AUGUST 21, 2019

By Vijay Kumar

GST Inspector Vivek Bhagat was with Amitabh Bachchan in Kaun Banega Crorepati yesterday and had quite an interesting chat with the legendary actor on GST.

The full programme can be seen at sonyliv.com

And this is what Sony TV tweeted -

The Return Rush:

It's a busy and frustrating time for taxpayers as the last date for filing Income Tax and GST returns, is just ten days away. While everybody is hoping that the crucial date for GST returns will be extended, many feel that nothing can be achieved by an extension alone - they will only be too happy if the damned return can be filed. They are damned if they do, they are damned if they don't. In the meanwhile, newspapers reported that a Chief Commissioner has issued strict warning:

-  Taxpayers should file their GST returns for 2017-18 by August 31 and failure to do so will attract very severe consequences, including hefty penalty,

-  Though only 15 days of time was left, 80% of traders have not filed it so far.

-  It involved a consolidated filing of the monthly returns filed by them and the date had been extended several times and would not be extended further,

-  They should approach the nearest Central Excise officials for hand-holding and filing the returns.

-  Besides, not passing on the benefit of GST to customers or indulging in any fraud in input tax credit or any attempt to use it as working capital or not remitting GST collected from consumers might lead to imprisonment, he warned traders. Traders should also issue a bill collecting GST as per the reduction effected by the GST Council from time to time, he said.

-  The Directorate General of Analytics and Risk Management was analysing bulk data to check GST fraud. The National Anti-Profiteering Authority would also investigate it.

-  He denied that cumbersome process was the reason for the delay in filing returns citing 90% compliance at the national-level and some States reporting as high as 70%. “Some are deliberately delaying payment,” he said.

-  The Central Excise and Service Tax dues pending for the past two years also should be paid in two weeks, warning of imprisonment if it was not complied with.

-  With the modifications in GST returns from October and January 2020 new returns should be filed and GSTR 3B would be done away with, he revealed.

-  Traders should file returns and pay the tax to improve collection, he said.

Flooding the High Courts - GST way:

Almost every High Court in the Country has a writ petition challenging the demand of interest under Section 50 of the GST Act. This Section 50 is the classic example of first leaping and then deciding where to land. Section 50 of the CGST Act, 2017 prior to its amendment by Finance Act 2019 read as:-

50. (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent., as may be notified by the Government on the recommendations of the Council.

Now this section implies that the taxpayer has the option of not paying a part of the tax, which can be paid later with interest. But this is only the Law; the portal will not allow part payment. The Government told the GST Council, "This being the case, a registered person cannot even avail his eligible ITC as he cannot furnish his return unless he is in a position to deposit his entire tax liability as self-assessed by him. This inflexibility of the system increases the interest burden." And the good Council approved an amendment of the Act, which was also done promptly by the Finance Act 2019. But the amended provisions are not yet notified. And the government has not clarified whether the amendment would have retrospective effect. This was a problem created by the Government and when they undo their mistake, is it not their duty to make it retrospective?

In the meantime, a bright Commissioner had a brilliant idea. Why not attach bank accounts for default of payment of interest. Out went in undue haste notices to banks to deduct the huge interest payable from the bank accounts of the taxpayers. The banks are only too happy to oblige. People who had to pay an amount of Rs. 10 lakhs as interest on the cash component of tax, were asked to pay about 5 to 6 crores as interest on the input tax credit available with them. The bank freeze caused a huge disruption in business. But did the Government get any money? No, lawyers did, as they rushed to High Courts in panic.

The GST department doesn't even give a notice let alone pass an order before attaching bank accounts. Their ground is that Section 50 requires interest to be paid on his own. That is interpreted to mean that the department is not required to give a notice or pass an order. Section 73 requires a notice to be given, but the Revenue argues that Section 73 is applicable only when tax is not paid. This means that a person who has not paid the tax and interest will be given the courtesy of a notice, while the person who has paid the tax, but not the interest, will be penalised with a bank attachment. Jest law indeed.

Government seems to be in the full-time business of creating, sustaining and promoting litigation. There is hope for all the consultants who despaired that GST will put an end to their career.

Highhanded Babu Fined by Tribunal:

Extracts from an order passed by the CESTAT this week.

Before parting with the judgment, I am constrained to observe that in the present case even the goods which admittedly did not require BIS certificate were illegally detained and was only released when the appellant filed a Writ Petition in the Hon'ble High Court of Kerala. The high handedness of the adjudicating authority, is writ large when he failed to conclude the proceedings within the time stipulated by the Hon'ble High Court in their order dt. 10/04/2019. Further the appellant was also compelled to initiate contempt of court proceedings before the Hon'ble High Court and in order to save himself from the contempt of court, the adjudicating authority hurriedly issued the show-cause notice dt. 28/05/2019 and served the same at 5 PM on the same day and directed the appellant to file reply to the show-cause notice by 10 to 12AM on the next day i.e. 29/05/2019. It is pertinent to note that no relied upon documents were supplied to the appellant along with show-cause notice and when the appellant vide letter dt.29/05/2019 requested for a week time to file reply, the adjudicating authority without considering the request of the appellant and without affording an opportunity of hearing absolutely confiscated the goods and also imposed a penalty of Rs.1,50,000/- under Section 112(a) of the Customs Act, 1962 on the appellant.

Heaven was not going to fall had the adjudicating authority given one week time to file reply by the appellant.

The conduct of the adjudicating authority from the very beginning appears to be totally biased and to harm the interest of the importer who appears to be small time importer and the size of the imported consignments is also not very big. The insensitive approach of the adjudicating authority is going to damage the policy of the Government of India relating to ease of doing business by small traders like the appellant. It appears that the adjudicating authority has deliberately violated the principles of natural justice to harm the interest of the appellant.

Adjudicating authority has no regards for the orders passed by the High Court. Unfortunately, the first appellate authority has also not applied its judicial mind and routinely confirmed the Order-in-Original. Therefore, keeping in view of the conduct of the adjudicating authority in this case from the very beginning, I am constrained to observe that Order-in-Original was passed with malafide intention by violating the principles of natural justice.

Therefore, in the interest of justice, I impose a fine of Rs.25,000/- (Rupees twenty five thousand only) on the adjudicating authority which shall be paid by him from his salary. The said fine is to be paid within two months from the date of receipt of this order in the Chief Minister's Distress Relief Fund, Kerala.

He is also advised to be careful in future while passing the order.

Please see 2019-TIOL-2368-CESTAT-BANG.

There are people who are learned in Ethics, vedas and shastras (maybe GST too); those who know brahma could also be found. But those who know about their own ignorance are rare.

Until next week