INTERVIEW WITH GST EXPERT ‘CA (DR.) ARPIT HALDIA’ BY  ‘CA SUDHIR HALAKHANDI’

Today we have with us CA (DR.) ARPIT HALDIA who has written several of Books of GST and attended Lot of Seminars as Speaker since inception of GST in India. Welcome Dr. Arpit. How are you?

CA (DR.) ARPIT HALDIA

Fine Sir and Thank you very much for the honor. Humbled by this gesture.

CA (DR.) ARPIT HALDIA

And it’s a great thing for me to be in communication with you. Your articleswere the ones from which I got the inspiration and this would be true for most of us.

SUDHIR HALAKHANDI: Let us start with your education. CA is Ok but   PhD is something unique. Tell us about school college education and PhD.

CA (DR.) ARPIT HALDIA: I did my Schooling up to Class Eighth from Saint Xavier Jaipur and from Class IXth onwards from St Annes Jodhpur.

SUDHIR HALAKHANDI: Your college and Article ship.

CA (DR.) ARPIT HALDIA: I did my post Graduation from Jodhpur in 2000 and complete my CA in the Year January 2002.

CA (DR.) ARPIT HALDIA: Articleship was from Jodhpur from MS B.M. Bhattar and Company.

SUDHIR HALAKHANDI: Fine Now about PhD. This is very much unique for a CA.

CA (DR.) ARPIT HALDIA: I did my PhD in “Comparative Study of VAT and Rajasthan Sales Tax” in the Year 2008. I Joined for PhD in the Year 2004 and was awarded in the Year 2008

SUDHIR HALAKHANDI: Ok and how your interest developed in GST.

CA (DR.) ARPIT HALDIA: It was your articles written sometime in August 2015 and since it was an upcoming subject and very few were into this field of writing on GST(Except for you and few others) so I thought to write about GST. 

CA (DR.) ARPIT HALDIA: I thought that since GST would take about 2-3 Years to come to let’s start with the basics. My First Article on GST was in August 2015 and then I started to refer some basic Government literature on GST which has become the base for GST Like reports of NIPFP, Ministry Of Finance and White Paper on GST.

SUDHIR HALAKHANDI: – How many books have you written on GST. I know very well that some of the books written by you are being used as reference books in the syllabus of some of the universities all over India. 

CA (DR.) ARPIT HALDIA:-I have written about 4 books and have about 15 editions of those books have been published. The books written by me are GST Made Easy, GST Mini Ready Reckoner, GST Samasya Evam Samadhan, GST E-way Bill.

SUDHIR HALAKHANDI: Ok Now Please say something about journey of GST. The way it is implemented and run are you satisfied with it.

CA (DR.) ARPIT HALDIA: The first thing I used to say in My lectures were that “Concept” and Implementation” are two different things.So GST as a concept is excellent but has left much to be desired in terms of Implementation. There is a wide gap in what was perceived and what has been implemented. And what’s more, it’s the Implementation of a Concept which we agree or not decides the success of the Concept. Sokeeping my Fingers Crossed for an improvement in implementation in the near future. 

SUDHIR HALAKHANDI:The failure of GSTN is also matter of concern. How you feel about it? Why this problem was not solved in 30 Months?

CA (DR.) ARPIT HALDIA: Actually it seems that the matter has been tried to be covered upwith a Stop Gap Arrangement every time which can be seen in the case of GSTR-3B as well. It was a mistake that when Business Process were released in Oct 2015 that the issue about complexity was not raised with much force and government implemented the same and now what we are seeing is a cover up wherein nobody is able to take the responsibility and take the bull by the horn and improve the same.

I still remember that government invited opinion in Oct 2015 but they were firstly not sent in numbers and seems that government too ignored them.

SUDHIR HALAKHANDI: GST is itself on trial basis in India. Still it is not finally settled here.Why there are so harsh provisions at initial stage of implementation like late fees.

CA (DR.) ARPIT HALDIA: The system is not able to differentiate between intentional evaders and genuine difficulties and is trying to tackle both these persons in similar manner.The evaders are taking advantage of a half-baked system and genuine persons are finding the same too difficult to comply due to complexity and as well as multiplicity of Compliance. Government needs to understand that compliance does not increases by Late Fees but increases by Simplification and easy access to all.

