Browsed by
Tag: GST law

No GST on CXO salaries: Government set to clarify

No GST on CXO salaries: Government set to clarify

The government is looking to clarify that goods and services tax (GST) should not be applicable on salaries of chief executives sitting in head offices, two people in the know said.

This comes after the tax department started raising queries on how companies have dealt with this issue. ET had first written on November 14 that some of the top companies headquartered in Pune, Mumbai and New Delhi have started receiving queries from the tax department on cross-charging of CEO and CFO salaries.

According to a person close to the development the Central Board of Excise and Customs (CBEC), is set to clarify that common function like Human Resources should be out of the GST gamut.

“The intention of the GST law was never to tax salary and any other interpretation should be avoided as this would lead to prolonged litigation. Salary cannot be under the GST net and there is an urgent need for a clarification around this,” said Rohit Jain, partner, ELP, a law firm.

The tax department has started questioning top companies and banks if they were passing on some of the common costs like salaries of chief executives to their branch offices.

The department wants companies to proportionately distribute common costs from head office to branch offices and treat this as a supply. Once this is treated as a supply, 10% of it has to be added to the cost and 18% GST could be levied on the total amount.

Industry trackers say that ideally this would be a revenue neutral transaction but still impact the cash flows of the company.

Source: Economic-Times

Ease Your GST Retrun Filing & Invoice with XaTTaX- GST Software 

Source: Business-Standard.
Non-filers of GST returns may face cancellation of registration

Non-filers of GST returns may face cancellation of registration

The Goods & Services Tax (GST) Administration plans to act tough with non-filers of returns and cancel their registration. It has also decided to update the progress made in this regard on a daily basis.

Filing of returns helps tax authorities to estimate the tax liability and find out how much tax has been paid. The problem here is that nearly 20 per cent of assessees do not file their returns, which affects GST collections.

The Central Board of Indirect Taxes & Customs (CBIC) held a meeting with the Principal Chief Commissioner and Commissioner of GST & Customs on November 13. According to sources, PK Dash, Chairman, CBIC, expressed his displeasure in the progress of cancellation of registration of non-filers who have not filed GSTR 3B (showing tax payments) returns for six or more than six return periods and are liable to action under GST law.

“…the task of cancellation of registration of such non-filers of GST returns should be taken on priority basis and should be furnished by November 25, ” a communication sent from the office of the Principal Chief Commissioner of GST & Central Excise, Mumbai to Principal Commissioner/Commissioner posted in its jurisdiction. It has also asked for reports to be sent on a daily basis.

Conditions for cancellation
Section 29 of the Central Goods & Services Tax (CGST) Act prescribes conditions for cancellation of registration and fulfilment of any of these will invite action. These include contravention of the provisions of the Act, a composition scheme assessee not filing returns for three consecutive tax periods, any non-composition assessee not furnished returns for a continuous period of six months, not commencing business within six month from the voluntary registration, and registration obtained by means of fraud, wilful misstatement or suppression of facts. The Act clearly provides that registration will not be cancelled without giving the person an opportunity of being heard.

According to GST Law, a registered person will have to file returns either monthly (normal supplier) or on a quarterly basis (supplier opting for composition scheme). An ISD (Input Service Distributor) will have to file monthly returns showing details of credit distributed during the particular month. A person required to deduct tax (TDS or Tax Deducted at Source) and persons required to collect tax (TCS or Tax Collected at Source) will also have to file monthly returns showing the amount deducted/collected and other specified details. A non-resident taxable person will also have to file returns for the period of activity undertaken.

The law is very clear here that the cancellation of registration will not affect the liability of the person to pay the tax and other dues. Every registered person whose registration is cancelled will pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher.

