MARCH 11, 2020

By Vijay Kumar

A recent news headline read as:

Infosys required to submit a plan for removing GSTN portal

glitches

My first understanding was that the GSTN Portal is to be removed. That would have been the best solution, but it seems what is going to be removed is "glitches" and not the portal itself.

It is widely reported that Infosys Chief Nandan Nilekani has been asked to make a presentation before the GST Council on 14th of this month. Hopefully Mr. Nilekani will present solutions which have been eluding us for the past 32 months.

It may be of interest to see how Infosys views this problem. These are some excerpts from material published by Infosys, available in the public domain:

Results for the Quarter ended September 30, 2017 - IFRS - USD

Infosys is very proud to be associated with the prestigious GST project which is the largest tax project of its kind in the world. The system has already demonstrated success across several parameters - till date 37 crore invoices have been uploaded on the system while the system is designed to handle 300 to 320 crore invoices every month. 70 lakh tax payers have successfully migrated to the new system and the country has recorded 25 lakh new registered taxpayers. Central and state level tax regimes have been integrated with all 29 States and 7 Union Territories successfully migrating onto this system. In addition, the system is able to manage 1 Lakh active users and saw peak loads during the last two days of filing, with 50% of the filings done in that timeframe and 70% of the collection achieved with just 25% of server utilization, demonstrating the system's ability to manage scale.

Given the complex nature of the project and rapid change management, there have been several stakeholder concerns that have also been raised. Some of our finest engineers are supporting the GSTN team as they work towards resolving these and serving all stakeholders.

PRESS CALL Q4 FY 2018 RESULTS April 13, 2018

On GST, in the last two quarters, we have seen successful filing of all the returns, there are hardly any issues. We had seen that we had more than 50% of the filings gets filed in the last two days of the month and the system has been able to handle it without any glitch. So things are stable and we are working on subsequent phases of the GST.

India is a very small part of our business. There is Finacle, which has a dominant market share in the banking sector in India. But outside Finacle, on the services side, it is a very small part. Historically, we have focused a lot on the government businesses and to some extent on the private business. But in the last year, strategically we decided to limit our focus on government business. We would only do those businesses which we believe is very strategic and of importance such as GST, but otherwise we increased our focus more on the private players.

Open Networking Conference Asia 2019 Management Journal

Infosys and Nilekani created the Goods and Services Tax Network (GSTN), a central platform consolidating taxes and information from every state in India onto one central platform. This platform today handles all of India's indirect taxes for 11 million businesses. It is able to handle and organize data at the individual level for taxpayers, and at the invoice level for businesses.

But the victims seem to have a different opinion. See some news reports:

The Economic Times - Nov 02, 2017

Infosys, for long the face of India's software sector, finds its management of the GST information technology backbone under scrutiny at the highest levels of the government.

Three top government functionaries expressed strong disappointment with the company over frequent glitches that have beset the Goods and Services Tax Network (GSTN), leading to extension of deadlines for returns several times.

"It has been a disappointing experience," said one of the officials, adding that the software provider is now expected to improve service delivery.

Several taxpayers including trade bodies have said the system is prone to slowing down to a crawl, generating error messages and crashing. "This has led to restlessness among the businessmen… A small businessman can't spend so much time on filing of returns," said a trader.

Business Today - November 03 2017

Facing criticism over glitches in the software it developed for the GST Network, Infosys Ltd has deployed more IT experts and engineers in states to steady the Goods and Services Tax return filing portal, a government official said today.

NDTV - October 29, 2017

Goods and Services Tax Network vendor and software major Infosys would expand its team to fix bugs in the GSTN, said Group of Ministers (GoM) Chairman Sushil Kumar Modi on Saturday.

"The IT services major (Infosys) told us that it would expand its 100-member team, which runs the GSTN, to fix the bugs or technical glitches in it," Modi, who is the Bihar Finance Minister, told reporters after the third meeting of the GoM here.

The software major has already fixed 18 of the 27 glitches and made them operational though more bugs were cropping up due to changes the GST Council makes after it meets every time to smoothen the new tax regime.

Financial Express - May 17, 2018

The Goods and Services Tax Network (GSTN) - which handles a mammoth taxpayer base (over 1 core at last count) and over 50 crore invoices every month - was bound to have some "teething problems", but the system has "stabilised" and has been working without any major glitches since December, its chairman Ajay Bhushan Pandey said on Wednesday.

