JUNE 25, 2018

By G Mohana Rao, Assistant Commissioner (Retd.)

RECENTLY, notifications have been issued by a few States and CBIC notifying NACIN as the authority to conduct examination for GST Practitioners under rule 83(3) of the CGST Rules, 2017. Another feather in the cap of NACIN who appear to be doing some high-quality work in GST by way of weekly updates, flyers, FAQs etc. The need of the hour is to do much more. They should take more lead in educating the trade, the country as well as the officers and should renovate themselves into an institution of brilliance.

However, my present article is on the GST Practitioners scheme which appears to be going nowhere. One hardly find consultants getting enrolled as GSTPs. Those who are enrolled, are not using it. There is one provision in the CGST/SGST Act – Section 48 which only provides that the manner of approval of GSTPs, their eligibility conditions, duties and obligations, manner of removal and other conditions relevant for their functioning. More provisions and clarity shall be prescribed. Specific and separate Rules are advised bringing more clarity and effectiveness. As per Section 48(2), a GSTP can file returns on behalf of a registered person. What about filing refunds, representations before AARs, department etc.??? The consultants provide or can provide innumerable services. The responsibility of correctness of the particulars in the returns remains that of registered persons. The consultants, in practicality, file the returns by logging onto the system using the user id and password of the registered person. Thus, there is no accountability at all. The compliance contracts between the companies and consultant companies appear to be one-sided and may be non-enforceable. Even otherwise, in India, contract enforcement is self/society/market driven rather than law driven. The Contract Act enforcement through law appears to be feeble!

The role of intermediaries like GSTPs and GST Suvidha Providers (GSPs) is very important. Both have badly failed as a concept as well as in performance!! Out of 34 GSPs licensed by GSTN initially, only three or four are working. The rest have either closed or are on the brink of closure. Many in fact had not even started!!! It is not sure how GSTN had granted them the license. The companies are made to swim in the tsunami on their own. The consultants have their plates full and are not taking fresh work of compliances due to uncertainties in law (Advance Ruling decisions are a real pointer to the same) as well as system (nowhere near to stabilising). On the other hand, due to reduction in number of returns after complete failure of the GST return mechanism, the companies are renegotiating the contracts for downward corrections.

The Rule 83 of the CGST Rules, 2017 provides provisions relating to the GSTPs. However, the provisions, for the duties, accountability and obligations of GSTPs as mandated in the Act, are missing. The rule also wants a GSTP, for their continuing as GSTPs, to clear examination in a specified period. The Erstwhile tax return preparers (TRPs) and Sales tax preparers (STPs) have to clear this exam with in one and half years as per the recent notification issued. However, the period for other GSTPs is not specified yet. The question is whether GSTPs should be subjected to any examination. Once specified qualifications have been fixed which include various degrees by the educational institutions, the GSTPs mostly cleared the exams conducted by such institutions. Further examinations are not warranted. In case, the government desire to train other graduates etc. also to become GSTPs, it should specify clearly and for those GSTPs detailed training needs to be given and the institutions providing the training should conduct the exams as well. Is it desirable that the government enter such unchartered area?! If NACIN has to conduct such exams, they should convert themselves into a university and provide the diplomas to such people so as to provide them real employment opportunities.The ICAI conducts one of the toughest exams for the CAs, and the Government finds them fit to audit the accounts of registered persons. In case of complex cases, government is taking help of CAs to conduct special audit. But to file returns...a low end work, they need to enrol as GSTP and on top of it, pass exam as well. Clearly unfathomable and may not be needed. Not much thought appears to have gone into it. First, make the scheme lucrative and then think of any exams, else it would be an exercise in waste.

Instead, the government should come out with viable and clear guidelines for GSTPs stipulating their rights, duties, examination and obligations. In the present form, it is hazy, unwritten and as such a clear failure. For the welfare of the trade, smooth and accountable service, the subject issue certainly is of paramount importance and calls for certain & immediate attention.

(The author is Managing Partner, Elysian Tax Advisors, Mumbai and the views expressed above are strictly personal.)