Source: The-Hindu-Business-Line

Get Your GST Returns Filed Easily and

Our GST software enables you to file your GST returns free of any hassle. Get more details by writing to us at

Government expects Rs 40,000 crore GST shortfall

Government expects Rs 40,000 crore GST shortfall

The government is expecting a shortfall of around Rs 40,000 crore in the GST collections over what has been budgeted for 2019-20. This could put pressure on the compensation that states are eligible for in case the tax growth falls below 14% during the year.

A state finance minister said the Centre had informed the GST Council, which met in Goa on Friday, about the expected shortfall at a time when economic growth has slowed down. Most states were, however, optimistic that the government will find a way to meet the compensation requirements, otherwise they may be forced to borrow from the market.

Economic growth has slowed in the country due to a string of factors and latest data showed that GDP growth slumped to a six-year low of 5% in the April-June quarter, hurting prospects for higher revenues.

As part of the GST bargain, the Centre had agreed to compensate states for five years, if the annual increase in revenues was less than 14%. Under the GST law, payment of compensation only flows from a fund where the cess is collected. The Centre has estimated a collection of Rs 1 lakh crore cess on sin and luxury goods in 2019-20 or about Rs 8,000 crore a month. The collection in August was Rs 7,272 crore, triggering possibility of a lower than budgeted collection.

In the first four months of the year, the Centre has released Rs 45,784 crore as compensation to states. The states are also demanding that the compensation period be extended by another three years. The government has said it expects revenues to rebound when growth picks up in the coming quarters and is also hopeful of robust GST collection.

It is taking measures to plug loopholes and stamp out fraud claims.

The GST Council, which met after the historic cut in corporate tax rates, complimented the finance minister Nirmala Sitharaman on the bold move but state FMs are learnt to have expressed their concern over decline in their share.

Source: Times-Of-India

XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.

  • Automate Invoicing and get Paid Faster
  • Integration with all popular accounting software
  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

Get Our GST Software DEMO and E-WAY BILL DEMO for FREE

GST shortfall may turn into next worry for the Centre

GST shortfall may turn into next worry for the Centre

The sluggish growth in goods and services tax (GST) revenue receipts, unless reversed quickly, could poke a ₹40,000 crore hole in central government finances by the end of this fiscal, analysts warned on Wednesday, even as a private survey showed India’s services sector growth lost steam in August from a month ago.

An analysis of GST revenue trend Credit Suisse shared on Wednesday said growth in collections in the first five months of the fiscal has been 6.4%, well below the 10% estimated for the year. If this pace is maintained for the full year, the shortfall could be ₹40,000 crore, all of which may be borne by the central government, considering that states have been guaranteed 14% annual revenue growth under GST laws, the analysis said. The Centre compensates states for their revenue shortfall using collections from a cess on GST imposed on products such as automobiles. GST receipts which had touched ₹1.13 trillion in April could not sustain that growth subsequently.

“The rules are not clear to us, but if compensation needs exceed (the) cess collected, the extra funds would go out from general fiscal expenses. While this is just a Centre-state allocation issue, it can have a negative growth impact,” said the Credit Suisse analysis.

Finance minister Nirmala Sitharaman, who has already announced several steps to improve business confidence and boost growth, on Wednesday consulted infrastructure sector representatives on ways to stimulate growth. The tight fiscal position, however, reduces the government’s headroom for offering fresh sops.

The cooling down of the economy could hurt the central government’s fiscal health, a worry accentuated by fresh data on Wednesday. The services sector, which accounts for more than half of India’s $2.7 trillion economy, lost momentum in August, according to IHS Markit, a market information supplier. The IHS Markit India services business activity index, which tracks 400 businesses across various industries including transport, information, communication, finance, insurance and real estate, retreated from 53.8 in July to 52.4 in August, signalling a slower rate of output growth, the company said in a statement. A reading above 50 indicates expansion.

