JULY 11, 2018

By Vijay Kumar

Who is a Cost accountant?

As per Section 2(35) of the CGST Act, "cost accountant" means a cost accountant as defined in clause (c) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959.

Now, clause (c) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 reads as, "Council" means the Council of the Institute.

So, this sub-section actually defines the Council and not the "Cost Accountant".

"Cost Accountant" is defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 as, "cost accountant" means a person who is a member of the Institute and the word "Institute" is defined in clause (f) as, "Institute" means the Institute of Cost and Works Accountants of India constituted under this Act.

And, therefore,the clause to be referred in section 2(35) of the CGST Act, 2017 should have been clause (b) and not clause (c) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959.

This is an 'inadvertent typographical error' that has crept into the CGST Act and faithfully copied and pasted into all State GST Acts.

"Cost Accountant" figures at least thirteen times in the CGST Act and in each of the State Acts, but its definition in all these Acts, is wrong. So, as far as these Acts are concerned, there is no 'Cost Accountant', at least no correctly defined 'cost accountant'

This is not certainly a failure of technology as the top bureaucrat connected with the GST may proclaim. It is not technology, but typing that failed. If something can fail, it will. We shouldn't bother too much about it. But how do you bring in this 'Cost Accountant' into the CGST and all the State GST Acts? All these Acts have to be amended by Parliament and the State Legislatures, after getting the approval of the GST Council. The Government has started the process and have proposed nearly fifty amendments to the CGST Act and the IGST Act. These are placed in public domain till 15^th July, by which time we, the Public of this Republic are allowed to send in suggestions, if you can find out where and how they should be sent to. (I will explain that a little later.)

Apart from the major benign step of allowing 'Cost Accountants' into the realm of GST, the amendments proposed include:

1.Change in definition of services : As per Section 2(102) of the GST Act, "services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged ; Now, an explanation is proposed to be added to specify that the expression "services" includes facilitating or arranging transactions in securities.

2. No double taxation on imported warehoused goods : For details, please see DOUBLE IGST on Imported Goods deposited in Customs Bonded WarehousesGovernment proposes to solve the confusion legislatively. Will they also bury the generated litigation?

3. Reverse Charge Mechanism under extended hibernation : As per Section 9(4), all registered persons are required to pay the GST on reverse charge basis on purchases made from unregistered persons. This is under exemption by various notifications, the latest being Notification No. 12/2018 - Central Tax (Rate) dated 29th June, 2018, by which the exemption is to end on 30 the September 2018. Now this sub-section is proposed to be substituted with a provision to empower the Government to notify a class of registered persons who would be liable to pay tax on reverse charge basis in case of receipt of goods from an unregistered supplier. If the amendment is not carried out by September end, there will possibly be another extension exemption notification.

4. ITC on food and beverages to employees: As per Section 17(5)(b), Input Tax Credit is not allowed for food and beverages, health services, travel benefits to employees etc. This is proposed to be amended to allow ITC in respect of these goods or services or both where the supply of such goods or services or both is obligatory for an employer to provide to the employees under any law in force.

5.Suspension of registration pending cancellation: Cancellation of a registration is far more difficult than getting it. If somebody chooses to close his business or simply is blessed with the better of the two certain things in life (death and taxes), it is very very difficult to get his registration cancelled. And until the registration is cancelled, he is bound by law to maintain records and submit returns. Now, relief is coming with a proposed amendment that the proper officer may temporarily suspend the registration till the procedural formalities for cancellation are completed. In the field formations, formalities have a different connotation and they are not very respectable.

6. Payment of Tax - Utilization of ITC: The proposed amendments stipulate that the credit of State tax/ Union territory tax can be utilized for payment of integrated tax only when the balance of the input tax credit on account of central tax is not available for payment of integrated tax and a taxpayer would be able to utilize credit on account of CGST, SGST/UTGST, only after exhausting all the credit on account of IGST available to him . This is perhaps to avoid the technology failure that haunted us earlier.

7. Appeals - Limit on mandatory pre-deposit:The mandatory pre-deposit for appeals, is now 10% for the first appeal and an additional 20% of the tax dispute for the second stage of appeals. It is now proposed to stipulate a ceiling of Rs. 25 Crore and 50 Crore respectively for these appeals. This benefits appellants whose tax dispute runs into more than 250 Crore rupees.

8. Exports - Rupee Receipts from Nepal qualify: Receipt of payment in convertible foreign exchange is one of the requirements for passing the test of "export of services" under Section 2(6)(iv) of the IGST Act. Now receipt in Indian Rupees is also proposed to be allowed, for being treated as exports, if permitted by RBI. This will facilitate trade with Nepal and Bhutan.

9. Place of supply - a truck carrying goods from India to Pakistan by Road. An Indian truck owner carries goods to Pakistan in his truck. Is he liable to pay GST? We need not break our heads searching for relevant case law to answer this question. The Government has proposed an amendment to the IGST Act to stipulate that if the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods .

10. CBIC also figures : As the name of CBEC has been changed to CBIC, several provisions in the Act need amendments, which are suitably proposed.

Interestingly, the rationale given for carrying out these amendments are -

+ to correct inadvertent omission;

+ to correct an inadvertent typographical error;

+ seek to bring clarity & correct the repetition of fact;

+ taxpayer friendly measure;

+ taxpayer friendly amendment.

While on the subject, in the CGST Act, the word "concerned" has been used as many as 34 (thirty-four) times and I am a bit "concerned" about its incorrect usage at almost 25 places.

Grammatically speaking, 'concerned people' means people who worry and 'people concerned' means people who are relevant/responsible to/for something.

Perhaps, in these usages viz. concerned State, concerned supplier, concerned officer, concerned High Court, concerned registered person, concerned persons the word 'concerned' should have succeeded the noun(s). And this could have also been a part of the proposed amendments to 'correct the inadvertent grammatical errors'!

Click here to see all the proposed amendments.

How to send your suggestions : This is as good a "Good and Simple Task" as the GST is.

Go to https://www.mygov.in . There, under IN FOCUS, you will find this image.

Click on it.

You will get

If you want to post your comments, you have to log in and for that you have to be a registered user or you can log in with your Facebook, Google, Twitter, LinkedIn etc. You have time till 15^th of July 2018 to tell the Government your views on the amendments. If you find the site in a little "Go Slow Track", don't worry, be patient, eventually you will reach your goal.

GST Officers' Performance - Centre vs States : It has been reported in a section of the Press that the Finance Secretary has written to the CBIC Chairman that the performance of the State GST officers is better than that of the Central GST Officers. The All India Association of Central Excise Gazetted Executive Officers, is not amused. Its General Secretary Mr. Manimohan in a memorandum to the Finance Minister states,

Our officers (read the Superintendents, supported by Inspectors and the Assistant Commissioners to some extent) in the field level have executed the roll out and transition into GST with no less (or even more) sincerity, integrity, vigour and dedication than the State officers.

Further, in contrast to their counterparts in the State GST, the Superintendent/Inspector cadres lack any support by means of manpower, data provision or infrastructure. Infrastructure in terms of office space is dismal and provisioning of vehicle at the disposal of Superintendents is NIL.

In a recent letter to the Chief Commissioners, the DG, HRD of CBIC has advised them to allocate office space as per the Infrastructure Manual. And as per that manual the area of space entitled to by the officers is:

The Good and Simple Tax obviously needs Greater Space to Taxmen.

Happy FM : Finance Minister Mr. Piyush Goyal has tweeted, "Happy to share that traders across the country have accepted GST with open arms, as it has led to a greater ease in doing business and increase in their sales volume."

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