News Update

CBIC issues transfer order of 54 Commissioners + mixed transfer order of 54 IRS officersCBIC posts two IRS officers in TRUHigh time that the GST department prescribes a standardized format for the arrest memo: HCGST - Evasion of tax - Reason to believe - Power to arrest u/s 69 can be invoked by the Commissioner without there being any adjudication: HCRenewable energy certificate (REC), taxable under GST, is also an output of generation of electricity - proportionate claim of ITC admissible: AARApplicant seeks a ruling on a supply to be received by it - in view of s.95(a) of the Act, said question cannot be taken up for consideration: AARActivity of body building undertaken on a truck chassis made available by a customer to the applicant amounts to supply of services: AARServices provided by applicant relating to testing of chemicals in fresh table grapes are not classifiable under SAC 9986 and is not exempt: AARSupply of cigarettes mentioned in the menu by the restaurant is a mixed supply and taxable @28% GST plus GST compensation cess: AARChennai Metro Rail acquired property for public purpose and gave the right to use pathway to the earlier owner to access main road - act of agreeing to grant easement rights for a consideration is a supply classifiable under SAC 999794; GST @18%: AARRecipient of supply cannot seek advance ruling: AARPre-mix popcorn maize packed with edible oil and salt is correctly classifiable under CTH 2008 and chargeable to GST @12%: AARCredit Card services imported by applicant is chargeable @18% IGST on reverse charge: AARPrinting of content provided by recipient on PVC materials and supply of printed trade advertising material is a supply of service, SAC 998912; attracting GST @18%/12%: AARArrest before adjudication of offence under GST in the backdrop of allied Acts (See 'The Insight' in Taxongo.com)Loan moratorium - Union of India informs Apex Court - Banks to credit interest on interest by Nov 5IGST Refund - Import under AA - Rule 96(10) - Insertion of Explanation - 54/2018-CT is effective from 23 October 2017 - Exporters who already claimed refund under second option need to payback IGST along with interest and avail ITC: HCIndian NGO Global Himalayan Expedition wins UN Global Climate Action Award for providing solar energy to remote communitiesEncore Vodafone! (See 'TII Edit')Vivad se Vishwas Scheme - Due date for payment extended till Mar 31, 2021Customs - CBIC clarifies Sec 65 units can source capital goods or inputs from SEZ or FTWZNDPS - 1.230 Kg of Charas recovered qualifies as commercial quantity as per Sec 20(ii)(c) of NDPS Act - conviction of accused upheld: SCA Tax on Walking, Reading... for the disabledNDPS - Non-examination of independent witnesses would not ipso facto entitle one to seek acquittal - Compliance with Sec 50 need not be examined where accused possessed commercial quantity - conviction upheld: SCNDPS - If the accused applies for bail u/s 167(2), CrPC r/w s.36A(4), NDPS Act upon expiry of 180 days or the extended period, as case may be, the Court must release him on bail forthwith without any unnecessary delay: SC LBCBDT promotes Nitin Gupta as Pr CCIT on ad hoc basisGovt amends SEZ Rules to allow drawback or any other benefit if payments are in foreign currency in case of supplies from DTA to foreign suppliers in FTWZAnti-Dumping duty on Fluoroelastomers (FKM) imported from China PR extended up to 27th November, 2020Vivad se Vishwas Scheme - CBDT extends due dates for filing declaration and making payments to Mar 31, 2021Export of NBR Gloves - Procedure for submission of applications explainedST - When credit was reversed without utilization, no interest can be recovered: CESTAT
 
GST - When 'Pati, Patni & Woh' are in agreement, why is the delay?

TIOL - COB(WEB) - 187
MAY 13, 2010

By Shailendra Kumar, Editor

LIKE the Direct Taxes Code (DTC), the Goods & Services Tax (GST) is also a certainty for India! But a glaring difference lies in the Time Zone! For the DTC, the Union Finance Minister could set the deadline of April 1, 2011. But for the GST, in his Budget Speech he promised the House to make ''earnest endeavours'' to realise the same deadline. Strangely, or call it an ugly twist of fate for the GST that though the Centre, the States and the Trade & Industry are all in agreement on the basic question of adopting the dual system of GST but the certainty in its implementation continues to elude us.