The survey, which collects data from businesses in the second half of every month, pointed out that all sectors it covered, except realty and business services, showed sustained growth. IHS Markit’s composite PMI output index showed expansion for the 18th month in a row, but at 52.6 in August, the expansion was slower compared to 53.9 in July.

gst software

“The weaker PMI readings for India’s service sector match the trend noted in the manufacturing industry, bringing unwelcome news of a cooling economy halfway through the second quarter of FY20,” said Pollyanna De Lima, principal economist at IHS Markit. Earlier in the week, IHS Markit survey showed India’s manufacturing output in August grew at the slowest pace in 15 months.

News of slower growth in services sector follows data earlier this week showing eight infrastructure industries slowed to a 2.1% expansion in July, down from a 7.3% growth in the year-ago period. Asia’s third-largest economy expanded 5% in the June quarter, the slowest pace in six years.

Credit Suisse said states received ₹6.5 trillion in GST revenue in FY19, including central government compensation, which, with a 14% growth, would touch ₹7.4 trillion in FY20. If this increase of ₹90,000 crore is not seen in aggregate GST collection, the Centre’s GST take would see a decline in FY20, Credit Suisse said.

Reuters reported, citing unnamed government officials and advisers, that the government may miss its 3.3% fiscal deficit target for the current financial year, despite receiving an additional dividend from the RBI. The gap between receipts and spending, which is met through borrowing, could go up to 3.5% of GDP, the report said.

Source: Live-Mint

XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.

  • Automate Invoicing and get Paid Faster
  • Integration with all popular accounting software
  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

Get Our GST Software DEMO and E-WAY BILL DEMO for FREE

Advance ruling: A useful tool for achieving tax certainty

Advance ruling: A useful tool for achieving tax certainty

Advance ruling can be obtained in respect of registration requirement, classification, determination of time and value of supply, admissibility of input tax credit and determination of the tax liability. Taxpayers need to exercise this option with caution, compared with other modes of obtaining certainty and dispute resolution, in view of the recent trend of adverse rulings.

India embarked on its journey of ‘One Nation One Tax’ with the introduction of the goods and services tax (GST) in July 2017. The landmark legislation, which has completed two years, is the biggest tax reform in India after independence. The GST Act subsumed erstwhile indirect taxes such as excise duty, value-added tax (VAT), service tax, etc.

In order to ensure uniformity in central and state GST laws, the GST Act promulgated setting up of a GST Council to recommend changes in the law for consistent implementation by the central and the state governments.

Being a new legislation, the GST law posed challenges for both the taxpayers as well as the tax practitioners in the form of interpretation of law, classification of goods and services, admissibility of input tax credit, applicability of exemption notification, etc.

In order to ensure faster disposal of these issues, the GST law borrowed one of the aspects from the erstwhile indirect tax legislation, ie the mechanism of obtaining an advance ruling. An advance ruling helps a taxpayer to obtain the required clarity on taxability of a transaction in advance thereby enabling it to avoid future disputes.

Under the GST law, an advance ruling can be obtained with respect to registration requirement, classification, determination of time and value of supply, admissibility of input tax credit of tax paid and determination of the liability to pay tax on any goods or services or both.

The Authority for Advance Ruling (AAR) has been constituted in each state/Union territory under the GST regime. An applicant seeking an advance ruling is required to file an application before the state/Union territory AAR providing required details such as the facts of the case, issues on which advance ruling is sought along with the contentions in relation thereto. The AAR is required to give its ruling within 90 days of the receipt of the application.

There is also an appellate forum created in each state in the form of Appellate Authority for Advance Ruling (AAAR). Any applicant aggrieved by the AAR’s ruling can appeal before the AAAR. The AAAR is also required to pass its order within a period of 90 days of the filing of the appeal.

The advance ruling process has gained considerable traction under GST with close to 1,000 applications made to the advance ruling authorities by taxpayers. In a short span of two years, the AAR’s have passed rulings on various critical tax issues like tax treatment on transfer of business as a ‘going concern’, provision of back office support services by Indian entity to overseas entity, treatment of interest free security deposits, etc. One should note that while the ruling passed by the AAR and AAAR are binding only on the applicant and the jurisdictional authorities, the same carries persuasive value for others.

