OCTOBER 02, 2018

By Vijay Kumar

'Modalities for Revenue Mobilisation in case of Natural Calamities and Disasters'

The Finance Minister has approved the constitution of a Group of Ministers (28th September, 2018) to examine the issue regarding 'Modalities for Revenue Mobilisation in case of Natural Calamities and Disasters'. This is in response to the proposal of the State of Kerala for imposition of Cess on SGST for rehabilitation and flood affected works. What is the difference between 'calamity' and 'disaster'? Section 2(d) of the Disaster Management Act, 2005 defines 'disaster' as:

"disaster" means a catastrophe, mishap, calamity or grave occurrence in any area, arising from natural or man made causes, or by accident or negligence which results in substantial loss of life or human suffering or damage to, and destruction of, property, or damage to, or degradation of, environment, and is of such a nature or magnitude as to be beyond the coping capacity of the community of the affected area;

Maybe the GST Act or the Rules framed there under, will redefine disaster and calamity, hopefully without disastrous consequences. For many, service tax was a disaster and GST is a calamity. Churchill is believed to have said, "If Gladstone fell into the Thames, that would be a disaster; and if anybody pulled him out, that would be a calamity." Of course, no claim of authenticity for Churchill, Gladstone, Thames, disaster or calamity.

But why do you need a separate mobilisation in case of Natural Calamities and Disasters? Can't your budget and the regular taxes take care of these calamities? Can you budget for a calamity? Well, the Union Budget has a provision for Disaster Management. In 2018-19, the Finance Minister allocated 348.46 Crores of rupees for Disaster Management. Out of this, 240.02 crores are for Capital Expenditure leaving 108.44 crores for Revenue Expenditure. One flood in Kerala and the 100 crores is next to nothing. So, they have to find a way to fund disaster management and the only way seems to be a little additional tax through GST. But can they levy a disaster cess ?

Article 279A(4)(f) of the Constitution stipulates:

The Goods and Services Tax Council shall make recommendations to the Union and the States on- any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster ;

Even the Constitution of India recognises calamity and disaster as two different happenings. Anyway, the GST Council can recommend a special rate, which it has not done in the last meeting. The Group of Ministers is to submit its report by 31st October, 2018. Then we will know the modalities for revenue collection to face calamity or disaster. Until then, Kerala has to find other ways.

TDS and TCS under GST - SOP and FAQ released:

CBIC has released a Standard Operating Procedure on TDS under GST (A ready reckoner for DDOs (Drawing and Disbursement Officers)/other Deductors in GST) and FAQ on TCS under GST.

Who should deduct TDS? The SOP answers:

All the DDOs of

a.  a department or establishment of the Central Government or State Government;

b.  local authority;

c.  Governmental agencies;

d.  an authority or a board or any other body, -

i.  set up by an Act of Parliament or a State Legislature; or

ii.  established by any Government, with fifty-one percent or more participation by way of equity or control, to carry out any function;

e.  a society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);

f.  public sector undertakings.

Incidentally, even in the GST era, the CBIC officers do not appear to be concerned with the proper usage of the word "concerned". But they are certainly "concerned" about "responsibility".

See these FAQs (in Chapter 14)–

Q8. I s there any need to upload any document to complete the registration process?

A. Yes, (i) a proof of address of the concerned office & (ii) a scanned photo of concerned DDO is required to be uploaded. A valid TAN is also needed.

Q15. As a DDO, I have to enter some personal information to get TDS registration. What will happen if I get transferred? Will I still be responsible for any lapse committed by the DDO who succeeds me?

A. It is true that the DDO is personally liable for any lapses regarding TDS deduction. But at the same time, the personal details of the DDO as entered in the Registration Form can always be amended; it is suggested that, the new DDO upon assuming of office should immediately amend such details. However the GSTIN of the deductor will remain un-altered.

Q16. If the new DDO does not amend the details of his predecessor in office whether the ex-DDO would be liable for any lapse done by this new DDO?

A. No, the ex-DDO will not be liable for any lapse by his successor in office . A DDO is required to perform any responsibility in respect of TDS in GST either through a valid DSC (which is person specific) or through an EVC which would be sent to the registered mobile no as well as registered email id of the DDO only.

Perhaps, the handing-over and taking-over-charge formalities for a DDO should have a specific mention about the GST TDS responsibility too.

Be that as it may, the SOP carries a Disclaimer which reads - "This Standard Operating Procedure (SOP) is clarificatory in nature and is not meant for legal interpretation of provisions of relevant Acts and rules." – As always!

GSTN Owned by Government

The Cabinet has approved change in the existing structure of the GSTN with transitional plan as:

•  Acquisition of entire 51% equity held by the Non-Government Institutions in GSTN equally by the Centre and the State Governments and allow GSTN Board to initiate the process for acquisition of equity held by the private companies.

•  To restructure GSTN, with 100% government ownership - shall have equity structure between the Centre (50%) and the States (50%).

•  To allow change in the existing composition of the Board of GSTN inducting three directors from the Centre and the States and three other independent directors to be nominated by the Board of Directors and one Chairman and the CEO. 

It was Dr.Subramanian Swamy who championed the movement for government ownership of the GSTN. He has happily tweeted ' Now PM must hand over to CBI the scam on money spent by GSTN on Infosys and in enabling interest collected by HDFC&ICICI on tax deposits .'

GST reduced; Price increased: No profiteering.

Every increase in tax will not necessarily bring more revenue to the State and every decrease will not benefit the taxpayer. Somebody who was perhaps a regular visitor to 'Subway' restaurants was appalled when he found that on reduction of GST from 18% to 5%, 'Subway' increased the price of Hara Bhara Kababs from 130 rupees to 145 rupees. His anguish must have taken him to the The National Anti-Profiteering Authority under The Central Goods & Services Tax Act, with his grievance that tax was reduced, but his price was increased. The Director General Anti Profiteering (DGAP) conducted extensive investigation and came to the conclusion that "Subway" had increased the price, because the reduction in tax was with a condition that Input Tax Credit would not be allowed and if they did not increase their price, they would have suffered loss. And so, the Authority held that 'Subway' was not guilty. (2018-TIOL-08-NAPA-GST). Because the Government reduced the tax, our consumer had to pay a little more for his favourite Hara Bhara Kabab. Please also see Be careful what you wish for because you might get it , in the JEST GST dated 25.07.2018.

No Bail in GST case

Recently the Allahabad High Court rejected the Bail application of an accused in a GST case. The Counsel for the applicant submitted that that the applicant has falsely been implicated in this case and that as amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken does not exceed two hundred lakh rupees, the offence is non-cognizable and bailable. He further submitted that no previous sanction was ever taken from the Commissioner, therefore, entire prosecution is bad in eyes of law in view of Section 132(6) of the Act. The State stated that during the search several voter identity cards of different persons, Rs.34,98,500/- in cash, Bill Books containing different signatures, dongles, writing pad, stamps of several companies were recovered and the investigation is still in progress and the amount of tax evasion may exceed several crores.

The High Court was of the opinion, that the counsel for the applicant could not point out any good ground for grant of bail to the applicant. Accordingly, the bail application filed on behalf of the applicant was rejected. The Court directed to conclude the trial of the case, most expeditiously, preferably within a period of six months in accordance with law. Will the accused be in jail till then?