JULY 16, 2018

By Disha Jain, Advocate

GST has been the biggest tax reform in our country.

In the initial days, no doubt, the implementation of GST faced some hiccups. As a matter of fact, when the Government for the first time announced that the implementation date of GST will not be further extended from 1st of July, 2017, everyone raised their concern regarding department, system as well as industry not being ready. The journey of GST started with a bumpy ride, however, to the surprise of everyone, the government drove the vehicle with open ears and listened to grievances of the industry and public at large and undertook efforts in the direction of redressal of the same. This is substantiated by the fact that the Government issued various notifications, circulars, clarifications and FAQs time and again clarifying minutest of points which may become a cause of concern for the assessee. However, it will not be incorrect to say that though the efforts of the Government directed towards smooth implementation of GST are praiseworthy, some key concerns are still haunting the industry.

One of the major issues which needs to be settled by the Government this very year is that of the Returns. The complexities revolving around returns in the form of multiplicity, excessive details, matching concept, HSN details etc need immediate action from the Government. The Government also has understood that the problems faced by the industry is genuine and deserve immediate action. As a consequence of this realisation, GST Council in its last meeting has indicated that revised system of return will be introduced soon.

Another sector which has been suffering under the GST regime is that of exporter. Though the provisions of the GST Acts and Rules are benevolent in nature, allowing provisional refund of 90% of the claim amount, the ground reality has been something different altogether. In majority of the cases, the exporters have not been not able to get the refund, which in turn has led to the problem of working capital blockage. Though this problem is faced both by big corporate houses as well as small time exporters, the brunt faced by small time exporters has led to situation of closure of business for many. Therefore, the Government should take action to streamline the procedure of timely disbursement of refund.

One of the highlighted positive of GST was reduction and settling the existing confusion and disputes regarding classification. However, the reality in this case is also different when compared to the expectation. The confusion regarding interpretation of the tariff and HSN explanatory notes still persists. This is substantiated by the fact that majority of the issues raised before Advance Ruling Authority are pertaining to determination of classification and applicable rate. Accordingly, the Government should address the same on an urgent basis. There is no doubt that this initial confusion will lead to litigation in future and thus, one of the intentions behind introduction of GST i.e reduced litigation, will fade away slowly.

Structure and functioning of Advance ruling authority under GST has been another roadblock, which deserves introduction of changes by the Government. In the backdrop of factors such as absence of judicial member, high number of unreasoned orders and lately, conflicting decisions of different states' authorities on similar issues, the need to restructure the Authority for Advance Rulings has arisen. Further, in my view, the latest issue regarding conflicting views can be redressed by exploring the option of having a Centralised authority or a central appellate body like CESTAT.

The concept of reverse charge mechanism has been borrowed from the erstwhile service tax provisions. However, how the same are to be implemented has not been made clear even after end of first year and this why the provisions are still in abeyance. Thus, in this regard, the Government need to issue more clarifications and thereafter, should make the provisions regarding liability to pay tax under reverse charge in cases of unregistered suppliers as well as TDS/TCS applicable in the second year.

Other issues such as multiple rates, registration in each state of presence, uncertainty in anti-profiteering provision are some other areas where actions are needed by the Government.

Apart from the aforementioned issues, which could be clarified by way of delegated legislations, necessity has arisen to make amendments in some provisions under the GST Act as well. Various writs and representations have been filed by the industry highlighting the flaws and contradiction in the provisions. Thus, all eyes will be on the monsoon session to see the amendments that would be introduced.

(The author is Principal Associate with Lakshmikumaran & Sridharan, Attorneys, New Delhi and the views expressed are strictly personal.)