TIOL-DDT 2965
07 11 2016
Monday

THE GST Council had to adjourn without a decision on the administrative control issue. GST is supposed to be a combined levy by the States and the Centre, but the moot question is who will collect it? If both start collecting it jointly, what will happen to the poor assessee? How to share the power? 'How to share the tax', is no more an issue.

The ideas floating around was GST on goods upto 1.5 crore will be with the States - any way the Centre was not collecting excise duty on this small scale sector; dual control above 1.5 crore; GST on services with Centre; Audit with the States. But then there was a statistical disaster. The Centre was campaigning that there are 11 lakh service tax assessees which suddenly swelled up to 31 lakh just before the GST Council meeting. The States which had surrendered the power to tax were not prepared to abdicate the right to collect. The question was whether there should be a vertical or horizontal split of the assessee base. Finally, it may be a combination of vertical and horizontal split.

The whole problem boils down to the deployment of the army of taxmen at the Centre and the States. Even now, there is no clear idea as to how many taxmen we have in the States and the Centre. One estimate is about 60,000 Central Taxmen and some three lakh State tax officials. So, the States are not prepared for a fifty-fifty vertical split. And the Council Meeting could not arrive at a consensus and has been adjourned without a decision. Finance Minister Arun Jaitley announced that an informal meeting of the Finance Ministers (without officials) will be held on 20th to find a political solution to this economic problem. Political Science to aid in economic engineering?

GST - Capture by Central Bureaucracy

THE Kerala Finance Minister Thomas Isaac said,

Look at the way decisions have been made. The States giving up the rights to tax which is not a small thing. Or the rate structure, which has ideological connotations...many of these issues were settled on a spirit of give and take. And this comes to an organisational matter. The Centre has adopted an in transient attitude. It's a kind of capture by the central bureaucracy. I think it is very unfortunate. None of us thought this would come to such an impasse. It's a kind of stone-walling by the central government.  There is no question of many states, like Kerala, ever changing their position.

GST - Who Should Control - Why Not Seek Public Opinion

IF the Assessees are asked to choose from the following on who should have control over GST administration,

1. The Centre (CBEC)

2. The States (Commercial Taxes/VAT Departments)

3. Both 1 & 2

4. None of The Above

NOTA, (None of The Above) will be a clear winner. But you don't ask the victim's choice.

Do we need about 4 lakh employees to collect this entirely electronic based tax? Maybe we should create a new department of GST manned by officers who never had any experience in tax collecting. And perhaps they can create a new Indian GST Service (IGS).

But what do you do with this army of four lakh tax collectors? Pay them their salaries with an additional GST bonus and ask them all to stay away from GST. It is certainly not going to be a bad investment.

CBEC - Where is that Annual Return?

DURING the last week, we have been getting many mails and calls on the new return required to be filed by the assessees by 30th November. One of the mails:

Annual Return

Rule 12(2)(a) was amended vide NotiNo.8/2016 CE NT dated 1.3.2016. The words "Annual Financial statement" were substituted by "Annual Return".

CBEC has not yet specified the format for "Annual Return"

The format for ER-4 available in ACES for erstwhile ER-4 is not enabled for 2015-16.

In this situation if the assessee cannot file the "Annual Return" then whether it will be construed as "Non-compliance" of Excise Law? 

I asked Ms. Bhagya Devi, ADG, Systems of CBEC, "The Annual Return under Rule 12 of the CE Rules is to be filed by end of November. Has the Board notified the format? When is it going to be available in ACES?".

She replied, "Regarding the Annual Return under Rule 12 of the CE Rules the Board has not yet notified the return format. It will be made available in ACES if and when notified."

Thank you, madam, for the prompt response, but how long will the CBEC keep the assessees on tenterhooks?

GST - A tax reform, if not properly implemented, might lead to increased litigation - CBEC Commissioner

WHILE addressing a Seminar on "GST Implications- Industry Perspective: Gearing up for the change" organized by the Confederation of Indian Industry (CII) in New Delhi, Mr Sanjiv Srivastava, Commissioner, Central Excise, CBEC, said;

While the ultimate consumer is actually paying the tax under GST, industry is a part of the tax collection mechanism. To give way to a smooth and perfect GST, every link in the value chain and the supply chain has to work seamlessly, without any distortion.

A tax reform, if not properly implemented, might lead to increased litigation. Moreover, every sector of industry has different challenges and issues regarding the new regime. Making an amendment in the GST Law in India would be a difficult task since changes would be required in all State laws as well as the Central law. The Government is therefore targeting a unique tax system, which would take care of such issues without any detriment to revenue or to the industry.

GST - Enrolment of Existing Taxpayer on GST System Portal

THE Goa Commercial Taxes Department has issued an FAQ on 'Enrolment of the Existing Taxpayer on the GST System Portal'.

All existing taxpayers registered under

a. Central Excise

b. Service Tax

c. State Sales Tax / VAT (except exclusive liquor dealers if registered under VAT)

d. Entry Tax

e. Luxury Tax

f. Entertainment Tax (except levied by the local bodies)

are required to enrol into the new system as data available with various tax authorities is incomplete and thus fresh enrolment has been planned. Also, this will ensure latest data is available in GST Database without any recourse to amendment process, which is the norm to update the data under tax statutes today.

The Department has also prescribed the procedure for enrolment of existing VAT dealers on the GST System Portal. The online provisional registration on GST System Portal should be completed by all existing dealers between 14.11.2016 and 29.11.2016.

Goa Department of Commercial Taxes - FAQ on 'Enrolment of the Existing Taxpayer on the GST System Portal'

Goa Department of Commercial Taxes - procedure for enrolment of existing VAT dealers.

Preventive Vigilance as a management function - CBDT Chairman's letter to officers

THE CBDT Chairman, Mr. Sushil Chandra in a letter to all the Principal Chief Commissioners says,

This year Vigilance Awareness Week is being observed from 31st October to 5th November, 2016. Vigilance, however, is not a stand-alone activity and the focus on vigilance should not be limited to the duration of the Vigilance Awareness Week only. It is a management function to be exercised by all supervisory authorities for overall risk management in any organization. A supervisory officer cannot absolve himself from vicarious liability if the supervisor who has the right, ability or duty to control the activities of a subordinate does not take steps to prevent the acts of misdemeanour by the subordinate.

Rule 3(2)(i) of the CCS (Conduct) Rules, 1964 mandates that every Government servant holding a supervisory post shall take all possible steps to ensure the integrity and devotion to duty of all Government servants for the time being under his control and authority. Therefore, it is necessary that Supervisory Officers conduct necessary checks so that officers and officials maintain absolute integrity and complete devotion to duty.

Inspections & reviews are important preventive vigilance functions and periodical inspections of the work of a subordinate can give timely alerts about any wrongdoing by officers. However, I am constrained to point out that the laid down procedure for conducting inspections/ reviews by the CCsIT, the CsIT and the Addl.CsIT is not being followed and only about 25% to 30% of the targeted inspections have been conducted in the past 2/3 years. I request you to give your immediate attention to this area and ensure that the targets and timelines in this regard are strictly adhered to. DDT

Any new initiatives/ ideas in the field of Preventive Vigilance may be shared with me by email on chairmancbdt@nic.in so that the same can be duly considered by the Board for replication in other Regions also.

CBDT Chairman's D.O. Letter F.No.DGIT(Vig.)/PV/2016-17/4559., Dated November 04, 2016

Until Tomorrow with more DDT

Have a nice day.

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