GST Network & Data Protection - Shadow of SC Judgement
TIOL - COB( WEB) - 569
AUGUST 31, 2017
By Shailendra Kumar, Founder Editor
LAST few days have been quite eventful for the GST canvas which continues to be the quickest headline grabber in the media. With the GST Council at its last meeting firming up a view to hike the Compensation Cess on vehicles so that a tangible error made previously in terms of reducing the incidence of taxation on the sector, the Cabinet approval was virtually on the cards. And the Union Cabinet gave its nod to promulgate an Ordinance to hike the CESS rate as the Compensation CESS Act had to be amended to vest such powers in the Union of India to notify the hike. And it is going to impact motor vehicles for transport of not more than 13 persons, including the driver, falling under sub-headings 870210, 8702 20, 8702 30 or 8702 90 and 8703. After the Presidential Assent, the Notification will be issued in a couple of days. Obviously, the automobile sector has not welcomed it but the guiding principle for decision-making by the GST Council has been a status-quoist approach - no tax rate reform in the initial months. Once the Union of India and all the States are comfortable with the revenue collections trend, the Council may review its decision.
So, here comes the Union Finance Minister, Mr Arun Jaitley's press briefing detailing the total collections as on August 28, the last date for filing TRANS-01. And the visibly happy Finance Minister said that the GST collections have surpassed the redline fixed by the GST Council - Rs 91000 Crore. The actual collections even crossed Rs 92000 Crore for the month of July. In fact, it is likely to be in the range of Rs 1.2 lakh crore in the weeks to come once a large number of taxpayers who are yet to file their returns and could not do it because of certain technical glitches. A good number of them are first timers and they do need assistance. As per the latest data, about 60 lakh taxpayers were expected to file their returns but only about 39 lakh could do it. A whopping 20 lakh more would file with fine and the total tax kitty may swell beyond Rs one lakh crore in the next few days as the week to file GSTR-1 will roll out in the next 24 hours. As per the data, there are a little over 72 lakh taxpayers in the GSTN Server but about 13 lakh are yet to complete their migration process for various reasons. The Finance Minister said that upto August 28, as many as 19 lakh new taxpayers have registered with the GSTN. They are first timers and would take time to comply with the complicated maze of procedures. In fact, a good number who have opted for the Composition Scheme, are required to file returns only on quarterly basis. And this is one of the reasons for lesser returns than what the total tax base is.
Another reason for a little subdued collections is also what a taxpayer from Surat communicated to us. The taxpayer had managed to do RTGS/NEFT on Friday (August 25th) but the GST Network and the banks are yet to align their technology to reflect the fund transfer in the cash register of the taxpayer on the real time basis. Since the fund was not reflected and the next two days were holidays (4th Saturday & Sunday), the taxpayer could have done it only on Monday (Aug 28th). But since there was a delay as per the SYSTEM, one was required to generate one more challan to pay late fine and only then one could pay tax and file GSTR-3B. For no fault of the taxpayer, a mental agony and a financial penalty were inflicted on such taxpayers which the Union of India needs to look into so that genuine taxpayers are not roughed up for no fault of theirs. For a good number of taxpayers, here comes another bad news as the GSTN portal has announced that from Aug 30 evening to Aug 31 evening, no services would be available. Unfortunately, some taxpayers wrote to us that while filing TRANS-01, some of the Columns did not take more than certain entries. So, if one had more entries for capital goods, such assessees are stuck as they could not file their TRANS-01.
In this backdrop, what may appear timely and sound word of caution is what the NITI Aayog has stated in its three-year Action Plan. It has stated: "We need to develop an efficient GST operational system and minimise the disruption caused by the transition from the current indirect tax regime to the GST. The steps towards this include: (i) A well-functioning GST council; (ii) Advocacy and outreach programme to help the stakeholders (especially new taxpayers) adjust to the new system; (iii) A robust tax administration system by the Union and the state governments; and (iv) A well-functioning GSTN system ... Moving forward, under the real spirit of the GST, we should move gradually towards fewer number and lower level of rates. Since the GST system will expand the tax base, we should be able to lower the tax rates without loss of revenue."
The NITI Aayog has suggested a roadmap and certain milestones to be achieved. Overlooking all other milestones I would like to focus on the need for well-functioning GSTN as emphasised by the NITI Aayog. Unfortunately, the GSTN has so far not lived upto one's expectations. It is also a case of poor anticipation index. In other words, the GSTN failed to foresee what all a taxpayer filing returns or paying taxes may require. That is why such a basic aspect of tax payment through RTGS or NEFT has become incongruous. If a taxpayer has hundreds of entries to make, it has restricted the column size or data size which deprives the taxpayer from doing what is statutorily required to do. There would be thousands of cases of non-compliance because of malfunctioning or inadequacies of the GSTN facilities. Let's hope the Revenue Secretary takes note of the Achilles Heel of his entire GST-related homework.
In this context, what may appear pertinent to make a reference here is the GSTN and the Supreme Court latest Constitution Bench judgement on the Right to Privacy. While giving expressions to various dimensions to the Right to Life and Right to Liberty the Apex Court Bench put emphasis on the Doctrine of Data Protection which is unfortunately in a state of disarray in India. So casual has been the approach of the Sovereign towards a citizen's personal data that the taxpayers' data about their entire purchases and outward supplies to their buyers now rest with a private body i.e GST Network which may have some moral obligations but no legally binding protocols with penalty clauses if certain data is leaked. True, the senior GSTN functionaries have been giving reassuring statements but what if something is leaked and how would one fix the responsibilities. Strange, it was an opportunity for the policy makers to enter into an agreement with the GSTN to legally bind it to take necessary safeguard measures for taxpayers' data and if it is found leaked, what would be the financial and other consequences that may ensue. And such a casual approach was adopted after the Govt had set up Justice Srikrishna Committee to suggest data protect framework for the entire nation.
While talking about certain RESTRICTIONS or FETTERS on the Right to Privacy the Bench listed out six different reasons and one of them is - The Taxation. It states - The regulatory framework of tax and working of financial institutions, markets may require disclosure of private information. But then this would not entitle the disclosure of the information to all and sundry and there should be data protection rules according to the objectives of the processing. There may however, be processing which is compatible for the purposes for which it is initially collected. These words clearly put onus not only on the GSTN but also the Directorate of Systems of the Income Tax and the CBEC which collect huge data from the taxpayers. A formal data protection matrix must be built and shared with the public to instill confidence in the Government's intent to protect their personal data.
Let's hope the Union Government takes note of all these aspects of taxation and the need for data protection. A comprehensive legislation should be the goal of the Modi Government before it goes to polls again perhaps towards the end of 2018. With the internet technology taking long strides with each passing day and huge personal data being collected on the social media by various non-State and State Actors, it is high time that the Data Protection is made one of the key pillars of Taxpayers' Services in the days to come.