Learned GST Expert CA Sudhir Halakhandi has given a Memorandum for GST problems faced by Trade and Industry and made suggestions to solve them to give relief to Trade and Industry. He has made the suggestion to  Give one chance to remove technical mistakes and allow the revision of returns, Waive Interest on gross tax as same is illogical and impracticable section 50(1), Waive And Return Late Fees, Treat the payment of tax in bank as the date of payment to the government, Look into the problems related to GSTN and please give instructions to solve GST Network Problem, Give Logical and practical solution for GST Mismatch problems, Remove Illogical And Impracticable Provision Of RCM, Give one more chance to dealers whose Input credit time expired, Make GST A Simple Tax, Increase Service sector threshold limit and Extend annual return date to 30/06/2020. Full Text of his Memorandum is as follows:-

The Hon. Finance Minister
Ministry of Finance
Govt of India

Respected Madam Finance Minister


Re: – Memorandum for GST problems faced by Trade and Industry and some suggestions to solve them to give relief to Trade and Industry.

Thanks to you for presenting the good budget for 2020 which is a very suitable for Indian Economy and it will certainly give relief to Indian taxpayer public.

Indian Government has taken a very bold step at the time of Introduction of the GST in 2017 in the country and it was a very bold step for the upliftment of the Indian economy.

GST was essential for the Indian Economy and now whole the economy is dependent on the success of the  GST but after 30 Month of its introduction GST is not fully settled in the country and now the Trade and Industry in the country is facing so much problems from the GST and its stringent procedures and these problems require your goodself immediate attention otherwise these problems will become very serious and in long term these will harm the financial Interests of trade and Industry of the Country and that will ultimately will harm the Indian Economy.

Let us see the GST problems and the possible solution of the same:-

1. Give one chance to remove technical mistakes and allow the revision of returns

GST is A New tax and Indian Trade & Industry with the help professionals have given its 100% to GST and it’s procedures but since the tax was new hence lot of technical Mistakes were done by the dealers though the same did not have any financial effects or any intention to avoid the tax.

Further GSTR-3B was introduced as a stopgap arrangement but later it was inducted as a return in the Law books but Revision facility of GSTR-3B was not given.

Some of the mistakes made by the dealers is GSTR-3B are irreparable if the revision facility is not given. The examples are the credit of SGST and CGST is taken in IGST wrongly or vice versa. Tax is wrongly set off etc. These are initial mistakes and the reason is new tax regime and unique and back to back procedures.

Your good self is therefore requested to please allow one time amnesty to rectify all these technical mistakes and further allow one time revision of GSTR-3B filed in the Financial Year 2017-18.

The GST is introduced for simplification of existing VAT, Central Excise and Service Tax Laws but in all these Taxation laws there was a facility to revise all the returns and even in Income Tax Return there is a facility to revise the returns.

The revision of return was a facility in erstwhile laws and GST has replaced them with a view to simplify the indirect taxation system of the country and this essential facility is withdrawn? To make the law viable and easy to follow and make it logical please give facility to revise the earlier returns otherwise the Annual return will not serve any purpose at the time of assessment and every assessment will be made after issuing the notices and this not the purpose of GST.

Here I am giving only one instance where the dealer has committed a mistake but at present there is no solution:-

The dealer say X has claimed ITC as IGST of Rs. 5.00 Lakhs instead of Rs.2.50 Lakhs SGST and Rs. 2.50 CGST in July 2017 due to accounting software mistake and unfortunately the mistake was noticed at the time of preparation of GSTR-9.

Now at present there is no solution though it is not the tax evasion and it is only technical or clerical mistake.

Even in VAT one can rectify this mistake on or before filing of annual return but in GST, which is introduced in the name of Simplification, there is no solution of this type of problem.

No Loss of revenue to the Government but there is No solution of this type of Mistakes. There are lot of cases of this type of mistakes.

2. Interest on gross tax is illogical and impracticable section 50(1)

The intention and notices of the department to collect the interest on Gross amount of tax in case of delay in filing the returns instead of charging the interest on Net due payment is creating very big problems for the Trade and Industry.

Even GST council and the Government is not agree with this arrangement and a amendment is moved in this respect in Budget-2019 and a proviso to section 50(1) is inserted to mitigate this hardship but it should be made retrospective instead prospective so that the problem of the Trade and Industry in this respect can be solved.

In public interest your good self is requested to make a retrospective amendment in this respect and further disposal of this matter in logical way, please instruct the department not to issue notices in this respect.

3. Waive And Return Late Fees

Respected Madam, GST late fees is very big problem for the dealers and this one more point is attached with the late fees. At one point of time the Government has waived the late fees for the dealers who did not file their returns but in that case most of the dealers filed their return before that time with late fees and if a late fee is waived for the defaulters, the late fees collected from these dealers should be refunded to them. But this is not done hence dealers have regrets due to this discrimination.

Respected Madam, Please make a provision for refund of late fees to these dealers and further introduce an amnesty scheme for rest of the dealers so that they can file their returns.

