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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
 
Finance Commission Task Force Report on GST - The Enemy within!

TIOL - COB(WEB) - 166
DECEMBER 17, 2009

By Shailendra Kumar, Editor

IMMEDIATELY after the release of the 'First of the Discussion Paper on GST' by the Empowered Committee of State Finance Ministers(EC) on November 10, 2009, TIOL had commented in great details (see our piece 'GST roll-out: State fiscal jingoists succeed in proving April 1 st as 'All Fool's Day') about the unrealistic facets being attached to the new tax regime. While speaking to media persons the EC's Chairman, Mr Asim Dasgupta, had strenuously talked about three prominent deadlines,not only for the EC but also for the Centre - November 15th for finalising the text of the Constitutional Amendment; November 30th for polishing the phrasing of the Model Legislations; and January 15th for putting the IT Infrastructure in place.

Although Mr Dasgupta had exhibited a brave face in fixing these deadlines, but for TIOL, which could see the elements of surrealism in his claims, it was all unreal. In other words, the deadline of April 1 st, 2010 truly appeared to be a 'All Fool's Day'. Now after a month of this event, when TIOL looks back and takes another look at the entire gamut of developments, the chances of realising all the deadlines fixed by the EC have moved into the realm of misleading fantasy! Nothing has been heard about either the text of the Constitutional Amendment or the Model Legislations for the CGST, SGST and IGST.

More shocking is the recent news that even before the EC and the Centre could agree on the basic structure of the new fiscal edifice, the EC would be coming out with its own set of multiple GST rates. Defying all logic and the spirit of cooperation, the EC appears to be in a tearing hurry to roll out everything that provides a leg to its 'unilateral fantasy', and probably blame the Union Government for the failure to make it happen as per the deadlines.

Here comes yet another bout of shock for all GST-optimists. Even before a formal announcement is made for postponement of the April 1 st deadline, the Finance Commission Task Force has gone beyond its mandate and pushed the deadline to October 1, 2010. Has it become a proxy face for the Centre? Will the Finance Minister clarify this point? Or,is it that the the Empowered Committee which has been mandated to work in close tandem with the Centre to thrash out the nitty gritty of the new regime, has in turn delegated its powers to the Finance Commission Task Force. Let's find out what mandate was given to the Task Force. Going by the report of the Task Force which has not followed the protocol of giving the Terms of Reference in the beginning of the Report (a typical characteristic of its Chairman, Mr Arbind Modi, who has given 'Definitions' of words and phrases used in the Direct Taxes Code Bill, 2009, in Part H, towards the end). It has been printed on page no 136. The sentence begins with ''The Task Force shall examine the impact of the proposed implementation of the Goods and Services Tax (GST) ...''

If one goes by the terms of reference, this Task Force was mandated only to study the IMPACT of the proposed change in the realm of indirect taxation, and not to go deeper into various facets like the GST model best suited for the country; the potential tax base; the modalities of the implementation of GST including threshold limits, composition limits and treatment of inter-state transactions. As our understanding goes, this Task Force was not asked to indulge itself into a parallel homework unless there was a secret understanding in which case the public has a right to know. For its detailed homework, the Empowered Committee along with its officials have been spending public money on travelling of its key negotiators and holding talks with the Centre's representatives. Then, what was the need for another set of study? It is common sense - deciding the threshold limit is the prerogative of the negotiating parties and not of the Finance Commission.

The basic assumption behind the impact-analysis-mandate given to the Task Force was that the model legislations would soon be in public domain for nationwide debate, and the Finance Commission may study and give its feedback along with the inputs coming to the negotiating parties from various stakeholders in the economy. But here is a case where an inch of space offered to the Task Force has been converted into miles of it for its extra-jurisdictional commentary.

Worse, even before the major components of the GST regime are agreed upon between the negotiating parties, the Task Force has jumped the guns to make its comments public on virtually all the key features of the proposed changes. The Finance Commission's mandate, if one goes by the history of protocols, cannot be to suggest procedural issues like monitoring of compliance and the framework to administer GST. These are typical administrative works which fall within the exclusive domain of the Executive, and not a temporary body like the Finance Commission.

What happens when a temporary body exceeds its mandate? So far as IGST is concerned, the Empowered Committee has already rejected the 'Bank Model' in response to serious objections raised by many States. Netizens may like to go back to the Discussion Paper and find out for themselves which IGST model has already been approved by the EC. But this Task Force has on its own suggested a Modified Bank Model which harps on the wisdom of collecting tax revenue with minimal costs. And for the same, it wants the exchequer to totally rely on the robustness of IT Infrastructure of the banks which would also reconcile the Input Tax Credit accounts. In a nutshell, this modified system is to replace the Central Govt in the IGST model. And all this is to be implemented at the cost of the Centre.

TIOL would be carrying a series of articles on the technical-flesh of this report in the coming days but today, we would like to focus on some of the idiosyncrasies of the Finance Commission. First, is it not an awkward reality that the Finance Commission handpicked a gentleman, supposedly an expert in Direct Taxes to head the Task Force on the most important Indirect Tax Reforms. Is it not a case of asking an Engineer to study and comment on a complicated bypass surgery? Secondly,how is it that Dr Vijay Kelkar could not find anybody either from the CBEC (the implementing agency for the CGST) or the State VAT to join this Task Force? Thirdly, the authors of this Task Force Report have tried hard to borrow an aura of credibility by profusely thanking four key officers from the CBEC who had, TIOL is in know of this reality, debunked the basic assumption made by Mr Arbind Modi, for arriving at the Revenue Neutral Rate. When the fundamentals scripted by Mr Modi were themselves punctured by the CBEC officials, what purpose does it really serve by thanking them and then, ignoring their reservations and recommending the same flawed and misleading Revenue Neutral Rate for working out the tax base.

Although the ignoramus may welcome this report but the fact remains that this would further add to the prevailing confusion and may not lead to churning of any new set of wisdom. It would be a desirable behaviour on part of the EC and the Centre to discount all those details which are not related to the mandate given to the Commission, and focus on ironing out their own differences to arrive at solid foundations for the proposed regime. Let's hope that the unsolicited information does not delay the roll-out any further.