The good news is that after a mysterious lull of almost four-and-half months the Empowered Committee (EC) of State Finance Ministers is scheduled to meet on May 21, 2010. The fact that the EC has taken almost 150 days to schedule its next meeting, tells us the untold tale of deep-rooted differences among the States over a large basket of issues. Though there has been no official statement from the EC on any issues of differences among the States but it is also not difficult to see through the unpretentious veils of secrecy maintained by some of its members. What is going to be the EC's agenda is not yet clear. One would perhaps come to know about it only on May 21st.

Meanwhile, it is learnt from the sources in the EC that the States like Punjab and Haryana continue to be stubborn in their response to the proposal that the Purchase Tax may be subsumed in the GST. For other States, subsuming alcohol and tobacco is not acceptable. Why? What defies the logic is that when the Centre has agreed to loosen its compensation purse if the States lose revenue on account of abolition of these, where is the question of 'entertaining any fear' of revenue loss! Is it revenue loss or something else that bothers our States more? Is it the revenue leakage or unaccounted money which attracts our State politicians more? When the Centre has agreed to allow States to levy State Excise Duty on alcohol over and above GST, where is the space for disagreement with the Centre.

Let's move to some hardcore legal aspects of the GST issue. Constitutional amendment is going be a major step forward in the direction of GST implementation. TIOL Netizens amy recall the words of EC's Chairman Asim Dasgupta at the time of the official release of 'First Discussion Paper on GST' last year when he had announced the deadline of November 15, 2009 for Constitutional Amendment, and November 30 for CGST and SGST legislations. It is a widely known fact that the Indian Constitution has to be amended in order to give fiscal power to levy service tax by the States and VAT by the Centre. Since the Concurrent List states that in case of any dispute the Parliament will prevail over the State Assemblies, there is a need for a Fourth List which would allow equal authority to both the Centre and the States to levy taxes. Since the Constitutional amendment was delayed, one school of thought at the Centre was to make a Presidential Reference to the Supreme Court before an amendment is moved to tinker with the basic structure of the Constitution. However, it is learnt that the Centre has now jettisoned this idea and decided to directly move the amendment in Parliament.

Another amendment which would be required if VAT experience is anything to go by, would be for creation of a GST Council to enforce discipline on Centre and States before they tinker with the tax rates. Whether it is BJP-ruled State or UPA-ruled State, fiddling with VAT rates has become a hobby for most States. And one of the reasons they seem to be doing it for is to demand more compensation from the Centre for the supposed losses they may incur if they switch over to GST. No doubt, the Centre will have to call the bluff, and to avoid a repeat of the history, such a Council is required to be headed by the Finance Minister, and State FMs can be its Members. Its decision has to be legally binding on all the stake-holders.

Amendments apart, what seems to be baffling most GST observers is the fact that why has the Centre not done anything concrete so far? The States have proposed a threshold limit of Rs 10 lakh for exemption. It is now Centre's turn to respond to the EC's suggestion. True, the EC has urged the Centre to stick to Rs 1.5 Crore bracket but it is not obligatory for the Centre to accept that suggestion. In the interest of uniformity and minimal complications, the Centre should also announce its agreement with Rs 10 lakh threshold limit. Once such a limit is decided, it would help size up the taxbase which would in turn enable the stakeholders to work out the Revenue Neutral Rate

Most importantly, deciding the exemption threshold limit would help the Centre and the States to work on the IT Infrastructure. It is a gigantic task, and it cannot be successfully implemented in the leftover months before April 1, 2011. Having fathomed the complexity of the GST project, the FM, in this year's budget, has set up Technology Advisory Group for Unique Projects (TAGUP), headed by Mr Nandan Nilekani. In fact, Mr Nelekani was last week in North Block, and had his first one-to-one interaction with the GST team of CBEC. He knows that building IT Infrastructure for about 50 lakh assessees and capturing billions of transactions and their invoices would be an uphill task.

Notwithstanding the many impediments the GST is faced with, TIOL is hopeful that if the Centre breaks the ice and takes a few steps forward, the States would also come forward. The Centre indeed has very little time left if one goes by the reality of state elections Mr Asim Dasgupta will be facing next year. Given the prognosis of unpredictability elements about West Bengal polls, it is important for the Centre to back him fully as he alone can bring warring and battling States to the floor where negotiations could take shape. Let's hope all the stakeholders of GST finally join their hands together to gift India the much-awaited New Indirect Tax System.