Further Late fees on GSTR-1 is waived till 10th JAN 2020 and general perception is that after that there will be late fees on this form also which will create more problems for Taxpaying dealers. Please sir, please stop this at this initial stage.

Respected Madam, GST itself is at experimental stage hence provisions like late fees should be avoided to make the dealers to understand the system.

The GST was introduced to simplify the indirect system of the country but now it is being as described as  “A Tax which is collecting the late fees only” and this is not good for a tax which is introduced for simplification of the Indirect taxation system of the country.

Respect Madam, the dealers who have surrendered their RC and does not have any tax liability and having no stock have to file a final return GSTR-10 and in most of the cases these returns are NIL but if forget they have to pay a late fess amounting to Rs. 200.00 per day subject to maximum of Rs. 10000.00 . The form GSTR-10 in most of the cases have NIL information hence this late fees is a harassment and big burden on the dealers who have already surrendered their registration certificates.

This GSTR-10 has to be filed after order of the cancellation of the RC and it is a big problem. Sometimes it is ordered within 15 days of applying the surrender and in some cases it took 6 Months so the dealers who surrendered their Registration to keep in touch with this formality.

Please consider the problem associated with this form GSTR-10 and practically this form should be taken with the application of surrender of RC and in NIL cases if the return is not filed please waive the late fees further the NIL GSTR-10 has no purpose hence it should be made optional for the dealers who has something to file in it.

4. Please treat the payment of tax in bank as the date of payment to the government

The dealer has deposited the tax in the Bank and on the same day it is transferred to the Government exchequer but as per the interpretation of the Law the interest is charged till the date of set off of the tax hence in case late returns the Interest may be charged on the amount of tax which is already paid but not set off. Setting off the tax is just a technical procedure but charging interest till that date is not justified because tax is already paid to the Government  by the dealer from his bank account through required challan hence your good self is required to look into this aspect the Please take immediate steps to solve this problem. Why dealers are being made scapegoat of an illogical provision or illogical interpretation of a provision.

5. GST Network :- Why it is not working properly since introduction of GST

Respected Madam, GSTN is creating problems since inception of the GST. It is not well equipped with required capacity hence filing of return is always a problem. The GSTN always crashed before one or two days before the due date of every return. Recently it is advised to file the returns 3 days before the due dates but sir, this is not the solution but it is acceptance of the shortcoming of the GST Network.

Recently on 20th Dec. 2019 at last date of filing of GSTR-3B GST network was working perfectly when internet was blocked for security reason in some part of the county and it shows that GSTN can work smoothly but the capacity is the problem.

Respected Madam, Please order for the enhancement of the GSTN capacity so that it can work smoothly,

GSTN is a national portal of Indirect Tax and our country and its working, capacity and speed should be a prestigious issue for us since we are the top IT country of the world but the working of GSTN is not up to the mark.

As per the accepted principal of IT Industry the IT system should be construed with visualising the demand of Next 10 years but the GSTN is a not up to mark since first day of its operation .

Your good self is therefore requested to please compel the service provider of GSTN to increase its capacity and if is not possible then changing the service provider in the best interest of the general Public.

The problems of GSTN will not be solved by giving all the responsibility to the Dealers and professionals. It is just a capacity and speed problem which can be solved by introducing the technical solution.

GSTN is biggest hurdle in smooth Procedural implementation of GST and your good self is requested to please look into the problems related to GSTN and please give the instructions to solve ASAP.

6. GST Mismatch problems: – logical and practical solution is need of the hour.

Respected Madam, the provision of 10% Input credit provision should be postponed and it should be introduced again with proper preparation and planning of the time. The time limit given in the provision is very impractical and the dealers should be given at least 3 to 6 Months time for clearing the Mismatch of the input credit. Here I am not supporting the tax evasion or non payment of tax but if the tax is paid by the dealer to the seller then it should not be collected from him again on the ground that there is delay on part of the seller in filing his returns Since the purchasing dealer has no control on return filing activity of the selling dealer.

There may be several reasons for delay in filing of the returns and if in the same month the ITC – Input tax credit is withheld or blocked and purchaser is asked to deposit the same is not a practical solution. It will unnecessarily block working capital of the dealers.

In any case the tax will be paid by the purchaser if it is not paid by the selling dealer with interest but he should be given a time of 3 to 6 Months to control the transactions of the seller and compel him to file the returns and clear the mismatch of the ITC.

It is very easy to say that “Choose your vendor wisely” and the RC is also given to the seller by your Government so it is the duty of the Government to compel the seller to deposit the tax instead of punishing the purchaser who has already paid tax to the seller.

Your good self is required to see section 36(4) and made suitable arrangement to give relief to dealer from this hardship and allow them 3 to 6 Months time so solve this problem.

7. Remove Illogical And Impracticable Provision of RCM

Respected Madam, the provision of RCM on inward supply from unregistered dealers is a very impractical provision especially in the cases where the paying dealer is getting the instant credit of the same. It has Zero revenue effect in most of the cases.

