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Tax arrears of Gujarat industrial units at Rs 30,000 crore

Tax arrears of Gujarat industrial units at Rs 30,000 crore

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The combined tax arrears of over 48,000 industrial units in Gujarat stood at Rs 30,000 crore as on June 30, 2019. Official sources in the state finance department said the taxes that remained unpaid include sales tax and value added tax (VAT) for the period before the introduction of the goods and services tax (GST) in 2017. Of these units, there are nearly 6,400 units with tax bills of more than Rs 10 lakh.

The figure includes long-pending dues, says PD Vaghela, commissioner of commercial tax, adding that over 50% of these units have gone for appeal mostly in sales tax and VAT related cases.

“We have formed teams to speed up the recovery process of these bills. Some of the units have not even paid taxes over the period of 15 years and more. Some units have closed down, but the authorities are in the process of slapping notices to owners of these industrial units,” said a senior official. Interestingly, many units failed to pay even GST, despite the fact that there are strict provisions including that of jail terms.

Vadodara tops the list of defaulting industrial units with unpaid taxes over Rs 10 lakh, with Rs 6,431 crore due from nearly 700 such units in the city. Some of the other districts with high amount of due taxes are Kutch (Rs 4,569 crore), Surat (Rs 4,250 crore), Morbi (Rs 2,766 crore) and Bhavnagar (Rs 1,722 crore).

The Gujarat government is estimating GST income to the tune of Rs 48,000 crore in the recently presented budget for 2019-20. In such a scenario, such a huge amount of unpaid taxes would hamper various development-related schemes. Sources in the GST department said that not only recovery, but strict actions were being taken to curb GST theft as in June 2019, and over 280 raids were conducted and GST theft of more than Rs 6,000 crore caught.

Source: Financial Express

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15th finance panel stresses on dialogue with GST council

15th finance panel stresses on dialogue with GST council

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Finance Commission Chairman N K Singh Tuesday stressed the need for a dialogue between the commission and Goods and Services Tax (GST) council to address various concerns on the taxation regime.

He said the Commission had requested the Finance Minister, who is the Chairman of the GST council, regarding this, and has received a favorable response.

“One of our areas is how do we engage, how purposeful can the finance commission engage with the GST to be able to bring the concerns to the notice of that constitutional body- that what can be done to improve the outcome of the GST, and what can be done to improve the quality of compliance, also fixation of rate structure,” Singh said.

Speaking to reporters here, he said the mechanism for dialogue between the finance commission and the GST council was an area that deserves greater attention.

The chairman said he had written to the previous finance minister Arun Jaitley about the need for suitable consultative mechanism between the finance commission and GST council.

“..I have reiterated this request to the present Finance minister Nirmala Sitharaman.

I have received a very positive and favorable response and we hope that the commission can have the dialogue with the GST council at an early date to address the concerns,” he said.

The 15th Finance Commission, which is on a visit to Karnataka, Tuesday held discussions with Chief Minister H D Kumaraswamy, his cabinet ministers, and state government officials.

Singh said Karnataka was upfront in pointing out to the commission that in the era prior to the GST their performance on VAT presented very high revenue growth and this had got somewhat halted after the application of GST.

“Along with exemptions and the systemic relentless drive to fix rates, which are not revenue neutral, far from being revenue friendly is an area of worry for Karnataka, indeed the commission believes this is an area of worry for India as a whole,” he said.

During his meeting with the commission, Kumaraswamy highlighted that the base tax rates in the VAT regime in Karnataka were much higher and today on account of reducing the GST rates in several items, the actual tax collection for Karnataka had been adversely affected.

“I urge the Commission to recommend to the Central Government to continue the compensation for another 5 years beyond 2022 or at least protect the compensation level of the year 2022 for an additional 5 years,” he said.

Pointing out that both the Commission and the GST council were constitutional bodies, Singh said, “We have sought the Chairman of the GST council, who is the Finance Minister, to facilitate some dialogue between the two entities.”

Stressing on the need for a tax buoyancy, a member of the finance commission said, while the direct tax buoyancy seemed to be doing well, it was the indirect tax buoyancy “that worries us.”

