are required to be collected. The number of taxes has reduced. Professionals have now developed a good habit of continuous reading and learning due to continuous changes in GST. Both professionals and dealers got knowledge about modern features of taxpayer information technology systems and network. The revenue of the government has increased and the number of taxpayers has also increased.

Question :- There is a provision in GST under which if a buyer does not make the payment for 180 days from the date of the Invoice , then the input credit taken by him must be repaid with interest. Is it of any benefit to the vendors who are troubled due to non-receipt of payment or late payments?

Sudhir Halakhandi:- This provision was brought in the GST Laws but it has never been clearly announced by the law makers “why this provision was introduced” and there is no clear evidence that it is benefiting the sellers to whom payment is not made within time and in most of the cases this provision is  not even being followed.

The main feature of this provision is that the buyer is only given the duty of  giving information his own late payment . The seller has no power to inform about delayed payment  so the seller is not getting any special benefit from it.

Question:- You have written a lot about GST network from the beginning. What is the status of this network at present?

Sudhir Halakhandi :-

In the initial years, the GST network caused a lot of trouble to both the tax payers and the government, but at present the network is working fine and hardly any major complaints have come in the last few months. Presently the network is working fine. Small problems may be there but overall performance has improved considerably.

Question:- GST is a Dual tax in which both the state and the centre collect tax the same transaction. Tax payers have any trouble because of this DUAL TAX.

Sudhir Halakhandi:- GST was imposed in India in the name of “One Nation One Tax” but India it was imposed as a Dual tax due to the federal structure of Governance in our country. If GST was to be implemented in India, it was to be implemented in the same manner. If there was any problem in the beginning, then it is a different matter, but now everyone has become used to it, so now there is no problem. The problem that was said in the beginning was only of principles that why one country is having dual tax in the name of one tax, but now there is no problem with it. GST was a bold step taken by the Government of India and this dual format reiterates its practical form. The problems that have come in GST are not because of the imposition of this tax but because of the manner in which it was imposed, which had many procedural flaws and is still there.

Question :- We have an annual return in GST and you cannot call it a very practical return from. What is your opinion about this ?

Sudhir Halakhandi :- The annual return of GST should be made in such a way that the taxpayer can make the disclosure of his Turnover and Tax Liability  in such a practical form stating all his mistakes so that he can show all his actual tax liability and how it has been paid by him.

But at present this return is not like this and then when there is no provision for rectifying mistakes in GSTR-3B, the main return of GST, hence the importance of this annual return has completely ended. It is not serving any purpose.

It has been 5 years since the annual return of GST was introduced, yet you must have seen that like every year many seminars have been held and articles have been written to understand this return this year also and this shows that this return has no simple or practical form. There is a problem even for professionals so  they have to learn about this return every year since last 5 years. You can term this return as a “Round Square”.

I have a big question regarding the annual return of GST that why GSTR-9 and 9C are to be filed separately. By adding some more columns in GSTR-9, it can be made GSTR-9C right here for dealers with turnover above Rs.5 crore. That’s why I say many times that there has been a lack of practicality in the GST law from the very beginning.

Question :- What do you think about GST e-way bill and e-invoice?

Sudhir Halakhandi:- At present there is no problem with GST e-way bill because most of the states have increased its limit from Rs. 50000.00 to Rs. One Lakh in their state. In some cases, intra-city limit is raised to Rs. 2 Lakhs though on interstate sales it is still Rs. 50000.00.  Now dealers are accustomed to this system.

The e-invoice is currently capped at Rs 10 crore and in a recent clarification it has been told that at present there is no plan to revise the limit to Rs 5 crore, so small dealers are relieved at this moment. If the government wants to modernize the entire system of GST, then the dealers should also be ready for this, there is no other option for them.

Question:- You keep talking about the rate of interest in GST also. What is this controversy after all?

