GST Will Be Implemented From 1st July 2017
Its Official now that Goods and Services Tax (GST) will be implemented from 1st July , 2017. This has been disclsoed by Economic Affairs Secretary Shaktikanta Das on this Tuesday i.e 27th February 2017.
It must be understood that he further stated that
GST will be a reality soon as all states were on board. The GST, which will replace a myriad of consumption taxes, could be a “game changer” over the medium term as it would reduce tax cascading and boost India’s competitiveness, investment and job creation.
Why There Is Surety of 1st July 2017 ?
The surety of 1st July 2017 comes from the expresion “all states are on board”
Firstly,it must be understood that GST Council is represented by almost every political party in as much as the representation from every state governement is there in it. Therefore, once they agree in GST Council , they cannot take a differnet verison in Parliament.
Secondly, in the last GST Council meeting held on 18th February 2017 at Udaipur, the GST Compensation draft has already been approved and now no state will be reluctant in any major manner otherwise the package granted to them will be in doldrums . Hence, the possibility of backing out is almost negligible.
Whereas,Finance Minister Arun Jaitley, said,
The first requirement is constitutional amendment, the law has been passed unanimously and by September 15, 2017 the curtain will be down. We have resolved most of the critical issues. Legislations have been drafted. Two weeks ago, we approved the first draft. By March first week, the second draft will come up. Parliament will be resuming from March 9.
What Is The Preparation of GSTN ?
As per the reliable sources, GSTN has already started circulating various docs related to GSTR-1 to 34 GST Suvidha Providers (GSPs) i.e tehcnical companies , which will offer support and services to help tax payers and businesses in compliance of GST.
This gives more confidence that technically GSTN is achieving milestones,for being ready within the stipulated time period of 31st March 2017 .
Why IRS Lobby Is Requesting Prime Minister to Intervene To Implement GST ?
The IRS Association on 21st February 2017 has writen to PM and made various requests but prominent amongst them were as below :
a.Likely Lower Tax Receipts in the hands of UOI post GST
b.Likely Legal Hurdles i) Cross-empowerment in CGST & SGST
ii) Delegation of powers in IGST
iii) Supplies within and supplies to territorial waters
The supplies within and supplies to territorial waters has been an area of concern and this grey area was well highlighted by IRS Association with reference to Articles 245,269A(5) &297 of Constitution of India.
c. HR Issues-Demoralised work force.
It is also coupled with concern on parity of non experienced State Officers with well experienced Central IRS Officers
What Are The Significant Procedural Aspects Highlighted by IRS Association ?
The IRS Association also brought the concern towards the significant issues as below:
1. The provisions of VAT Laws for checking of vehicles in transit have been carried forward in the draft GST Law , despite opposition by the Officers of CBEC. It is highly desirable for the GST Council to do away with these archaic provisions of the draft GST Law to truly make the pan-India movement of goods seamless, besides helping the Transportation industry immensely.
2.At present, a big service tax assessee in sectors like Aviation, Telecom, Insurance or similar sectors has just to face one stop single assessment point with one tax administration. However, in the proposed GST Administrative Architecture, they will have to take around 30 separate registrations, thereby making them face 30 different tax administrations. This belies the promise of ‘One Nation One Tax’. Also, states have no experience of Service Tax which is very different as a concept. In such a scenario, divergent views on similar tax issues may emerge across states leading to a plethora of litigations.
3.Service providers in the Banking, Insurance, Logistics, IT & ITES and Aviation sectors are operating under a single Centralised registration of Service Tax at present. That means, at present, they have to file 3 Service Tax returns in one year. In GST era, they will have to file 61 Returns per State, per year, after taking Registration in each State in which they have presence. So, a major Bank like SBI, which has branches in all 35 States / U.T.s, will end up filing over 2000 (61*35) Returns annually. This does not seem to be in the spirit of Ease of doing business, as it will lead to severe rise in compliance costs.
4.There is a reported failure rate of 30% in Karnataka’s invoice matching. In the proposed GST Architecture, Invoice Matching is a central means of establishing the sanctity of tax credit chain. Such a massive failure rate of 30% will lead to tax anarchy whereby due to machine failure, tax assesses will be denied legitimate credit
5.Any Order passed under the VAT Laws can be revised by the Department even after 5 years (even after 6 years in some States). These powers of Revision don’t bring finality and closure to the tax implications of any transaction for a very long time. The procedure under the Central Indirect Tax Laws is different and provides an identical time frame to the taxpayer and to the Department to file appeal against any Order of any Officer of CBEC. This time limit is 3 months. However, the provisions relating to Revision by the Departmental Officer have been retained in the draft GST Law at the insistence of the States. GST Council needs to convince the States on this.
6.Settlement Commission has been providing an alternate dispute resolution mechanism for nearly two decades now on the Central Indirect Tax side too, thereby reducing the load on the Tribunal and Courts. The States need to be convinced by the GST Council that the proposal of CBEC to have a Settlement Commission for GST is a win-win proposition.
India is a country where problem persists before and after everything is done but we always move on to new light of the day on regular basis. We at AMLEGALS feel that the problems as highlighted by IRS Association needs to be considered since they highlight various aspects which cannot be brushed aside as well.
However, the tragedy is that for such grievances including changes in GST laws, it is only GST Council which has the final say and even Finance Minister or PM alone can’t do anything unless a consensus is arived at in GST Council.
We feel GST is a comfortable reality by 1st July 2017 and it is our collective responsibility to tackle its implementation with trade in win win situation.