“Key for that is a dialogue between Finance Commission and the GST council, and try to see how we can fix this mechanism,” he said.

Source: Business-standard.

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National Anti Profiteering Authority (NAA)
GST Council may give 1-year extension to anti-profiteering authority

GST Council may give 1-year extension to anti-profiteering authority

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The GST Council is likely to extend till November 30, 2020 the tenure of the National Anti-profiteering Authority (NAA), which deals with customer complaints regarding not receiving tax cut benefits, at its next meeting on June 21, an official said.

The Council at its 35th meeting, the first under new Finance Minister Nirmala Sitharaman, is also likely to consider a proposal to set up one appellate tribunal for north-eastern states, and another one for all Union Territories.

Besides, the Council would discuss a proposal to levy Goods and Services Tax (GST) on extra-neutral alcohol (ENA), which is used for manufacturing alcoholic liquor for human consumption, the official added.

The Finance Ministry is of the view that NAA should be given an extension of one year till November 30, 2020 as the authority continues to receive complaints of profiteering by companies, the official told PTI.

The NAA is keen for a two-year extension, the official said, adding that the final call will be taken by the GST Council in its meeting on June 21 which had earlier been scheduled for June 20.

Soon after the GST was rolled out from July 1, 2017, the government had approved setting up of the NAA for two years to deal with complaints by consumers against companies for not passing on GST rate cut benefits.

The NAA came into existence on November 30, 2017, after its Chairman B N Sharma assumed charge. So far, the NAA has passed 67 orders in various cases.

The GST law provides for setting up of benches of appellate tribunal in all states. Although 18 states have got the approval to set up appellate benches, none of these states have operationalised them.

The GST Council in its June 21 meeting is likely to approve the proposals of Delhi, Odisha and Telangana to set up appellate tribunal benches.

The Council will also take a call on setting up a combined bench for all north-eastern states as well as one bench to deal with appeal cases in six Union Territories — Chandigarh, Puducherry, Lakshadweep, Daman and Diu, Dadra and Nagar Haveli, and Andaman and Nicobar Islands, the official said.

With regard to bringing ENA under GST, states have divergent views on levying GST. Larger states like West Bengal, Rajasthan, Haryana, Tamil Nadu, Karnataka, Andhra Pradesh and Maharashtra have been of the view that ENA should be out of GST.

States levy Value Added Tax (VAT) and Central Sales Tax (CST) on ENA. They will have to forgo the right to tax the product if it is brought under GST.

The GST Council had earlier sought the opinion of the Attorney General on legality of imposing GST on ENA. The AG had then opined that since ENA is not consumed directly by people, GST can be imposed on it.

Currently, potable alcohol is out of the ambit of GST and states are free to levy taxes on them.

Among other things, the GST Council will also consider issuance of e-invoice by entities with turnover of over Rs 50 crore for business-to-business (B2B) sales in a bid to curb GST evasion.

Source: The-Hindu.

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input tax credit
No input tax credit if GST returns not filed, says HC

No input tax credit if GST returns not filed, says HC

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The Telangana high court has ruled that no input tax credit (ITC) is available unless GST returns are filed and a taxpayer is liable to pay penalty on the entire liability. The ruling is expected to have a significant impact on all businesses that use tax credits available on inputs and raw materials to reduce payment in cash.

“…until a return is filed as self-assessed, no entitlement to credit and no actual entry in the electronic credit ledger takes place. As a consequence, no payment can be made from out of such a credit entry,” Justices V Ramasubramanian and P Keshava Rao said in a case involving Megha Engineering & Infrastructures and GST Authorities.

The company had delayed filing the GST returns from July 2017 to May 2018 when its tax liability added up to Rs 1,014 crore. It had ITC of Rs 968 crore and it claimed that the shortfall was to the tune of Rs 45 crore. While the tax authorities demanded 18% interest on the entire amount, Megha Engineering argued that interest should only be calculated on the net tax liability, after deducting ITC from the total liability. The court upheld the department’s view.

“The ruling has very wide implication as almost all taxpayers, who delayed filing returns and have paid interest only on cash payment of tax and not on the GST amount set off by them through ITC. The issue will open a floodgate of litigation and demands of interest by GST officials are imminent. Even CAs while auditing Annual GST Returns, which have to be filed by June 30, may be required to point out short payment of interest due to delayed set-off,” said tax lawyer RS Sharma.