One of the Government publication in the initial phase suggested that “Return” in GST should be as simple as Postcard. However, it’s a farfetched dream but atleast they could have ATLEAST made it like our VAT-10 which was a perfect return in Rajasthan.

SUDHIR HALAKHANDI: In your opinion the late fees collected till date should be refunded?

CA (DR.) ARPIT HALDIA: Yes but then refunding is not the solution.It would only create more non-compliance.Like we have seen in VAT Regime.Refund of late fees along with Ironing out of the glitches so that in future defaulters left are intentional defaulters. This would only resolve the problem.

SUDHIR HALAKHANDI: What about the phrase “Return can be filed by neighborhood child?

CA (DR.) ARPIT HALDIA: Something’s are Better said than done and it was a poster boy remark which has lost its relevance for the Government and for rest, it has become something to haunt the Government.

SUDHIR HALAKHANDI: GST is a new concept and technically tough both for the officials working for GST and the Professionals like us.Like professionals they also have tough time to keep the pace with this taxation system? Is there any lack of proper training to the officials working for GST? What are your suggestions regarding this since you are also attached with their training program also?

CA ARPIT HALDIA: I think there is no lack of proper training since I have been associated with the training part as well. In a way, it can be said that officials till now have not started assessment and audit in GST and as VAT is near its completion, it is expected that they would be able to put in efforts and this entire gap would be bridged.

Take the example of Refund Procedure, everybody is doing well and in some cases raising issues as well.

SUDHIR HALAKHANDI: In Last 3 years lot of stress have been taken by professionals regarding GST. Is there any suggestion by you to professional fraternity to come out of stress and work normally

CA (DR.) ARPIT HALDIA: What I feel that as a fraternity,that we have to decide upon fees level in commensurate with work involved and stick to it as one and then take the work keeping in mind that fee structure.If that is done, I don’t think there would be an issue.What is happening that since there is lack of uniformity,fees is not commensurate to the work involved and therefore we all are struggling.Mantra is “Fees should be directly proportional to work Involved”.

SUDHIR HALAKHANDI: Thanks Arpit and it is turn for member’s questions. Please answer the same –

Query -1

An assessee provides exempted services whether advance received for providing such service is also exempt. Advance not settled during the year will it will have some effect.

CA (DR.) ARPIT HALDIA: Yes Advance would also be exempt from levy of Tax.Since Advance is exempt from levy of tax settlement or non-settlement is not an issue.

Query-2

Hotels are taken over by government for developing isolation ward for COVID  patients… now they will not getting any consideration…. will it be supply and GST is payable?

CA (DR.) ARPIT HALDIA: This a Tricky one and will try to answer the same to the limited extent I can arrive at the conclusion due to paucity of time.

Supply and Tax thereof-The hotel has been acquired by the Government under Disaster Management Act 2005. The assessee has no other option but to give it to the government. Since Provisions of Schedule I of CGST Act, 2017 are not applicable and no consideration is being received, said transaction would not be leviable to tax and no tax would be leviable on the given transaction.

Further regarding the claim of Input Tax Credit, Hon’ble Gujarat High Court in the matter of Commissioner Of Income-Tax … vs Navsari Cotton & Silk Mills Ltd. on  March 81 Equivalent citations: 82 1 ITR 546 Guj has laid down the criteria for falling within the clause of “in the course or furtherance of business.

If the expenditure incurred :-

a) with a view to bring profits or monetary advantage either today or tomorrow.

b) to render the assessee immune from impending or reasonably apprehended litigation.

c) in order to save losses in foreseeable future

d) for effecting economy in working which may pay dividends to-day or to-morrow.

e) for increasing efficiency in working

f) for removing inefficiency in the working.

g) where the expenditure incurred in such as a (i) wise (ii) prudent (iii) pragmatic (iv) ethical man of the world of business would conscientiously incur with an eye on promoting his business prospects subject to the expenditure being genuine and within reasonable limits.

h) where it is incurred solely by way of a civil duty owed by the a…

Therefore in my view the hotel has been acquired by the government and the assessee has no option but to give it to government and cannot deny the same. Therefore looking to the above clauses my view is that the act is in the course or furtherance of business and therefore, eligible to  claim ITC on the inputs and input services received during this period in accordance with provisions of Section 16 and subject to provisions of Section 17 and other applicable restrictions specifically applicable, if any.

