FEBRUARY 06, 2019

By Vijay Kumar

How do you pay 20% of the disputed admitted tax?

The budget was unlimited, but I exceeded it.

Always be sincere, even when you don't mean it.

Live within your income, even if you have to borrow to do so.

We must believe in free will. We have no choice.

I can resist everything but temptation.

I am not always right, but I am never wrong.

Give me a smart idiot over a stupid genius any day.

I like a smuggler. He is the only honest thief.

Clearly confused?

Well, these are some of the oxymorons that I have come across in life and the latest one is DISPUTED ADMITTED TAX!

An appeal cannot be filed before the Tribunal under GST unless the appellant has paid-

(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and

(b) a sum equal to twenty per cent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order, in relation to which the appeal has been filed.

So, the amount of pre-deposit is the admitted tax and twenty per cent of the remaining disputed tax. But what is disputed admitted tax? Either you dispute the tax or admit it; can you do both? If English grammar is going to be taught again in our schools, this could be drilled into young minds as an example of oxymoron! But our tax textbooks can also be lessons in grammar.

As per Item. No. 14(b) of FORM GST APL - 05 under the CGST Rules 2017, for Appeal to the Tribunal, the following particulars are to be furnished.

Details of payment of admitted amount and pre-deposit (pre-deposit 20% of the disputed admitted tax and cess)

How do you pay 20% of the disputed admitted tax?

Fortunately, the Government has realised that such oxymorons don't gel with a simple tax like GST and has amended the provision with a notification 3/2019-Central Tax dated 29.01.2019 for which a corrigendum was issued on 05.02.2019. It would be far easier for the Prime Minister to win the elections than understand that corrigendum. But Prime Ministers are not required to understand a corrigendum - there are any number of consultants for that. Prime Ministers are required to win elections, with or without GST.

Taxing Oxymorons, we are familiar with

Civil Servants

Disaster Relief

Fair Trial

Good Lawyer

Income Tax

Proper Officer

Revenue Intelligence

Revenue Service

Responsible Government

Reasoned Order

Tax Refund

Tax Return

Tax Humour

Voluntary Taxes

Voluntary Statement

Zero Deficit

GST

Your registration stands suspended …….: FORM GST REG -17 is a Notice given by the GST Officer to cancel a registration. The Notice also states that "Your registration stands suspended with effect from ---------- (date)." You can reply to this Notice in FORM GST REG -18 and if the Proper Officer is convinced that you are after all not all that bad to deserve a cancellation of the Registration, he can order dropping of proceedings for cancellation under FORM GST REG-20. Strangely this form also contains a Note: Your registration stands suspended with effect from ---------- (date)."

This obviously is a "copy and paste" mistake, which the Government has corrected by the corrigendum issued yesterday. Now it reads as, "Suspension of registration stands revoked with effect from........(date)."

It is amazing how these small mistakes are detected and corrected. All those officers working in the Gigantic GST Law Sections should be honoured with Presidential awards.

Interest - an Inevitable Liability: "Interest is an inevitable liability on the self-assessed tax in every case of delayed filing of GST-return, except NIL return." This is a quote from a Standing Order dated 04.02.2019 issued by a GST Principal Commissioner. The Commissioner has observed that:

(i) The said interest liability is not being discharged by some Taxpayers (TPs);

(ii) Some TPs are discharging such interest liability, either at the instance of the officers of the department or on their own as convenient to them, while filing subsequent return; and

(iii) Some TPs are paying such interest only on the cash component of the Tax paid / being paid belatedly, but not on the ITC component of the Tax paid/being paid, for the delayed returns.

He further notes:

(i) the delay in payment of interest is a clear case of financial accommodation; and is absolutely against the interest of the Revenue. Hence, prompt action for recovery of interest, as per the law, is warranted.

(ii) The Sec. 50 envisages that such interest is liable to be paid by the Taxpayer on his own. Thus, the interest liability is an inevitable statutory liability in all such cases where the return was filed after the prescribed due date.

(iii) Since ITC/Credit in balance in the 'Electronic Credit Ledger' cannot be treated as the Tax paid, unless it is debited in the said credit ledger while filing the return for off-setting the amount in the ‘Liability Ledger', the interest liability under Sec. 50 is mandatorily attracted on the entire Tax remained unpaid beyond the due date prescribed. The ITC in balance as on the due date for filing the return has no relevance with regard to the interest liability u/Sec.50. It is immaterial whether the self-assessed tax is paid through the Credit/ITC or the Cash. Once the payment is beyond the prescribed date, interest liability is attracted on the entire Tax amount.

He wants his officers to conduct due verification of all the cases of belated filing of returns [which obviously involve payment of self-assessed Tax after the prescribed due date] and ensure that the interest liability is paid not only on the cash component, but also on the credit component of the Tax paid;

One Lakh Crore Shortfall in GST Revenue: The 2018-19 Budget proposed to collect a GST for the Central Government to the tune of Rs. 7,43,900 Crores. Obviously the collections are not as good as expected and the Finance Bill presented on 1 st February 2019 has reduced this Budget Estimate to Rs. 6,43,900 Crores - a clean reduction of One Lakh Crore! Even this seems to be a little difficult and the Revenue officers are already on the collection drive. February and March are not exactly the best times to meet Revenue Officers.

From our archives - Beware the Ides of March .

Pizzaman Sliced by GST: One Mr. Kiran Chimirala Chiki, purchased 1 SGB Stuffed GB (Garlic Bread) and 1 Med NHT Veg Extrava (Medium Veg Pizza) after paying Rs. 129/- and Rs. 440/- per item respectively vide tax Invoice No. 66065/17/66210 dated 20.10.2017 from the restaurant of Domino's Pizza in Bengaluru. He had purchased the above 2 items again vide tax Invoice No. 66294/17/40249 dated 19.11.2017 by paying an amount of Rs.139/- and Rs. 485/- respectively.

He had alleged that though the Goods & Services Tax (GST) rate on restaurant services was reduced from 18% to 5% w.e.f. 15.11.2017, Domino's had increased the base prices of the above food items and charged the same base prices which they were charging before the rate of tax was reduced and had they maintained the same base prices which they were charging before the tax reduction, the consumers would have been benefited but in this case it had not happened. He had, therefore, alleged that Domino's had resorted to profiteering and accordingly action should be taken against them. He had also stated that large organisation like Domino's should be investigated where the prices had been inflated with the reduction in the rate of tax. All this through an e-mail dated 29.11.2017.

The great wheel of Anti Profiteering started moving and it was ascertained that:

1. JUBILANT FOOD WORK LTD was engaged in the business of operating quick service restaurants under the brand name "Domino's Pizza" and had a pan-India presence with 1,128 outlets across 31 States and Union Territories in which they were registered under the GST.

2. Their sales in 2017-18 was about Rs. 3000 Crores. (So many Pizzas sold in India)

To cut a long story, short, the Anti Profiteering Authority held - 2019-TIOL-04-NAA-GST that Jubilant Food selling Domino's Pizza had profiteered illegally an amount of Rs. 41,42,97,635/-. Out of this, our Kiran Chimirala Chiki, who started it all with his e-mail will get Rs. 5.65 along with interest @18% from the date of charging the above amount till its refund and the balance of Rs. 41,42,97,629.35 will go the Consumer Welfare Fund. The news of the Order saw the stock price of the Company tumble down by a hundred points.

GST is powerful: Beware.

Until next week…