Tax experts said that companies were relying on VAT rulings and clearing cash dues to employees and suppliers before paying GST and the ruling will change this practice. “Businesses should be very cautious in understanding the distinction between the VAT position and the GST position as the consequences could be very severe. This decision states this aspect very clearly,” said M S Mani, partner at Deloitte India.
Sharma said some respite may come in the future.

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Source: Times of India.
GST Compensation
GST support: Some states get central compensation despite revenue growth

GST support: Some states get central compensation despite revenue growth

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The formula for compensating the state governments for their goods and services tax (GST) revenue shortfall is proving to be quite liberal, with many states that have reported big jumps in revenue growth this fiscal continuing to be eligible for the succour.

Bihar’s monthly average GST collection grew nearly 50% year-on-year this fiscal but it has still received a compensation of about `2,000 crore in April-December period; similar are the cases of Madhya Pradesh, Rajasthan and West Bengal, among others

Also, it is increasingly becoming clear that ‘consumer states’ report higher rates of growth in

GST collections than those known for their manufacturing industries. Had the GST not been launched and the state-level value-added tax (VAT) system continued, these states would not have achieved the current revenue growth rates, going by the historical trend.

Also, it is increasingly becoming clear that ‘consumer states’ report higher rates of growth in

GST collections than those known for their manufacturing industries. Had the GST not been launched and the state-level value-added tax (VAT) system continued, these states would not have achieved the current revenue growth rates, going by the historical trend.

According to GST compensation law, the states are guaranteed a revenue growth of 14% on the FY16 base.

Under this the monthly state GST (SGST) target for all states in FY18 was `42,979 crore and this is `48,999 crore for the current fiscal. The states with very high y-o-y revenue increases continue to receive compensation because in the first year of GST (FY18), the growth rates have been minimal or negative due to the initial glitches faced by the comprehensive indirect tax.

Most major states were reporting average own tax revenue (OTR) growth of below 10% during the FY 15-FY 17 period, the three years prior to GST’s launch, growing at an average of below 10% during FY15-FY17 period. (Of OTR, about 60% used to come from levies like state VAT, entry tax, octroi, purchase tax, luxury tax etc that are now subsumed in the GST).

While the GST revenue deficit for all states combined was 20% in the last fiscal, it halved in the April-December period this fiscal. “The expansion of the revenue base in every state consequent to the reasonable tax rates across the board now would take care of their revenue concerns possibly after a brief time lag,” Deloitte India partner MS Mani said.

In the eight months of FY18 when GST existed, states were given compensation of `48,178 crore to bridge the gap assured revenue and actual collections. For the current fiscal, `48,202 crore has been disbursed to states for the April-December period as compensation.

The GST is now helping the consumption-led states to report revenue growth much higher than manufacturing states. “This is probably a result of better compliance in states that have traditionally lagged in infrastructure to enforce and collect taxes,” AMRG & Associates partner Rajat Mohan said.

“The structure adopted for GST was intended to move revenues from manufacturing states as it was a destination-based consumption tax and this would become more prominent in future as consuming states grow their markets further,” Mani said.

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Source: Financial Express.
GST
‘Changes in GST will boost SMEs but may complicate tax system’

‘Changes in GST will boost SMEs but may complicate tax system’

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The goods and services tax (GST) was intended to bring uniformity and harmony to India’s indirect tax laws. But all that is set to change yet again with a few states opting out of the recently announced registration criteria for businesses, wherein the annual sales threshold for GST registration was doubled to ₹40 lakh.

While Delhi, Jammu and Kashmir, and Assam have opted for doubling the annual sales threshold for GST registration, Kerala has opted to retain it at ₹20 lakh, a person familiar with the development said. The remaining states, however, are expected to decide sometime this week.

During the announcement of the new threshold on 10 January, the GST Council, chaired by finance minister Arun Jaitley, had allowed states to opt for either of the two levels after some states objected to raising the threshold limit uniformly for all states to ₹40 lakh barring the hill states. The freedom applies only to supply of goods and not for services, which account for a little over half of India’s $2.7 trillion economy.