GST is a new tax and RCM is a very innovative provision hence in most of the cases dealers has made default in paying the same though they have paid the full tax as per their tax liability and in these type of cases the RCM is just a technical formality.

Respected Madam, please consider the dealer who defaulted in paying the RCM and taking credit of the same due to complications attached of this provision though they have otherwise paid their full tax liability and abolish the same since inception to give relief to these dealers.

Respected Madam, we are giving herewith an example how RCM has no financial effect on the revenue. Let us assume a dealer has to pay tax amounting to Rs. 5.00 out of which RCM is Rs. 50000.00, the dealer failed to pay RCM but paid tax Rs. 5.00 Lakhs.

The same dealer has paid Rs.50000.00 as RCM and paid the normal tax as Rs.4.50 Lakhs since he is eligible to get ITC of Rs. 50000.00 paid by him as RCM. Hence in this case also total tax deposited is Rs. 5.00 Lakhs. Rs.50000.00 is paid as RCM and Rs. 4.50 Lakhs paid as Normal Tax.

The RCM u/s 9(4) was introduced on 1st. July 2017 and it was postponed on 13th Oct. 2017 and after one more postponement the provision was practically scrapped. Why the provision which was postponed for its impracticality is applicable up to 13/10/2017?

In these types of cases the RCM is just a technical formality and having no financial effect so please scrap it since inception of GST i.e. 1st, July 2017.

8. Input credit time expired please give one more chance to dealers :- section 16(4)

As per section 16(4) the input credit can only be taken up to a definite period but at the initial 2 years of GST lot of dealers make a mistake of not taking the credit within stipulated time but in that case the Government has already received the tax under consideration.

If this credit is not give then it will be tantamount to double taxation on a single transaction because at first stage the purchaser has paid the tax to the Seller and at second stage department is not giving him the credit so he is required to pay it again. It is a big hardship to these dealers though GST itself is at initial stage at that time and not fully stabilised.

Your good self is therefore requested to please give suitable relief to the sufferers of this provision at least for initial 2 years.

9. Make GST A Simple Tax:- Please Start The Process Now

Respected Madam, GST is a big reform but unfortunately it was introduced with stringent procedures as a Tax to curb the evasion of tax instead of collection of collection of tax. So stringent procedures were made at the initial stage for which even the Law making agencies were not ready. Sir, you will be surprised to know that still the Final Returns for the first year of the GST are still pending though GST is completing its Third year of Introduction. There should be an atmosphere of “Respect and Belief” on the dealers and tax payers instead of making stringent procedures to make their day to day life complex and confusing. After all the dealers are also working for the nation and collecting the Tax.

GST is not the last destiny of economy and it is only the vehicle to help the smooth running of the economy and its main purpose should be to help the Trade and Industry and the ultimate aim is make strong economy of the country. GST should be the “As Simple as Possible” but unfortunately  it appears that in our country it was introduced with the hidden slogan “How to make difficult GST” and now after 28 Months the problems of trade and Industry are increasing day by day. We all know sir, it was not the intention but the results are supporting this contention hence your intervention and efforts are needed to solve the problems of GST.

Respected Madam, Please issue strict orders to make the GST “Simple and easy to follow” for dealers and tax payers and further make it a viable revenue generating vehicle.

10. Service sector threshold limit

Respected sir, GST is “One nation One Tax” and it was introduced as a tax with threshold limit of Rs.20.00 Lakhs both for Goods and Services but later when threshold was enhanced, it was enhanced only for Goods and not for services. Small service provider should also be given benefit of the same and for them also the Limit should be extended to a certain level to make it One Nation One Tax”.

11. Extend annual return date to 30/06/2020

The utility for the Annual Returns for the Assessment year 2018-19 is still not released till writing of this Letter. The dealers and professionals will need the time to file this return up to 30th June 2020. At present the due date is 31st March but till today i.e. on 19th Feb 2020 the utility is not there at GSTN hence it is prudent that at the time of introduction of utility the final date should be declared at 30th June 2020.

It is humble request to your good self to consider this Logical demand in a day or two so that dealers can file the annual return easily and without any mistake.

Further The number of Notices issued in recent days are too much and it is clear indication that tax payers are not very comfortable with the GST procedures hence technical mistakes are too much . More Notices means more paper work and more appeals and litigation but these were not the exact objectives of GST. So something is really wrong with GST and it is a humble request and suggestion to your good self please instruct your dedicated GST team to consult some real GST experts who are working on Ground level and facing the real problems. They are facing the real problems hence it is better to consult these experts for practical solutions of GST Problems.

Hope your good self will look into these problems and possible solutions as narrated above and give a big relief to Trade and Industry so that they give their 100% contribution to the Economy of the country.

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  1. NAZIR AHMAD says:

    Small taxpayers facing lot even they did not afford the penalties of mismatch so give relief for small taxpayers upto 31st march 2021

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