Priorities for GST 2.0 - Improve Index of ease of doing business
JUNE 06, 2019
By R Sridhar, Consulting Editor, TIOL
GST has ushered a big smile on the faces of Trade and Industry. With the new Government at the Centre taking over during last week of May 2019, it is apt to bring forward suggestions that warrant attention of the GST Council and the MOF in the first half of 2019.
Suggestions
Items not taken up out of the earlier recommendations of Law Committee
From the suggestions of the previous Law Committee many issues still remain not taken up in the legislation.An example would the status of ITC in case payments are delayed beyond 180 days, machinery provisions to give effect to Section 17(5) etc. While these are absolutely due to be taken up,it will be in the interest of all stakeholders if an overhaul is done again of the laundry list of items and new topics like re-characterization of Post sale expenses as Services, Tax on Liquidated Damages (entire gamut) and Input Tax Credit eligibility for Building Renting Services etc are taken up along with the earlier list. It is important for the Revenue to understand that while re-characterizing transactions, the rebuttal argument can even raise larger issues on Valuation.
Powers of arrest - Aftermath of Make my Trip - 2019-TIOL-65-SC-ST case
While the Supreme Court agreed with the observations of the Hon High Court of Delhi in the above case and hence advised the route of the Show Cause Notice followed by adjudication by strongly re-emphasizing it in all cases barring exceptions of fraud etc, the ground reality of Departmental overreach continues.In this background, adequate care should be taken that Intelligence and Anti Evasion authorities do not misconstrue Section 132 (1) (a) of CGST and hold all untaxed transactions (even if a strong case for a second view exists) as having been evaded.It is not the case of the Trade and Industry that unscrupulous evaders should be pardoned but in any interpretational issue, weight age of alternative views, factors such as contribution to exchequer, size of the assesse, stakes in the economy and its overall status should be given consideration and a SCN followed by adjudication is de minim is.
Role of new GSTN and new formats
It is indeed true that the Trade and Industry are settling down with GSTR1 and 3B and hence any change in formats,concepts such as Accept, Lock and Confirm or Invoices through GSTN may need to be run in parallel with existing systems for at least 6 months before they are made live. While the new ideas or up gradation of IT backbone is necessary, any change of system will take time to settle down. It would also be relevant to assess whether Invoices being from GSTN would be practical solution from an Indian perspective.
The Credit Controversy
While reconciliation between 2A and books and 3B is sine qua non for GST, the un-reconciled amounts reflected in annual forms should be duly investigated by the assessing authorities, because books of accounts record transactions that have taken place only. While the uploaded Invoices of the suppliers are as sacred as we can assume, any refusal of credit should be determined at the assessment stage with due consequence such as compensatory interest. This is all the more relevant as many assessees have received notices from authorities asking them to explain differences before assessment.
Advance Rulings - Scope for Refinement
While Rulings assist in ushering certainty, cross section of views among authorities adds to the litigation load in the High Court. There can be umbrella authority, with specific topics allocated and once there is a divided view among authorities in States, an automatic reference should happen and the umbrella authority should hand down a Ruling that will be fair and balanced. Topics that can be handed over to this authority among others are a) Credit dis-entitlements b) Classification of Goods c) Services inside an entity with multiple registrations.
The above suggestions are just a beginning in the journey of GST2.0 and hope the legislative changes are introduced before the end of this Calendar Year.
TIOL is happy to announce the launch of a New Column 'As I See It' by Industry veteran and Former Taxation Head of Hindustan Coca-Cola Beverages Pvt. Ltd., Mr R Sridhar . He is a Chartered Accountant and has fruitfully spent over 30 years in the industry, particularly in the Food & Beverages segment, in various capacities. He also had stints with GSK and Britannia. Though he is extremely passionate about Indirect Tax, he also has a craving for the Direct Taxes, not to mention International taxation.
TIOL is certain that Netizens who have watched him doling out his Gyan on TIOL Tube would wholeheartedly welcome him in this new role and would also feed him with vital inputs about industry-specific issues so that he can articulate them in his Column.
We also hope that this Column would be greeted by the policy makers for a new shade of opinion and also for technical inputs which may shape up the contours of future policies.
For suggestions and inputs you may like to email us at editor@tiol.in
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