The states were given a week’s time to take a call, according to the official statement issued after the last Council meeting. “It is not proper to hurry them through a decision,” a second person privy to the talks at the meeting said, requesting anonymity. The Council’s decision gives states flexibility to decide their optimum tax base without hurting small businesses and merchants with red tape. Experts said state governments will exercise this liberty keeping in mind the number and size of businesses in its territory. Inter-state suppliers anyway require GST registration irrespective of turnover. The Council had favoured a higher threshold as small manufacturers with annual sales below ₹1.5 crore, who were exempted from central excise duty in the pre-GST era, had come under GST when registration for businesses was made compulsory for those with annual sales of ₹20 lakh or more. Traders with sales ranging between ₹5 lakh and ₹40 lakh, depending on their state, were required to register for value added tax (VAT) in the earlier regime.

While policymakers consider it expedient to give relief to small businesses from registration, experts say this will complicate the tax system further. “Different threshold limits in various states will take us back to the VAT regime where this was prevalent. Besides, it will add one more layer of complexity to pan-India businesses,” said M.S. Mani, partner, Deloitte India.


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Source: Live Mint
GST Taxes
GST returns non-filers grow faster than tax base

GST returns non-filers grow faster than tax base

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The number of tax filers failing to file their returns has been increasing in the 17 months of GST implementation until November 2018, according to an answer submitted by the Finance Ministry in the Lok Sabha.

GST Tax

While the number of people required to file monthly returns has grown 32% from July 2017 to about 98.5 lakh in November 2018, the number of people not filing these returns has grown 167% during that time, the latest Goods and Services Tax filing data showed.

The data also shows that this is not just the case for monthly filers, but also for those under the composition scheme, which allows for quarterly return filing.

While the number of people required to file quarterly returns increased about 55% from July 2017 to 17.74 lakh in November 2018, the number of people who have not filed returns increased about 162% during this period.

In other words, the number of people failing to file returns has grown faster than the tax base itself for both regular and composition filers.

Tax analysts say the reasons are varied, including some taxpayers having too low a turnover, and others getting registered onto GST only due to the insistence of their large clients, and yet others simply daunted by the filing process.

“While the increase in the proportion of non-filers is a matter of concern, it must be borne in mind that several GST registrants may be having nil or low turnover and some others may have taken registration on their customers’ insistence,” M.S. Mani, a partner at Deloitte India, said. “Some of the initial challenges faced by smaller business on the GST portal may also have deterred some of them from attempting to file online returns.”

However, other tax analysts point towards a more serious situation where small businesses are systematically and fraudulently evading tax in the hope that they are too small for the taxman to notice.

“What happens is that a lot of small vendors get onto the system because their large clients force them because the client can avail of input tax credits only if their supplies are from a GST-registered vendor,” a tax analyst with a large consultancy told The Hindu on the condition of anonymity.

“However, these small vendors try to fly below the tax radar. They charge the GST rate on their supplies, but then keep this as their own profit margin instead of paying tax to the government.”

These vendors base these activities on the fact that the taxman will take 2-3 years to notice this activity since invoice matching is still not activated on the GST portal, the analyst added.

“By the time they are noticed, the vendor has already changed their name and GST number and is carrying on their business,” the analyst said.

‘Government loses’

“They have been doing this for 15 years under VAT and are simply transferring that practice to GST. The government loses because it has to pay ITC to the big corporate and doesn’t even get its tax revenue from the small vendors.”

Another analyst explained that, in reality, there are a relatively small number of taxpayers that fall below the ₹20 lakh threshold for filing returns.

“A ₹20 lakh income per year works out to about ₹5,500 a day,” the analyst explained. “Even your corner grocery store or Kirana store would do more business than this in a day. They just don’t file their returns because they are scared to draw the attention of the taxman.”


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Source: The Hindu
digitalization
Top 15 GST Judgments in 2018

Top 15 GST Judgments in 2018

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There were a lot of changes in the one and a half-year-old Goods and Services Tax ( GST ) regime in the year 2018. Here is the top 15 High Court judgments on GST delivered last year.

