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Suggestions on Model GST Act, 2016

OCTOBER 06, 2016

By V Inamdar

Sr. No.

Issue

Relevant Section /Provision of GST

Suggestions

1.

Eligibility for availing of Input Tax Credit on Goods and services

16(11)(d)

The availing of ITC based on the matching concept of uploading data and filing of valid returns by the supplier of such taxable person will most certainly lead to innumerable amount of litigations. To avoid this situation, it is suggested that the existing provisions of cenvat credit be retained.

It is suggested that condition of filing of return under Section 27 not be made mandatory for availing ITC credit.

ITC credit be allowed on services used for setting of plant / factory including erection and commissioning of machinery.

2.

Manner of Distribution of Credit by Input Service Distributor

Section 17(3)

Proviso be inserted prescribing the methodology for reversal of input tax credit attributable to supply of services partly used for non-taxable or other purposes.

3.

Remission of Tax on supplies found deficient in quantity.

Section 11(1) & 11(2)

It is suggested that section 11(1) & 11(2) be reworded as below:

“11(1) The Central or a State Government may by rules made under this sub-section for remission of tax on supplies of any goods which are found to be deficient in quantity due to any natural causes”

11(2) Any rules made under sub-section(1), may having regard to the nature of the supply, period of their storage or transit or other considerations, fix the limit or limits of percentage beyond which no such remission shall be allowed.

Proviso also to be inserted “different limit or limits of percentage may be fixed for different varieties of supplies for different areas or for different seasons.”

4.

Time and Value of Supply

Section 12(2) & section 13(2)©

It is suggested that clause (d) of sub-section (2) of Section 12 and Clause © of sub-section (2) of Section 13 to be omitted.

5.

Value of Supply

Section 15(d)

To avoid double taxation, it is suggested that taxes other than CGST, SGST or IGST if any leviable on supply of any goods or services, not be includable for the purpose of levy of GST.

It is also suggested that in GST(DVSGS) Rules,2016, a rule / provision be inserted similar to Rule 8 of the Central Excise (DPEG) Rules,2000,to cover the valuation of intermediate products for transfer to another place of same business for use in course or furtherance of business.

Deduction from the Value for the purpose of levy of GST:

In addition to trade discounts, freight, insurance also be allowed as deductions in line with the existing provisions of Central Excise, for supply of goods.

6.

Returns

27

A large number of returns are proposed. This will only burden taxpayer and will make the GST inefficient. Cost of compliance will also increase.

It is therefore suggested that, only monthly and annual returns be prescribed in place of proposed three returns per month and an annual return.

The due date for filing of GSTR- 2 and GSTR-6 return has been fixed at 15th of next month where data in GSTR-2 shall also to be auto populated from GSTR-6. It will be difficult for the taxpayer where both the returns have been filed on same date causing non-auto population of data in GSTR-2.

It is suggested that, the due date of GSTR-2 should be later than last date of filing GSTR-6.

7.

Payment of service tax under Reverse Charge Mechanism and

TDS

Section 12(5) & Section 13(5)

37

Supplier of goods or services must be made liable to discharge tax liability on the supply of goods or services and the concept of reverse charge mechanism has to be avoided.

The system of TDS not to be introduced in GST as it will increase the cost of compliance of the recipient of goods and services,also reconciliation.

8.

Registration

19

The proposed multiple registrations of same person in different states should be done away with. The concept of centralized registration as it exists in service taxbe introduced in GST. The taxpayer should be mandated to provide in his return with state wise supply of goods / services made by him.

9.

Interest

36

Rate of interest for the delay in payment Tax be kept at par with PLR.

10.

Audit

49(4)

The period of three months provided for audit of records is too longer period, which should be reduced to 15 working days.

11.

Simplified procedure for lodging Refund Claim& Interest on refund claim.

38

Explicit and simple provisions bemade for online filing of refund claims and sanctioning within the specified time.

The bar of unjust enrichment should not be made applicable to goods cleared for export on payment of duty under claim for rebate.

Rate of interest on delay in payment of refunds by the Government should be kept at par with the provisions relating to interest payable on delay in payment of taxes by the taxpayer.

12.

Provisional assessment.

44A

It is common practice prevailing in the trade and industry to offer periodical/ different kind of trade discounts for sale of goods viz. monthly, quarterly, annual etc. it is therefore not possible for the tax payer to submit information required for finalization within a period of six months. It is suggested that time limit for finalization be increased from 6 month to 1 year from the date of provisional assessment order and provision for further extension without any limit by the Jt. Commissioner.

13.

Appeals.

79(6)

The proposed provision for pre-deposit as a pre-condition for filing of an appeal will cause undue financial hardship to the trade and industry. It is suggested to restore with the present provisions of Section 35F of the Central Excise Act. It is further suggested that in lieu of pre-deposit, acceptance of Bank Guarantee may be considered.

14.

Appeal to First Appellate Authority.

79(10)

Under the existing provisions of Central Excise,the first appellate authority doesn't have power to remand back the matter for fresh adjudication/quantification. It is suggested that the power of remanding back the matter be given to the first appellate authority in certain situations viz. issue involving quantification / verification of documents etc.

15.

Simplified procedure for Exports

General.

There should not be any levy of tax for movement of goods in the course inter-state, which are subsequently exported after undertaking some process viz. packing etc.

(The author is Sr. Manager - Indirect Tax, Ceat Ltd., Mumbai and the views expressed are strictly personal.)

(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)

 


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