Suggestion to Implement (DIN) System in Karnataka GST

KSCAA made representation to Smt. Shikha C, Commissioner of Commercial Taxes, Karnataka and urged to implement the DIN process in the administration of taxes in Karnataka. they provided Suggestion to Implement Document Identification Number (DIN) System in Karnataka GST.

Text of their representation is as follows:-

KARNATAKA STATE CHARTERED ACCOUNTANTS ASSOCIATION (R)

Date: 26th August 2021

To,

Smt Shikha C,
Commissioner of Commercial Taxes, Karnataka
Vanijya Therige Karyalaya-1, 1st Floor,
Gandhinagar,
Benguluru – 560 009.

SUBJECT: SUGGESTION TO IMPLEMENT DOCUMENT IDENTIFICATION NUMBER (DIN) SYSTEM IN KARNATAKA GST

Respected Madam,

1. The Karnataka State Chartered Accountants Association (R) (in short ‘KSCAA’) is an Association of Chattered Accountants, registered under the Karnataka Societies Registration Act in the year 1957. KSCAA is primarily formed for the welfare of Chartered Accountants and represents before various regulatory authorities to resolve the problems / hardships faced by Chattered Accountants and business community.

2. At the outset, we wish to place on record our sincere gratitude and congratulate to your good selves and to all other officers of your Department working across the State for their sincere efforts in successfully steering the implementation of this GST Law which is still at a nascent stage albeit it is currently overshadowed by initial teething troubles and challenges being faced by not only the tax officers but also the taxpayers. With constant consorted efforts of the GST council and all the States, we sincerely anticipate that the nation should be able to weather for building trust between tax payers and the revenue. This would also go a long way in curbing spurt of fake/unauthorised notices which could be issued by persons with tainted intentions.

5. However exception to states like Kerala, the DIN system and related process as discussed above is implemented and is fully operational only in Central GST offices and many states including Karnataka State has not yet implemented this When it is viewed from perspective of lay tax payers in the country, it sounds weird and a thing difficult to conceive as to why such divergent and inconsistent practices and paths are being followed by Central and State GST offices when GST is a uniform law as propounded by Government right from the outset on the narrative of “One Nation One Tax”. A question could also arise for not implementing DIN process so far, whether State tax departments do not appreciate the risks involved in the absence of such a system being operational. While a similar circular was ideally envisaged from all the States, only few States such as Kerala have followed the suit and implemented this DIN system. To align with the GST promotional narrative “One Nation One Tax” as mooted by our Hon’ble Prime Minister Shri Narendra Modi, it is important that the requirement of DIN should be made enforced for both Central officers and State officers of GST.

6. We would wish to reproduce the key benefitsof DIN process, as espoused in above referred CBIC circulars:

a. Greater accountability and transparency.

b. Authenticity and genuineness of the documents.

c. Creation of a digital directory for maintaining a proper audit trail of communications sent to / received by tax payers.

d. Harmonization and standardisation of the formats of search authorisations, summons, arrest memos, inspection notices etc. issued by the GST formations across the country.

7. In case the DIN is not found to have mentioned on the notices, letters, etc. of the state departments, the taxpayers have the tendency of resorting to filing RTI petitions seeking the confirmation of authenticity of the source of such communications being received by them and that may eventually also lead to filing of complaints on the CPGRAM portal which ultimately reaches up to the Tax department for resolution of such queries. As a matter of fact, it is the right of the taxpayers to know whether the communication as received by them is really from a genuine and authentic source and whether they are obligated to act on the same. We live in Information Technology and Internet era where miscreants and fraudsters always by to find novel ways and means of sending misleading communications to their targets with the intention to defraud them. We may not rule out the chances of such persons personating tax officers with such tainted intentions to defraud innocent tax payers of our nation and it becomes all the more important for the State tax departments to appreciate the possible unwanted negative consequences of not having mitigating strategies in place against type of identified Risks in its sovereign tax administration function. Therefore the State tax department should consider implementation of DIN process similar to how CBIC has implemented it to pre-empt the negative consequences arising from such risks for the benefit of both tax payers and self.

8. For tax department as well, the DIN process would provide immense help and aid in tracking various communications being sent by its officers to tax payers under various provisions of the statute including identification of communications sent are under incorrect/invalid sections or without indicating the section under which such communications are being sent DIN process could there act as an additional supervisory tool for the department whereby the officers could easily monitor the performance of their reporting subordinate officers in order to take corrective steps where situations so warrant.

9.   In the light of above discussions, we may apprise your good selves that implementing DIN system in Karnataka will not only protect the rights of the taxpayers but also help the GST Department to maintain a proper track of summons/notices etc. sent to tax payers. This will create a win-win situation for both sides. At this juncture. we would like to draw your kind attention to similar systems having been already implemented and fully operational by the Central Board of Direct Taxes (Income Tax Department), Institute of Chartered Accountants of India (ICAO etc. and it has been immensely helping derive its benefits by all the stakeholders involved in the process. In fact, the Income Tax Department even came up with a promotional video with a message – “Throw Notices in Garbage, if they do not possess DIN”.

10. Your good selves may kindly appreciate that the Circulars issued by CBIC, in their true spirit, were introduced for implementation of DIN process for the entire nation, alas, due to the federal structure of our Constitution and separate GST legislations having being passed at Centre and State, the purpose of having DIN process could be left not served, unless State Departments comes on board and take necessary steps to implement DIN process by using the vested power for issuing circulars, instructions, etc. as conferred on the Commissioner under section 168 of the Karnataka GST Act, 2017.

0ur Representation:

We at KSCAA besiege to your good selves to kindly take cognizance of the merits of deploying DIN process as described by us herein above and implement the same as one of the significant and key part in the administration of GST law in the state of Karnataka. This step should go a long way in enhancing the trust and co-operation between the State tax Department on the one hand and the taxpayers on the other hand. We are optimistic that your good selves would definitely make an ‘all out effort to ensure that the necessary steps are being taken in the implementation of DIN process in Karnataka state very soon in the near future.

Yours sincerely,

For Karnataka State Chartered Accountants Association ®

Representation Committee

Copy to –

1. Shri. Basavaraj Bommai, Hon’ble Chief Minister and Finance Minister, Government of Karnataka

2. Smt. Nirmala Sitaraman, Hon’ble Union Minister for Finance, Government of India

3. Shri. M Ajit Kumar. Chairman – Central Board of Indirect Taxes and Customs