Thus, it can be seen that the aim of the advance rulings framework is to provide certainty and clarity to the taxpayer with respect to its obligations under the GST Act in a time-bound manner.

However, this does not mean that advance rulings are free from imperfection. One key limitation of the AAR/AAAR is that there have been numerous instances of divergent rulings being passed by different state AARs on issues such as taxability of cross charges for common administrative and IT support services by employees of one unit to other units, differential tax rates in case of solar energy sector etc. Further, there have been instances where decisions of the authorities are contrary to the position settled under the erstwhile indirect tax regime.

The GST Council, in order to address these limitation, had recommended formation of a centralized appellate authority. The Union cabinet has recently approved the formation of a national bench of the GST Appellate Tribunal (GSTAT) at New Delhi to address tax disputes due to contradictory rulings. However, the procedural guidelines of the GSTAT are yet to be issued. Thus, one may reasonably infer that the government is actively trying to address the current limitation in the existing advance ruling mechanism.

To conclude, a taxpayer should tread the path of obtaining an advance ruling with caution. The taxpayer should not only be well versed with the available jurisprudence under the erstwhile indirect tax regime but also be cognizant of the rulings passed by other AAR/AAAR, if any, on similar fact pattern. Further, it has generally been observed that cases where taxpayers have maintained appropriate documentation to substantiate their claims stand a better chance of obtaining a favourable ruling from the AAR.

While AAR/AAAR is a good mechanism for the tax payers to address their concerns, the recent trend of adverse / different rulings should be kept in mind before a tax payer opts for such a ruling. It is anticipated that once the GSTAT is fully operational, some of these concerns would get addressed. Till then, tax payers should act with caution and take this dispute resolution mechanism with a pinch of salt.

XaTTaX: Cloud and On-Premises Based GST Filing Software For India

Source: LiveMint
UT ranks first in GST return compliance

UT ranks first in GST return compliance

In a major achievement, the UT Excise and the Taxation Department has topped the country in the GST 3B monthly tax return compliance rating of 92.44 per cent among all states and UTs in the first four months of the current financial year. This has been revealed in the latest report of the GST collection and compliance. In this category, Punjab (87.72 per cent) stood second and Gujarat (86.35 per cent) third.

Sources said the city had around 18,000 registered dealers and it was ensured that maximum dealers filed the returns under the GST law. The department has recently carried out an intensive physical checking of the dealers who had not been filing their returns. After the checking, the GST registration of over 806 dealers, who failed to file return for more than six months, was cancelled. Notices have been issued to other dealers who did not file their returns.

Sources said the checking was started on the direction of Excise and Taxation Commissioner Mandeep Singh Brar, who now directed the department officials to achieve the target of up to 95 per cent GST return compliance.
The steps have been taken to ensure there was no tax evasion at the dealers’ end.

The department has collected Rs 466.94 crore as tax in the last four months with a hike of over 12 per cent against the corresponding period last year. RK Chaudhary, Assistant Excise and Taxation Commissioner, said the department also carried out a survey in various markets and directed dealers to issue proper bills to consumers.

Source: Tribune-India

Ease Your GST Filing & Invoice with XaTTaX GST Software

IT companies challenge government’s plan to brand BPOs as brokers & GST in court 

IT companies challenge government’s plan to brand BPOs as brokers & GST in court 

Are outsourcing units and BPOs merely intermediaries and brokers or are they exporters? About a week after the government released directions that Information Technology (IT) and Information Technology enabled Services (ITES) companies would attract 18 per cent goods and services tax (GST) for several exporters, some intermediaries have challenged the constitutional validity of such a regulation. 

Several back offices of BPOs and KPOs, already fighting the margin pressure, will have to pay 18 per cent GST after a government circular on July 18 said certain services shouldn’t be categorised as exports. As per the earlier tax regime, these companies did not attract any tax and up until 2018, even under GST, these companies would even get refunds for the input tax credits. 