The Hindu Business Line - January 30, 2020

With complaints rising against the IT system of Goods & Service Tax (GST), the Finance Ministry has summoned Infosys on Friday to seek an explanation. Infosys is the technology service provider for GST.

They will be asked to explain as to why they have not yet resolved the technical issues of the GSTN system despite being informed and requested to mend these glitches for last 4-5 months.

There have been repeated complaints from businesses and industry over the technical glitches on the GSTN portal while filing returns. The problems faced by tax payers include GSTN portal slowdown, login error or auto logout, non-delivery of OTP or delayed OTP, network error or Gateway timeout, OTP issues on email or on a few domains, open file error, GSTR-9C document not uploading, etc.

The Wire - November 13 2017

Traders' body CAIT (Confederation of All India Traders), which has blamed Infosys for glitches in the GST Network, on Sunday said if no action is taken against the company, it will have no other option left but to take "shelter of the court of law".

In a statement, CAIT said the GST portal has brought much harassment and mental agony to traders by its non-smooth functioning and has proved a major roadblock in success of a good taxation system like GST. The traders body said that "it has failed to understand why no action is being taken against Infosys and other companies who have taken the contract of GST portal at a huge cost of about Rs 1,400 crore".

Infosys has already denied the allegations as "completely inaccurate".

CAIT said that against its demand of a CBI enquiry, Infosys has come out with "lame excuses" and the stereotypical reply that the portal is functioning well.

"…if no immediate action is taken against Infosys, it will have no other alternative left but to take shelter of the Court of Law to intervene in the matter and while identifying the culprits award them suitable punishment for non-performance and wastage of public money. No one will be allowed to run away with public money," CAIT said.

The Sales Tax Bar Association took the matter to the Delhi High Court. - 2020-TIOL-271-HC-DEL-GST

In the Delhi High Court

The petitioner association, aggrieved by several glitches in the GSTN portal approached the Delhi High Court within a couple of months of launching the GST. The High Court so far had 23 hearings and took the role of a saviour to the taxpayers. What happened in the Court on some of those 23 dates of hearing, is given below.

15.05.2018 - 2018-TIOL-2790-HC-DEL-GST

The Counsel for the petitioner with reference to the status report dated 07.05.2018 filed by the Goods and Services Tax Network (GSTN) submitted that the grievance mechanism set up in terms of  Circular No. 39/13/2018-GST  dated 03.04.2018 is ineffective for the normal reply given is that the problem has been resolved though in fact the problem persists. The reply furnished should be effective and must disclose the method and manner in which the issue has been resolved. Some specific instances with reference to typical reply have been highlighted.

Second submission made by the petitioner relates to non credit/payments of electronic cash ledger.

Third issue is that Central and State Acts permit rectification of mistakes. However, GSTN portal does not permit rectification of a return already filed.

Counsel for the petitioner states that there is failure to issue of refunds including provisional refund and statutory time limits are not being adhered to by authorities. He says that petitioner will be filing a separate wit petition on the said aspects.

The Court directed,

The respondents would file response to the said assertions and allegations, in the form of status report. Prima facie we find merit in the submission that reply under the grievance mechanism should specifically deal with the issue raised and indicate the manner in which the same has been resolved and addressed.

Order dated 13.12.2018

The counsel for the petitioners pointed out that apart from the routine rectifications, other corrections such as inadvertent reflection of a mandatory GST registration form, as voluntary or vice versa, which can lead to serious consequences cannot be rectified in the existing format in the GST portal. The ASG submitted that on this aspect, instructions would have to be obtained.

Order dated 18.09.2019 - 2019-TIOL-2197-HC-DEL-GST

The counsel for the petitioner has highlighted several grievances with regard to the functioning of the GSTN system. Some of the issues highlighted relates to the technical and procedural aspects. The respondents must resolve these issues after understanding the difficulties that they are posing to the users.

The grievance of the petitioner is that there is no effective IT Grievance Redressal Mechanism in place, and whenever the assessee /members of the petitioner's association have sought to address their grievances, they were met with disappointment.