Sudhir Halakhandi:- See, if someone delays the payment of Tax then interest must be charged and it is inevitable but I have to say that the rate of interest is very high and it should be made practical and viable. It should be kept 2 or 3 percent more than the bank loan rate because the rate of 18 percent is very old and high and not practical. There is a need to reduce this rate of interest because there are other side effects also of delayed deposit of tax and late filing of return, so interest should be recovered as interest and not as penalty.

Question:-There is one more controversy regarding the deposit of tax. The dealers deposit the tax but their interest continues till they do not file the GST return i.e. GSTR-3B.

Sudhir Halakhandi :- This is also an unnatural and irrational provision and it has been written many times but what is still going on and there is no possibility of getting any relief in this respect.

A similar provision is to set off CGST and SGST against the tax of IGST and under this provision IGST cannot be set off against SGST until the balance of CGST is exhausted in the credit ledger and so forth. Due to this provision, an imbalance arises that even when there is sufficient balance in SGST, CGST has to be paid in cash. This problem can be solved if CGST and SGST are allowed to be adjusted equally or as required while adjusting the tax in IGST .

Question :- GST simplification has been your favourite subject and you have written a lot on this too. Your pen has been silent on this subject for a long time now. What is the reason ? have you lost all hope ?

Sudhir Halakhandi :- Yes, I have written on this topic from the beginning and this demand will continue even further because I have to say that the success of GST lies in its simplification.

Question :- Good!! Should GST be simplified, should this be the goal of GST?

Sudhir Halakhandi :-This should be the target for the time being but the ultimate target should be a “single GST” with a centralized GST and once it is collected, the states and the centre share it among themselves. At present It is not known when it will be implemented, but the efforts should continue because this is the only ideal form of GST.

Question :- If you are asked to remove or create any provisions of GST, what will you do or what advice will you give about it.

Sudhir Halakhandi:-

See, first, I will give advice to remove RCM not having any financial effects from July 1, 2017. Second, I would recommend making a provision for rectification in GSTR-3B and third is to extend the time limit for a dealer to take input credit till his annual return is filed. Recovery in respect of input credit should be made from the person who is not depositing the tax after collecting it from the buyer.

Question :- Do you have any thoughts about GST amnesty scheme also? 

Sudhir Halakhandi :- Yes, but this amnesty is not the late fee waiver or interest waiver amnesty that I am talking about. See GST was a new tax and whether the government believes it or not, it was a bit difficult and complex as well. Now there have been many mistakes in this in the first 5 years and I have to say that there should be a difference between mistake and evasion of tax, so an amnesty scheme should come in such a way that the dealers can correct these mistakes. As input credit of IGST has been taken in SGST and CGST, payment of tax has been completed but not shown as  RCM in the return. These are some examples and all such mistakes in which there is no tax evasion, an amnesty should be brought to rectify them.

Question :- And any message of yours regarding the readers of GST.

Sudhir Halakhandi :- Yes, keep watching my tweets continuously, they are mostly related to GST. Do your best to follow the law as it is made, work carefully so that there are minimum mistakes and you can do your work comfortably.

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One Comment

  1. opjain02 says:

    Per S.50(1), GST Act, interest is not payable on tax deposited before due date of seposit of tax. refer my detailed article in (2022) 38 J.K.Jain’s GST & VR, Pages R-11-R-12 alongwith the following decided cases;
    F1 Auto Components Pvt. Ltd. v. The State Tax Officer (2022) 38 J.K.Jain’s GST & VR 64 (Mad),
    Maansarovar Motors Pvt. Ltd. v. Assistant Commissioner(2022) 38 J.K.Jain’s GST & VR 411 (Mad),
    KLT Automotive and Tubular Products Ltd. v. Union of India (Bom) (2020) 38 J.K.Jain’s GST & VR 423 (Bom),
    Prasanna Kumar Bisoi v. Union of India (2020) 34 J.K.Jain’s GST & VR 159 (Orissa).

    CA Om Prakash Jain s/o J.K.Jain, Jaipur
    Tel:9414300730/ 9462749040

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May 2024