However, following an authority of advance rulings (AAR) directive last December, indirect tax department had started issuing notices to several IT/ITES companies demanding up 18 per cent GST on money received on convertible foreign exchange. 

“The recent circular on intermediaries means that several back end services rendered to foreign service recipients would attract 18 per cent GST due to the place of provision of such services. We have challenged the constitutional validity of the place of provisions for intermediaries on various grounds in Gujarat High Court and the arguments would cover relief for different players including the services mentioned in the circular,” said Abhishek A Rastogi, a partner at Khaitan & Co. 

The government circular goes into length in explaining how GST should be levied on certain IT/ITES services supplied outside India as these are not exports but merely broking services. The indirect tax department had started issuing preliminary notices to captive units of multinationals and Indian companies exporting offshore support services. 

Industry trackers said the question now was whether BPOs are commission agents and brokers. If so, they would not be considered exporters and their revenues would be subject to taxes as only exports are exempted from domestic taxes and receive certain benefits. So, services provided by Indian entities to foreign companies would not be treated as exports and hence taxable in India. 

“Many BPOs and KPOs are already moving to Philippines in last few years and such a hit on the margins is set to push many more there,” said a senior tax official with an Indian IT firm. 

India currently boasts of an outsourcing market of about $50 billion a year. The government stand is set to impact the $13 bn outsourcing industry that is already facing pressure on margins, said a person in the know. 

“While the circular is not binding on the taxpayer, it’s binding on the tax officials; which means that many companies will stop getting refunds,” said a person advising one of the IT companies on the issue. 

Earlier, industry body Assocham and an IT lobby group had raised concerns around the future tax liability due to the government’s stand. Experts said under the earlier indirect tax regime, an intermediary was mainly a broker or a commission agent. However, any company supplying support services to a multinational was not treated as an intermediary. 

In the past, companies and tax experts had reached out to the government on the subject. They wanted the government to look at amending the law to treat any service provided by Indian companies as zero-rated or non-taxable if the customers were based overseas

Source: Economic-Times

XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.

  • Automate Invoicing and get Paid Faster
  • Integration with all popular accounting software
  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

Get Our GST Software DEMO and E-WAY BILL DEMO for FREE

Firms may get to raise prices after transferring GST cuts

Firms may get to raise prices after transferring GST cuts

Companies are free to raise prices of products and services as per their business cycle without fear of getting caught in the anti-profiteering provision in the Goods and Services Tax (GST) law once they have passed on the benefit of tax rate cuts to consumers, said a government official.

The clarification from the official, who has knowledge of how the National Anti-profiteering Authority (NAA) and its investigative arm work, comes at a time when ambiguity in the law and the recent extension of the profiteering watchdog’s tenure as well as an increase in penalty for violation have led to concerns that the pricing liberty of businesses stands curtailed.

Analysts said that due to lack of guidelines on how to implement anti-profiteering provisions in the Central GST Act, companies are not sure how long they are expected to maintain a price after they reduce price to pass on the benefit of a tax cut to consumers. This is also worrisome for companies that have faced charges of profiteering for specific periods in the past. The law is silent on how long companies have to maintain the reduced price after a tax rate cut. This open ended provision, in effect, results in price administration, they said. Under GST law, not passing on the benefits of tax rate reduction or availability of input tax credits to consumers by businesses and merchants amounts to profiteering.

The liberty to increase price as per the business cycle will come as a relief to companies, especially large fast-moving consumer goods (FMCG) manufacturers that have faced ‘profiteering’ charges under GST law.

“Whenever there is a reduction in GST rate, businesses have to pass on the benefit to consumers immediately. Thereafter, companies are free to follow their cycle of price adjustments as they deem fit in line with market forces. There is no lock-in period for maintaining reduced prices,” said the first official cited above, who spoke on condition of anonymity. If a company has increased prices of products in a particular month in the past, that is a valid explanation for a price increase subsequent to reducing prices in line with a tax rate cut. Businesses, however, should be in a position to defend themselves in case of a complaint, said the person.

