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GST - Age is just a number

JULY 01, 2022

By Vinod Yadav

A new era in the field of Indian indirect taxation system was heralded 5 years ago when Goods and Service Tax (GST), the much touted and the most significant structure of indirect taxation ever - was introduced.

As usual, in some quarters, the timing of launch was questioned while pessimists had premonitions of its utter failure. Gloom mongers emphatically foretold about its doom within a year. But many of them went ahead and compared this unpredictable change in taxation system as Gabbar Singh Tax, coined after the negative and dreaded character, depicted in the 70s Bollywood blockbuster Sholay, who was pitted against the protagonist – Thakur.

To mollify the angst in the minds of ordinary taxpayers, GST was promised as a Good and Simple Tax system with the buzzword 'Ease of doing business'.

However, once the GST juggernaut started rolling on, driven largely on the electronics wheels, it emanated many signals to taxpayers to speculate on its efficacy to them. 'Ease of Business' seemed a misnomer while the actual intent appeared to be Ease of Business for the tax administration!

During the last 5 years of its existence, GST has succeeded to differentiate itself from Gabbar at least on the implementation of -

a. Automated mechanism of indirect taxation which was a far cry a few years back which had lead to widespread evasion of taxation;

b. Never conceived before system of E Invoice to curb fake invoicing issues;

c. Electronic Way Bill system tracking efficiently the movement of goods - end to end.

Pertinent to mention that Malaysia also took a plunge into this venture with India, but failed to emerge from the initial setback in its implementation and eventually withdrew from it, although Malaysia is not as gigantic in area and population and complex demographically as India. In fact, India serves as a role model for the entire world, especially the struggling economies where tax administration is in doldrums.

There is not an iota of Gabbar in the accomplishments.

However, Gabbar appears to have sneaked in from the back door in the garb of given infirmities:

1. Technical glitches every now and then cuts a sorry figure for the ease of business slogan;

2. Too many and too often changes in GST provisions and procedures is indeed punishing for the not so organized entities while it is equally cumbersome for the organized and large set up corporations as well;

3. Seamless flow of ITC suffered jolts when system hitches put a break on it and absurd provisions made it difficult to sail through;

4. The Good and Simple Tax catchphrase is rendered further eclipsed by rampant issue of notices by the department from the multiple GST provisions irrespective of its applicability, leading to avoidable wastage of time and energy. Unless accountability is suitably assigned to the issue of notices, the onslaught is expected to surge further;

5. Given the above and experience with the biased decisions of the quasi-judicial authorities coupled with non-existence of Tribunal makes imminent disputes referred to the higher fora of judiciary which may lead to chaos and protracted litigations.;

6. Conflicting and confusing Advance Rulings continue to create havoc by compounding simple matters in the name of solutions;

7. Enroute confiscation of goods and issue of notices on flimsy grounds without any consideration for practical difficulties and absolutely no inclination to understand the situation or have the demeanor for resolution of issues;

8. The novel concept of the GST Council is yet to make its presence felt positively in some of the vital issues of GST.

To withstand the marauding Gabbar in the Ramgarh (GST ecosystem), the legislative [Thakur] has to focus and optimally utilize Jai & Veeru [overall simplification & redressal mechanism in areas of concern]:

a. More user-friendly compliance system

b. Seamless tax credits throughout the value chain without cascading effects.

c. Simple tax rate

d. One nation, one tax in true spirit. In reality, it is remote in view of issues related to Place of Supply and multiplicity of tax slabs. Now, even States have started deviating from adopting the Central provisions in toto viz. Maharashtra.

e. Petroleum products to be GST net. Largest revenue earner for the Center and the States (more than half of total GST collection) - Petroleum Products are still out of GST makes a mockery of the 'One Nation One Tax' tagline!

f. Making provisions by keeping business needs also in mind, while ensuring a check on evasion.

g. Dispute redressal system has to be in place. Even after 5 years of inception of GST, a Tribunal of GST is still a far cry while a flurry of demands is being issued on a daily basis.

Goodies associated with GST are appealing, but the troubles and tribulations are equally appalling. Based on the status of setting right the shortcomings in Statutes, eradicating technical hiccups and bringing in the direly needed GST Tribunal to set the dispute redressal system robust, it would be concluded if this tax system was really Gabbar Singh Tax or a Good & Simple Tax!

[The author is Lead-GST, Calderys India Refractories Limited, Sadar, Nagpur and the views expressed are strictly personal. The names of the persons/places from the movie Sholay are used purely in jest.]

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