JUNE 02, 2021

By Vijay Kumar

I can't breathe

CIVIS: Sir, I can't breathe.

PRINCEPS: So, what?

CIVIS: Sir, I can't really breathe.

PRINCEPS: If you really can't breathe you can't say "I can't breathe" So, it means you are able to breathe. This is perjury. You are lying; we can initiate action against you.

CIVIS: Sir, I can't breathe.

PRINCEPS: Again, the same thing; you are able to talk and you say you can't breathe. What is your problem? What do you want?

CIVIS: Sir, I can't breathe; I want oxygen.

PRINCEPS: There is plenty of oxygen in the air; go and breathe.

CIVIS: I can't breathe from air; I need an oxygen concentrator.

PRINCEPS: Alright, go and buy one.

CIVIS: I can't breathe; I need an oxygen concentrator and it is not available in the country.

PRINCEPS: Alright, why don't you import one?

CIVIS: Sir, I can't breathe; I want oxygen. And you want to collect IGST on that oxygen concentrator, which my nephew has kindly donated to me.

PRINCEPS: If your nephew can donate a concentrator and can spend money on sending it to India, what is your problem in paying GST?

CIVIS: Sir, I can't breathe; I need an oxygen concentrator. And it is unfair for you to charge GST.

PRINCEPS: When you can import oxygen, can't you pay a little GST? After all, the country has to run on taxes.

CIVIS: Sir, I can't breathe; I need an oxygen concentrator. Can't the country do without that little GST from me?

PRINCEPS: Gentleman, you don't understand; it is a very complicated system; if GST is not levied, there will be distortion in the taxation; the manufacturer will lose Input Tax Credit and the price of oxygen will go up and there will be losses all around. Further the States get 70% of the GST collected and if it is waived, they will be in great financial distress. In view of the difficult situations, the government is benign and allowed you to take that oxygen with a small GST. Can't you pay a little to the country before you start breathing from the damned concentrator or whatever?

CIVIS: Sir, I can't breathe; I want oxygen. And I am not very keen to listen to your lecture on the benefits of GST. Tell me, can I breathe without paying GST?

PRINCEPS: My dear friend, you don't understand taxation or economics; it is not that easy. Anyway, the Central Government by itself cannot exempt your oxygen concentrator.

CIVIS: Sir, I can't breathe; I need an oxygen concentrator. And you say the Central Government cannot waive the tax. But pray, who can do it?

PRINCEPS: That's a good question. We have a GST Council and they will have to do it.

CIVIS: Sir, I can't breathe; I need an oxygen concentrator. Why can't you ask the GST Council to give me tax free oxygen concentrate?

PRINCEPS: Yes, we will do it; we will place this before the GST Council soon.

After ten days……

CIVIS: Sir, I can't breathe; I need an oxygen concentrator. Has the GST Council agreed to give me oxygen?

PRINCEPS: Yes, the good news is that there was a detailed discussion on your problem and the Council has decided to refer the matter to a Group of Ministers.

CIVIS: Sir, I can't breathe; I need an oxygen concentrator. When will the GST Council consider my request?

PRINCEPS: Wait, have patience, the Committee will meet soon and submit its report and then the GST Council will take a decision and the government will issue notifications.

CIVIS: Sir, I can't breathe; I need an oxygen concentrator.

My Lords, I can't breathe

An 85 years old man approached the Delhi High Court against the imposition of IGST on the import of the oxygen concentrator which has been gifted to him by his nephew. The petitioner, asserted that the imposition of tax is discriminatory, unfair, and unreasonable and that it impinges upon his right to life and health.

The High Court started its judgement 2021-TIOL-1168-HC-DEL-CUS with the words,

This is a George Floyd moment for the citizens of this country. The refrain is "I can't breathe", albeit, in a somewhat different context and setting; although in circumstances, some would say, vastly more horrifying and ghastlier.

The High Court had in an earlier hearing - 2021-TIOL-1045-HC-DEL-CUS suggested that since the government has gone this far, it could move further, and extend the exemption, to even individuals, to enable them to obtain imported oxygen concentrators by way of a gift, albeit, without having to pay IGST.

But, the High Court noted,

However, our attempt at nudging the State to take, what we thought was a reasonable stand, [and we dare say, a morally right position] has come a cropper.