Experts said it may not be a very easy task for businesses to defend price increases considering the complexities in the overall business environment and pricing. They said past price trends may show movement both ways and may not be sufficient to justify a price increase in case of a profiteering investigation.

“Businesses may at times want to increase margins on a better selling product to offset losses in other products. There is still an ambiguity on whether that increase in margin for some products would be acceptable by the authorities as a justification for a price increase. Separately, industry has also been looking forward to detailed guidelines on calculating the amount of benefit to be passed on and in specific, the duration for which the reduced price is to be continued,” said EY tax partner Abhishek Jain.

The other factor that has got businesses worried is the perpetual nature of the anti-profiteering provision in the CGST Act although the tenure of the NAA is defined. The provision which mandates immediate price reduction of goods and services commensurate with the tax cut, does not specify a sunset clause. A second government official, who also spoke on the condition of anonymity, said that the anti-profiteering provision may be administered by any designated government official or agency in a less elaborate way after NAA’s term ends as the tax system would have stabilised by then. The GST Council extended the term of NAA by two years in June, which enables it to continue to work till end of 2021. The Council had also in June decided to let NAA impose a penalty equivalent to 10% of the profiteered amount on those who pocket the tax benefit meant for consumers.

Ease Your GST Return Filing & Invoice with XaTTaX- GST Software

Source: LiveMint
GST evaders beware: Risky taxpayers to be profiled to pre-empt dodging

GST evaders beware: Risky taxpayers to be profiled to pre-empt dodging

In a bid to pre-empt tax evasion under the Goods and Services Tax (GST), the government is looking at options to deal with taxpayers based on their risk profile. Assessees identified as ‘risky’ could face restrictions on issuing invoices, utilisation of input tax credit and sanctioning of refunds.

The government has been grappling with evasion through fake invoice since the GST was launched two years ago. The indirect tax department has detected such frauds worth over Rs 12,000 crore. A tax official said the rule of the thumb indicated that detected frauds were only about 10% in value of actual frauds being committed, which would take actual evasion to nearly Rs 1.2 lakh crore.

The GST Council, which is the apex decision-making body for the GST, has constituted a committee of officers (CoO) to suggest parameters for risk-based profiling so that a taxpayer could be categorised as risky in an automated manner. Further, the CoO will identify methods for assessing financial credibility of a taxpayer vis-a-vis its GST profile. The committee will submit a report to the GST Council on August 15.

According to the terms of reference (ToR) for the committee, it will also suggest changes in GST law and rules to enable profiling and regulating risky taxpayers, including invocation of penal provisions in case of failure to undertake desired know your customer (KYC) verification. Further, the panel is required to suggest “measures for implementation of suggested risk-based management on immediate basis and any other measures, mechanism and machinery to check and curb multiple type of frauds,” the ToR said.

The official quoted above said recovery of tax evasion after it has happened was onerous and doesn’t yield results as often fly-by-night operators are not found at their addresses. It was important, he added, that pre-emptive mechanisms were employed to detect the likely instance of frauds before they took place.

XaTTaX – World Class Automated eSolution for Return filing and e-Waybill

Source: Financial-Express
Anti-profiteering in GST: Caught in litigation, extension in tenure may not be enough

Anti-profiteering in GST: Caught in litigation, extension in tenure may not be enough

Anti-profiteering provisions have been in force for nearly two years and at the recent GST Council meeting the tenure of the National Anti-Profiteering Authority (NAA) has been extended for two more years, till November 2021. Although the key reason given for this extension was the large pendency of complaints (around 350) which still needs to be investigated, it is fair to say that the presumption is that GST benefits are still not being passed on to consumers. But is the extension of tenure all that is required to ensure compliance with these provisions?