GST leviable on Supply of Goods and Services to Duty-Free Shops at International Airports in India: Madhya Pradesh HC [Read Order] A two-judge bench of the Madhya Pradesh High Court has held that no GST exemption can be given to the goods and services supplied to the Duty-Free Shops at International Airports in India.

Gauhati HC dismisses Petition challenging Service Tax Demand Post-GST [Read Judgment] The Gauhati High Court, on Friday dismissed a number of petitions challenging the service tax demand after the GST– rollout on 1st July 2017.

Lottery is a ‘Good’: Calcutta HC upholds GST Levy on Lotteries [Read Judgment] The Calcutta High Court has upheld the constitutional validity of bringing lotteries under the purview of Goods and Services Tax ( GST ) and held that a lottery can be treated as ‘goods’ for the purpose of West Bengal GST Act.

Supreme Court upholds Validity of GST Cess Laws [Read Judgment] A two-judge bench of the Supreme Court has today upheld the validity of the Goods and Services Tax (Compensation to States) Act, 2017 enacted by Parliament as well as the Goods and Services Tax Compensation Cess Rules, 2017.

State GST Officers has Power to Inspect, Search and Seize Goods under IGST Act: Madhya Pradesh HC [Read Order] A two-judge bench of the Madhya Pradesh High Court has held that the State GST Officers are also authorized to exercise the powers to inspect, search, and seize the goods under the Integrated Goods and Services Tax (IGST) Act, 2017.

Gujarat HC Strikes down GST Provision denying Cenvat Credit on Stock of Goods purchased prior to One Year to First Dealers [Read Judgment] A two-judge bench of the Gujarat High Court has struck down the provision relating to Transitional Credit providing for one year time limit of purchases for claiming excise duty credit inter alia in the cases of first stage dealers and importers struck down as unconstitutional.

Detention of Goods under GST justifiable for Mere infraction of Procedural Rules: Kerala HC Overrules Single Bench’s Decision [Read Judgment] A division bench of the Kerala High Court has overruled the decision of the Single bench in M/S Indus Towers Limited Vs. The Assistant State Tax Officer, and held that the power of detention contemplated under Section 129 of the SGST Act can be exercised on the ground of non-compliance of Rule 55 and 138 of the Kerala GST Act, 2017.

Dept cannot insist for Cash / DD to release Goods when Penalty paid through GST Portal: Kerala HC [Read Judgment] The Kerala High Court, last week held that the department cannot insist the assessee to make payment in cash or demand draft to release goods under the Kerala Goods and Services Tax (KGST) Act, 2017 when the penalty amount has already been remitted by the assessee using the GST portal.

GST is not Taxpayer-Friendly: Bombay HC directs Govt to Fix Technical Glitches in GSTN Soon [Read Order] While hearing a petition filed by M/s Abicor and Binzel Technoweld Pvt. Ltd, a two-judge bench of the Bombay High Court asked the Government to resolve the technical glitches in the Goods and Services Tax Network (GSTN) soon.

Gujarat High Court dismisses PIL Challenging GST Late Fee [Read Order] A two-judge bench of the Gujarat High Court has recently dismissed a Public Interest Litigation (PIL) challenging the imposition of the late fee for the delayed filing of returns under the Goods and Services Tax (GST) regime pointing out that there is no ‘public interest’ involved in the matter.

Goods can’t be Detained for Mere Non-Compliance of GST Rules when Transaction is Non-Taxable Supply: Kerala HC [Read Judgment] The Kerala High Court, in M/S Indus Towers Limited Vs. The Assistant State Tax Officer, held that the power of detention contemplated under Section 129 of the SGST Act can be exercised only in respect of goods which are liable to be confiscated under Section 130 of the SGST Act.

Bombay High Court upholds GST on Long Term Lease Premium [Read Judgment] The Bombay High Court has upheld the validity of Goods and Services Tax ( GST ) on Long-term lease premium.

Madras High Court dismisses Petition seeking to bring Petrol, Diesel under GST [Read Order] The Madras High Court has dismissed the petition which sought to bring Petrol and Diesel under the Goods and Services Tax ( GST ) regime.

