FEBRUARY 13, 2020

By G Natarajan, Advocate, Swamy Associates

"OUR government would like to reassure taxpayers that we remain committed to taking measures so that our citizens are free from harassment of any kind" - FM in her budget speech on 01.02.2020.

But what is the ground reality? Let us look into some of the alleged harassments faced by the genuine taxpayers -

1.Interest liability for delayed payment of tax.

The GST Council itself has taken cognizance of the bizarre fact that the GST portal is not in sync with the GST law and does not allow a taxpayer to file his return without payment of full tax liability, even though the statute did not bar it. So, the Council was magnanimous in recommending an amendment to Section 50 of the Act to provide that interest would be liable to be paid only on the net tax liability (Total GST liability minus ITC available) in case of delayed payment / delayed filing of returns. Accepting this recommendation, the Government has amended the Act and the President of India has assented the amendment on 01.08.2019 vide Finance (No.2) Act, 2019. But, this amendment has not yet been notified yet for whatever reasons.

When the Government can bring in so many retrospective amendment to the detriment of taxpayers (barring transitional credit of CESSes, restriction in refund entitlements, etc). why can't the above trade friendly amendment, which was necessitated due to lack of sync with GST portal and law, should not be made retrospective?

Adding salt to the wound is the recent communication from the Member, CBIC to haunt the taxpayers with huge demands of interest.

2. Transitional credit woes.

Everybody would agree that the GST law is so complex, which cannot be complained about. True is the case with the transitional credit also. Though the time limit for filing TRAN 1 return was extended several times, thousands of taxpayers could not either file the return within the due date or committed various errors in filing it. The Government has opened a window for allowing transitional credit up to 31.03.2020 but its scope is limited only to those taxpayers who could not file the returns due to technical glitches, which has to be proved. There are several cases, where the returns could not be filed not due to any technical glitches, but due to various reasons such as lack of knowledge, difficulty in understanding, filing with mistakes, etc.

It is time and again held that the benefit of credit is a vested right and the same cannot be curtailed by procedural barricades. Why does not the Government allow all taxpayers to reclaim missed out transitional credit, without any restrictions, subject, of course, to detailed scrutiny by the department about its entitlement?

3. Cancellation of registrations.

In many cases, the GST registrations have been cancelled for non-filing of returns. Even after such assessees have filed their returns along with payment of tax, interest and late fee, due to various technical glitches, their registrations are not being restored. The automated process in this regard is bereft of any human element and the officers are often helpless. How can a taxpayer survive without registration?

4. Invoice matching under Rule 36 (4)

The restrictions on availment of unmatched credit is a nightmare. Let the Finance Minister and her top bureaucrats spend time with a big taxpayer and understand how difficult it is to comply with this requirement.

5. Credit blocking.

The newly introduced Rule 86A is being implemented across the country in a cavalier fashion. Though the scope of the rule is limited in its application only for fraudulent credit availment, in all cases of mismatch of credit, ITC is being blocked by the field officers causing serious jeopardy in business. Without even trying to find out the reasons for mismatch, credits are being blocked.

Conclusion.

It is true that the scale of evasion, in the form of fake invoices is alarming and a cause of concern. It is not clear whether it is a new phenomenon under GST, or an age-old practice, which is coming to the fore now only, due to adoption of technology. There is no second thought that the Government should spare no efforts to go after such unscrupulous elements. But in the process, scores of genuine taxpayers are made to suffer.

So, the need of the hour is not any rhetoric like Taxpayer's Charter, Wealth creators would be protected, et all, but real action by the Government to protect the interest of genuine taxpayers.

[The views expressed are strictly personal.]