There are also reports that the GST Council, along with the extension of the tenure of the NAA, has approved a new mechanism to check profiteering. Tax officers have been empowered to conduct anti-profiteering checks in their jurisdictions. This clearly signals that complaints and investigations on profiteering will increase and the NAA will be around for much longer than the recent two-year extension. A new penalty may also may be imposed if the profiteered amount is not surrendered within a prescribed time limit.

Given that anti-profiteering related investigations will increase and impose heavier fiscal penalties there is an urgent need to address three key issues:

Introduce an appellate mechanism, within the GST law, for appealing the orders of the NAA;
Broaden the membership of the NAA to include a judicial member; and
Define methodologies/frameworks for compliance.

This will ensure that the core objective of ensuring that benefit of GST is passed on to consumers, is achieved in an efficient and timely manner.

It is worth noting that when NAA was originally constituted in November 2017 for a period of two years, it was set up primarily as a deterrent to big businesses and hence envisioned that its actions would be restricted. This is far from reality and the actions of the NAA have been far more widespread and have impacted almost all sectors and all sizes of businesses.

Considering that there is no appellate mechanism prescribed under the GST laws against an order of the NAA, can it be assumed that the government had not expected challenges on such orders? Whatever may have been the thinking on this aspect, the legal view adopted is that the law does not provide a statutory mandate to appeal orders of the NAA before the Tribunal, High Court or the Supreme Court. Hence, the only recourse for taxpayers is to file a writ petition in the High Court.

Almost all orders of the NAA where profiteering has been alleged, are being challenged in various High Courts. In most cases the courts have stayed the orders and the litigation is in progress. With most NAA orders being embroiled in litigation, the key purpose of the existence of the NAA, which is to ensure that the GST benefit is passed on to the consumer, is yet to be achieved. An alternative form of recourse is required which should assist in the faster resolution of cases.

Some of the writ petitions have challenged the constitutional validity of anti-profiteering provisions. While this challenge is being deliberated by the courts, the government may be able to address some of the other concerns/issues that have been raised.

In the absence of a statutory appellate process, the decision of the High Courts on anti-profiteering matters, will very likely be sent back to the NAA for implementation. This may create a conflict, as the authority that has passed the original order will have to review the orders based on directions of the High Court and then pass a revised order. This is likely to give rise to further litigation. One option to address could be to induct a judicial member on the NAA to ensure that a legal view is also taken into consideration while deliberating on High Court orders. Another option may be to create a body within the NAA to review and implement the orders of the High Court. There may be other options as well and the government should explore all possible alternatives to address this issue. In all such cases, the focus of the NAA should be to resolve the matter, pass on the benefit to the consumer and not litigate further.

As it is likely that anti-profiteering related investigations will increase going forward, there is also an urgent need to introduce an appellate mechanism, within the GST law, for challenging the orders of the NAA. This will ensure that going forward, writ jurisdiction is not the only option for challenging orders of the NAA and may also result in faster resolution of cases.

One key and outstanding demand of tax payers is for a specific mechanism/methodology to calculate profiteering. This may minimise the subjectivity in the investigation process and therefore litigation. The NAA’s position has been, and remains, that a standard methodology cannot be prescribed for all sectors and hence none is being prescribed. This position needs to be revisited urgently, more so as the NAA now has the benefit of experience from over a hundred investigations. The contradictory positions being adopted in some orders has also added to the complexity of complying with the provisions. One option could be to reconstitute sector-specific committees, set up during GST implementation, which were headed by senior tax officers. These committees can provide guidance on prescribing methodology for compliance with the anti-profiteering provisions.

With the focus once again on initiatives for improving Ease of Doing Business in India, anti-profiteering related concerns of taxpayers do need to be addressed on a priority. The trust deficit between the business and tax administration on this subject needs to be reduced to ensure that the key purpose of the consumer benefiting by GST implementation, is served.

XaTTaX: Cloud and On-Premises Based GST Filing Software For India

Source: Economic-Times.
× How can I help you?