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GST Analytics wing to identify risky suppliers to exporters

May 21, 2020 admin Comments 0 Comment

The CBIC has asked GST risk management wing to conduct supply chain analysis to identify risky major suppliers to exporters and share it with jurisdictional field officers. The Central Board of Indirect Taxes (CBIC) had received representations from exporters saying in some cases the Integrated GST (IGST) refunds are getting delayed by over 6 months.

Last year, the CBIC had detected several cases of firms availing credit fraudulently through refund of Integrated Goods and Services Tax on exports of goods.

To mitigate the risk, the CBIC has taken measures to apply stringent risk parameters based checks, and the consignment of such exporters in risky category are subject to 100 per cent Customs examinations and their refunds were kept in abeyance.

The CBIC, which had in January issued a standard operating procedure (SoP) to be followed by such exporters, has now asked GST and Customs Zonal principal chief commissioners to forward all pending verification report to Directorate General of Analytics and Risk Management (DGARM) by June 5.

“The zonal Peincipal Chief Commissioners/chief commissioners of CGST and CX zones are advised to put a process in place to ensure that in future all such verifications are completed and reports sent to DGARM within maximum 3 weeks of receipt of request of verification from DGARM,” the CBIC said.

While partially modifying the SoP issued in January, the CBIC said in order to cut down the time taken in grant of NOC (no objection certificate), the DGARM will “conduct supply chain analysis without waiting for verification report from field and share risky first and second level major suppliers with the jurisdictional CGST (Central GST) formations at the same time when the risky exporter details are shared with the CGST formations”.

The verification report in respect of identified suppliers will be sent by GST and customs Commissionerates directly to DGARM, which will take decision on grant of NOC or otherwise based on such verification reports in respect of exporters and its suppliers.

“DGARM would grant final NOC to the exporter once the verification of the identified first and second stage risky supplier is found in order,” CBIC said.

In case of availment of in admissible credit by the suppliers, the GST officers will ensure due process of recovery. If the taxpayer is under the administrative control of states/UTs, the issue of recovery would be flagged to them, the CBIC said.

Associates Senior Partner Rajat Mohan said exporters have a vested right of tax refunds unless they are proven guilty.

“With an internal memo from GST policy wing looping in the senior-most tax officers in a state is expected to ease the plight of exporters,” he said.

Source: Economic-Times.

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GST policy on e-commerce may make life difficult for cab startups: Experts

October 8, 2018 admin Comments 1 comment

A Bengaluru-based startup has filed an appeal questioning a July 27 ruling by GST authorities in Karnataka which said app-based cab aggregators must pay GST on trip fares collected by private cab drivers/owners tied to their e-commerce platforms.

Opta Cabs, a startup that plans to offer app-based cab hailing services, has preferred an appeal to the ruling by the GST Authority on Advance Ruling in Karnataka. Its founder Chandrakaladhar Reddy (44) said: “This kind of regulations impose huge legal costs, and create an entry barrier for startups like us. The policy needs to change.”

Sections of GST experts believe the GST policy requiring aggregators to pay GST on fares collected by cab drivers will hurt startups as “it affects their liquidity and increases their operational risks and costs.”

The provisions of law and notifications are detrimental to the interest of e-commerce players, especially startups, engaged in the business of providing taxi hire services through marketplace model, said M.A.Maniyar, GST consultant and former Deputy Commissioner of Commercial Taxes, Karnataka. A former tax commissioner, not willing to be identified, too felt the GST policy approach seemed to skew in favor of deep-pocketed aggregators, and not budding platforms.

PV Srinivasan, a mentor for indirect tax expert committee at Bangalore Chamber of Industries & Commerce (BCIC), felt the GST policy, in this case, militates against the government’s policy of encouraging self-employment. “The policy looks discriminatory against small entrepreneurs, and imposes a tax cost on e-commerce cab aggregators on a consideration that they don’t collect.”

The GST legislation has indirectly led to taking away the benefit of the GST exemption available to individual/small taxi operators for annual turnovers below Rs 20 lakh, said Vivek Pachisia, tax partner at EY. According to Maniyar, aggregating the fare collected by all the taxi drivers/owners and subjecting the same to tax at the hands of the e-commerce operator is unreasonable.

Like it does with e-commerce retailers, the GST policy could have asked app-based cab aggregators too to collect 1% TCS (tax collected at source), instead of transferring the entire burden on the e-commerce company, Srinivasan said. “When the transport sector is already paying steep taxes with fuel price steadily increasing, I think if this additional GST on e-commerce platforms needs a relook.”

EY’s Pachisia, however, said the government has in a way expanded the tax-base by indirectly including even small service providers within the GST net because they provide the services through an e-commerce platform while the same service would not be taxable if they were to provide it without platform support. “Eventually, the impact of GST is borne by the customers and taxi-operators and not e-commerce platform operator,” he said.HG Kumar, former Additional Commissioner of Transport, Karnataka, clarified that small e-commerce players with less than 100 cabs can operate just with a radio taxi license while those above 100 cabs require aggregator license. Only Uber, Ola and Utto have taken aggregator license in Karnataka.

An Uber spokesperson, in an email, said: “Basis the legal requirements as stipulated and verified with the concerned authorities, Uber ensures GST compliant receipts are generated for every trip taken. Separately, as a company, Uber also makes the relevant GST payments and complies with the requirements and necessary disclosures.”