Digital Copy of E-Way Bill sufficient for Transportation under GST: Allahabad HC [Read Judgment] The Allahabad High Court ruled that the consignment need not be supported with the hard copy of the E-way Bill as the current Goods and Services Tax laws permits possession of digital copies. E-way bills can also be stored in electronic form on a mobile phone or another device.

VAT Re-Assessment Order passed after GST rollout is Valid: Karnataka HC [Read Judgment] The Karnataka High Court has held that the re-assessment order passed under the Karnataka Value Added Tax (KVAT) Act after the rollout of the Goods and Services Tax Act ( GST ) cannot be held as invalid.

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Source: Tax Scan
GST on Sports
Industry demands 5 per cent GST on all sports goods

Industry demands 5 per cent GST on all sports goods

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Sports goods manufacturers Wednesday demanded a lower GST of 5 per cent for the sector from the existing 12-18 per cent, noting that the government had promised to keep the new tax rates similar to earlier VAT rates. The existing 18 per cent and 12 per cent GST on sports goods should be reduced to 5 percent, the convenor of sports industry body Khel Udyog Sangharsh Samiti (KUSS), Ravindra Dhir, said while addressing mediapersons here.

The central government had assured before implementing GST on July 1 that the GST slab would be around that of the value-added tax (VAT) on related items, the KUSS claimed.

On the contrary, it imposed 28 per cent GST on physical fitness, gymnastic and athletic goods and 12 per cent GST on other sports goods whereas VAT on all sports goods had been nil in Uttar Pradesh, Jammu and Kashmir and only 5 per cent in Punjab, Dhir contended.
Sports industrialists especially those located in Jalandhar have formed KUSS and have been spearheading the agitation against the Centre for a cut in GST on sports goods to 5 per cent, he added.
He noted that the Centre a few month ago reduced GST on physical fitness, gymnastic and athletic goods from 28 per cent to 18 per cent, but the industry is asking for a uniform 5 per cent GST for all sports goods.
The industry group has intentionally selected Dharamshala for holding their press conference a day before Prime Miinister Narendra Modi’s rally here so that their demand of reducing GST on sports goods may be heard properly.

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

Sources: Economic Times
GST
Working to bring 99% things in sub-18% GST slab: PM Narendra Modi

Working to bring 99% things in sub-18% GST slab: PM Narendra Modi

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Indicating that further simplification of the Goods and Services Tax is on the anvil, Prime Minister Narendra Modi said his government wants to ensure that ’99 percent things’ attract sub-18 per cent GST slab.

Before implementation of the GST, registered enterprises only numbered 65 lakh, which has now risen by 55 lakh, Modi said, addressing the Republic Summit here, Moneycontrol had first reported.

“Today, the GST system has been established to a large extent and we are working towards a position where 99 per cent things will attract the sub-18 per cent GST slab,” Modi said.

Modi indicated that the 28 percent slab of GST would only be restricted to a few select items, such as luxury goods.

The Prime Minister said the effort will be to ensure that 99 per cent of all items, including almost all items used by the common man, would be kept at a GST slab of 18 per cent or less.

“We are of the opinion of making GST as smooth as possible for the enterprises,” he said.

“In earlier days, the GST was framed according to the existing VAT or excise tax structures exercised in those respective states. (With) the discussions held from time to time, the tax system is getting improved,” Modi said.

“The country was demanding GST for decades. I am pleased to say that GST implementation has removed contradictions in the trade market and efficiency of system is improving. The economy is also getting transparent,” Modi said.

Even a small tax reform in developed countries is not easy, he said.

Modi also spoke of his government’s commitment to root out corruption.

“Corruption had been taken as a new normal in India. It was ‘Chalta hai’. Whenever anyone used to speak up, someone would say, ‘This is India. This is how it is’,” Modi said.

“Why should it be like this,” he said.

When companies used to be unable to repay loans, nothing used to happen to them and their owners, he said.

“That is because since the start they had been given protection from probes by certain ‘special people’, he added.

Modi also dwelt on his government’s initiative to provide gas connections to households.

“Till 2014, only 55 per cent houses in the country had a gas connection. Imagine that. Our government is working towards finding permanent solutions and ending those practices that have held progress back for decades,” he said.

The work to build a New India is going on, he said.

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

 

Source: Money Control