Further can the ITC be denied on account Provisions of Section 17(5)(h). If weclosely look at Section 17(5)(h) of CGST Act, it says about “goods lost stolen destroyed written off or disposed of by way of gift or free samples”. The above act does not in way falls in any of the above scenario.Providing hotel in this pandemic as a premises is under compulsory acquisition wherein charging consideration is not in the hands of the taxpayer. Therefore, question of providing premises free or as a gift does not arises and thus provisions of Section 17(5)(h) are not applicable. And as a matter of academic discussion Section 17(5)(h) is applicable on goods and not services provided free of cost.

Therefore, in my view output tax would be nil and Input Tax Credit would be available even though no consideration has been received. The case does not fall within Section 17(5)(h) of CGST Act, 2017 as discussed above and is in the course or furtherance of business.

Query-3

Mr.X is registered entity in Jaipur providing engineering consulting services to Singapore based company Y in relation to highways roads in Bangalore India. What is nature of above supply (inter or intra) or supply is zero rated supply.

CA (DR.) ARPIT HALDIA: It would be having Place of Supply according to Section 12(3) of IGST Act as Bangalore as it is directly in relation to immovable property.

Assuming that the location of supplier is Jaipur and no Fixed Establishment for provision of such service is therein Bangalore nor they have taken registration in Bangalore Nature of Supply would be IGST.

Query 4:-

Ineligible ITC Taken in GSTR-3B but not utilized due to already excess of credit. Now after one year it is reversed. Department is asking for Interest.

What is the legal provision?

CA (DR.) ARPIT HALDIA: In My View No Interest is Payable. Refer Commercial Steel Engineering Corporation Vs. State of Bihar (Patna HC).

To the extent there is always an excess balance of the wrong credit taken.

Query: 5-

RCM on royalty is a very lesser known subject. In our state First it was collected by the Contractors appointed by the Government and they were charging the GST. Now they stopped Charging the GST and it is now under RCM. What is the actual provision regarding the RCM on royalty paid to the Government?

CA (DR.) ARPIT HALDIA:

Tax Payment on Royalty was always under reverse charge and the contractors were incorrectly charging GST. The above anomaly was corrected somewhere in the year 2018. Therefore, charging of Tax by them, legally speaking does not absolves registered person from charging GST. Registered person has to deposit tax under RCM. Tax rate upto 31st December 2018 was equivalent to the tax rate on goods and from 1st January 2019, it is 18%.

Now whether charging GST by the contractor absolves taxpayer from GST? If Tax under RCM has not been deposited by the recipient, saving argument would solely be based upon revenue neutrality, no double tax on same transaction and order given by the State Government to the contractors for collecting tax which led the people in believing that tax is payable on forward charge.

Query:-6

ITC on import (From outside India) of Capital goods in FY – i.e. IGST not claimed by extended due date I.e. sty March. Even not claimed in Audited Books. It has been claimed in FY – and effect taken in – books in view of HC decisions regarding due date of GSTR3B. Subsequently law amended. Whether still be a good case to claim input credit on Capital Goods imported. Kindly enlighten.

CA (DR.) ARPIT HALDIA:

First of All the claim is hit by Section 16(3) of CGST Act which provides that where registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act 61 the input tax credit on the said tax component shall not be allowed.Since Tax has already been added to the part of cost and depreciation has been claimed therefore the claim would be denied.

Just taking the view hypothetically an alternate view can be taken that ITC to the extent depreciation has been claimed in – has not been proportionately claimed and rest has been claimed in GSTR-3B. Further regarding the time limit in my view Import of Goods is not covered by the Restriction of Section 16(4) as it restricts credit available through bill and debit note pertaining to invoice and claim of ITC on import of goods is taken on the basis of bill of entry (subject to Litigation).

And last but not the least, further Section 16(4) as it is subject to litigation and judicial scrutiny by Courts.

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2 Comments

  1. Raji Reddy says:

    Nice way of explaining various provisions in various situations including taking over of the hotels under the provisions NDMA,2005.

    In case of services provided by X,Jaipur entity to Singapore company Y, in relation to construction of roads in Banaglore, IGST is payable, it appears due to Section 7(5)(c) of the IGST Act,2017 read with Section 8(2) and 13(4) of the IGST Act,2017 as service recipient is in abroad.

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