Order dated 23.01.2020 - 2020-TIOL-271-HC-DEL-GST

The counsel for the petitioner has pointed that this Court, in its order dated 18.09.2019 =  2019-TIOL-2197-HC-DEL-GST, had directed the respondents to publish the e-mail Ids and telephone numbers of the Nodal Officers widely, including on the GST Website; Delhi GST Website and CBIC Website. He points out that though the said information has been made available, but it has been placed in the "news and updates" section. The result is that the notification of the particulars of the nodal officers moves into archive and is not visible on the current page of the "news and updates" section.

We direct that the e-mail Ids and telephone numbers of the Nodal Officers should be provided on the Home Page, by providing an appropriate prominent link, with appropriate heading.

Counsel submits that attempts to upload the annual returns for the year 2017-18 on the portal have been unsuccessful. In this regard, he has tendered in Court the screenshots in relation to several attempts made by different assessees. Copies have been supplied to counsel for the respondents. From the same, it appears that the GST Network displays a window stating  "There seems to be an inadvertent problem while communicating with GST System. This may be on account of one of the following:.......... "

He submits that in respect of the assessees whose annual returns for the financial year 2017-18 are not filed by 31.01.2020, adverse consequences will follow, for no fault of theirs.

On the other hand, counsel for the respondents, including the counsel for the GSTN states that they have no definite instructions in this regard. However, over two lakh annual returns have been filed in respect of the financial year 2017-18.

It appears from the registrations granted by the respondents, that there should be in excess of 11 lakh returns filed. The respondents are directed to keep a vigil to ensure that the annual returns in GSTR 9C Form, which are filed by the assessees for the financial year 2017- 18 get uploaded, and the uploading is not unsuccessful for any shortcoming of the respondents.

The counsel for the petitioner also submits that in respect of the financial year 2018-19, the GSTR 9, GSTR 9A and GSTR 9C Form have still not been uploaded and, consequently, even though the last date of filing of the same was 31.12.2019, the assessees have not been able to upload the Form. The date of filing of the same now stands extended till 31.03.2020.

We fail to appreciate as to why the respondents should not make Forms available and operationalise them well in advance, so that the assessees are able to file their returns in Form GSTR 9, GSTR 9A and GSTR 9C promptly, at the earliest. Financial year, in respect of each year, ends on 31st March and it should be possible for the assessees to upload their Forms soon thereafter. They should not have to wait for filing of the returns in the prescribed forms till the last date. In the present case, it appears that the respondents have been revising the Forms and in respect of the financial year 2018-19, the requisite forms have not yet been operationalised. Therefore, even those assessees, who could have, and may have attempted to upload their annual returns in the prescribed Forms for the financial year 2018-19, have been prevented from doing so. This situation is completely unsatisfactory.

The counsel for the respondents have sought to justify the non-operationalisation of the requisite return form for the financial year 2018-19, on the ground that they have extended the last date for filing of the Annual Return for the financial year 2017-18 up to 31.01.2020, and so as to prevent confusion in the mind of the assessees, they would operationalise forms for the financial year 2018-19 from 01.02.2020.

We are not satisfied with this explanation, since it should be possible to upload the returns for both the years 2017-18 and 2018-19 simultaneously.

Lot of the issues arising before us relate to the apparent technical flaws, glitches and limitations in the online portal system evolved by GSTN. On our query, we are informed that Infosys Limited and Tech Mahindra Limited have been entrusted the task of evolving and maintaining the GSTN Network for IT support. With a view to better appreciate the intricacies, and to ensure that the grievances raised by the taxpayers - whose interest the petitioner association represents and our orders are understood and implemented in true perspective, we consider it necessary to have Infosys Limited and Tech Mahindra Limited present before us, to receive their assistance, as and when required.

We, therefore, direct issuance of Court notice to Infosys Limited and Tech Mahindra Limited in the aforesaid context.

So, who is to blame for this Himalayan Blunder?

Three Infosys employees held for promising quicker tax refunds

And if you thought only Government officers were corrupt, read this report, two days ago.

Three employees of information technology major Infosys Ltd, who were attached to the Central Processing Centre (CPC) of the Income Tax department, have been arrested by police in Bengaluru for allegedly offering to speed up a tax refund of Rs 15.89 lakh to an assessee for a "commission" of four per cent. - Indian Express - March 10, 2020.

Until next week