The High Court further observed,

The absence of adequate medical resources forced persons infected with coronavirus, their relatives and friends, to fend for themselves and thus, find necessary means for survival. The fact that enough beds were not available in hospitals which, understandably, were required for critically patients, forced other patients to look for sources for supply which provide a viable alternative to LMO. Oxygen concentrators appeared to be that alternative. It is in this context that one would have to take judicial notice of the fact that since the production and supply of the oxygen concentrators did not commensurate with its demand, people looked for resources beyond our borders for supply of oxygen concentrators.

The petitioner, who is an 85-year-old man [and has a spouse who is a cancer survivor], was put in a similar predicament once he tested positive for coronavirus on 21.04.2021.

Quashing the IGST on imported oxygen concentrator, the High Court observed,

It is trite to state that if one aspires for a civilized society, then those who are obligated by law should pay their taxes. Likewise, the State should relent, or at least lessen the burden of exactions which take the form of taxes, duties, rates and cess, in the very least, in times of war, famine, floods, epidemics and pandemics since such an approach allows a person to live a life of dignity which is, a facet of Article 21 of the Constitution.

Accordingly, we hold that imposition of IGST on oxygen concentrators which are imported by individuals and are received by them as gifts [i.e. free of cost] for personal use, is unconstitutional.

The State was certainly not the one to keep quiet. The concerned officers took a conscientious decision to appeal to the Supreme Court where they submitted that the judgment of the High Court trenches upon a pure issue of policy; and that the exemption which has been granted in respect of the concentrators which are imported by the State or its agencies falls in a clearly distinct classification.

Attorney General for India submitted that on 28 May 2021, at the Forty-Third meeting of the GST Council, a decision was taken to constitute a Group of Ministers to scrutinize the need for "further relief to Covid-19 related individual items immediately. The Group of Ministers is to submit its report by 8 June 2021.

The Supreme Court in its order yesterday 2021-TIOL-185-SC-CUS observed that arguable questions are raised. And ordered, "Till the next date of listing, there shall be a stay of the operation of the impugned judgment and order of the High Court dated 21 May 2021".

Incidentally, in the High Court Revenue had taken a plea that the issue should be best dealt with by the GST Council. The High Court observed that exemption from IGST can be granted by the Government under Section 25 of the Customs Act. The Court held, "Therefore, this argument advanced on behalf of the State cannot be accepted, as, in the past, it has issued notifications by relying upon the powers conferred upon it under Section 25 of the Customs Act."

Does anybody know who can grant that exemption?

In Council

The Press Release issued by the government after the GST Council Meeting stated,

it was decided to constitute a Group of Ministers (GoM) to go into the need for further relief to COVID-19 related individual items immediately. The GOM shall give its report by 08.06.2021.

In pursuance of this decision of the GST Council in its 43rd meeting on 28 May 2021, a Group of Ministers (GOM) has been constituted to examine the issue of GST concessions/ exemption to COVID relief material.

The GoM, which consists of a Chief Minister and seven States Finance Ministers shall examine the need for GST concession/exemption and make recommendations. The GoM shall submit its recommendations to the Council latest by 8 June. 2021, when there will be another meeting of the Council.

In an interview to a leading newspaper, the Hon'ble Finance Minister clarified,

The GST Council consists of states and the Centre. The chairman happens to be the finance minister of the country. The voting rights of the Centre and the states are all agreed on. We are not a collection of people divided into two groups. We are not adversaries. That approach worries me. In 2019, when I took charge, in the first few meetings I was constantly reminded that the spirit of every decision here is consensus and that is what I am striving to keep. We should be able to have open and free discussions. There was a discussion on zero rates and we heard both voices. A decision on zero rating is not within the Council's hands. The Council can decide, but it requires amendment to the law. The states will have to pass ordinances before their assemblies meet. Therefore, some ministers like (West Bengal FM) Dr Amit Mitra suggested that, instead of that, we keep it as 0.1 or 0.01. Let the group of ministers decide.

To a question whether in the longer-term there is a need to have medicines, concentrators, testing kits, etc, in the lowest bracket, the FM replied,

What we have today under GST is what we imported from the pre-GST era. When we see the pandemic, we all think we need to give with a large heart. On Friday, one of the comments was (on being) heartless. Is the GST Council heartless? I am part of it today, somebody else was there earlier. Lifesaving drugs were required even then (before Covid), were they (the members) heartless? When you sit there (in the Council), you are sitting there representing your people. The rates today are what I have inherited based on the decisions of the Council (to go for revenue-neutral rates). If you want a change, we will discuss. That is the only way.

It is so heartening to know that everybody is genuinely concerned,

but,

I can't breathe

Until Next Week.