The 57th GST Council meeting- Outcome. Part two.

The best example under GST law administration for unproductive work is the raising of the demand based on the differences between any two GST returns. These demands convert in to actual payment of taxes when the amount is small and the taxpayer is unaware as to how to proceed further or when the reconciliation results in payment of 5 to 10 per cent of the proposed demand. During the years 2017-18 to 2020-21, section 16 (5) helped the taxpayers to some extent. Two circulars were also issued on identical issue. In a majority of the cases, the time, efforts, energy, loss of opportunity to focus on real productive work are all lost for taxpayer, tax professional and also the tax officer. Sometimes even the precious time of High Court is also spent on these issues where Courts had always taken the stand that a mere difference does not automatically result in short payment of GST.

Thanks to the thought process of the proposal in para number 5.2 The Council recommended that the provisions regarding alternate mechanism for amendment of liability and ITC in the GST return, may be brought into force from the return of April, 2027.These measures will considerably reduce mismatches in liability and ITC in returns, thus not only reducing demand notices and system generated intimations on account of such mismatches, but also improving the integrity of ITC across the supply chain, thereby facilitating taxpayers. This single initiative, when implemented with effect from 01/04/2027 shall stop all demands which are ultimately dropped in OIO or OIA or in first or second appeal as the case may be.

The efforts in identifying the rules which create bottleneck and the proposal to amend the rules in one go proves that the intention of the Government is to collect only the proper GST and there is no hidden agenda on improving the GST collection by way of unjust enrichment. If a tax, which is not legally payable, is confirmed due to the improper understanding of law by the adjudication officer, it is unjust enrichment of the Government. Now it is the turn of the field formation to understand, appreciate and act based on the GST Council recommendation.

The next issue which is also highly significant is the proposed amendment to section 132. The proposals approved by the GST Council are

1. The monetary threshold for prosecution to be raised from Rs. 1 crore to Rs. 5 crore.
2. Omission of clause (i) of section 132(1) of the CGST Act, 2017, deletion of the words "evades tax" in clause (e) of section 132(1) and deletion of words "or in any other manner deals with" in clause (h) of section 132(1) of the CGST Act, 2017.
3. Amendment in clause (c) of section 132(1) of the CGST Act, 2017, to cover only offence of fraudulent availment of ITC without receipt of goods or services or without invoice or bill.
4. Rationalizing the amount of punishment for various offences under section 132 of the CGST Act, 2017.

All the above four proposals when actually implemented in CGST/SGST law, shall have huge impact on the entire trade and industry. It is not the case that a person who violates can -not be arrested. Arrest is still possible even after due amendment. The first change is amount must be five crores and above. The arrest shall be under BNS 2023.

The above proposal shall be a huge relief for taxpayers who are targeted by tax officials improperly due to pressure on collection of GST or any other reason as well.

The free movement of goods when transported from one place to another was disturbed by various tax officials, at low levels such as Assistant Tax Officer or Deputy tax officer of various states due to lack of proper understanding of the appropriate sections. This results in obstruction of movement of goods and the taxpayers were forced to make the payment of the penalty as demanded to ensure undisturbed movement of goods. When the matter reaches GSTAT or the jurisdictional High Court, the penalty is mostly set aside are significantly reduced. Till the process is completed, it results in blocking the working capital by the trade and industry. The proposed initiatives, when implemented shall have two effects.

Only the Joint Commissioner and above are authorised in certain matters. In cases where E way bill and E invoice are carried while transporting, only the origin state and the destination state can stop and inspect the vehicle.

Conclusion: All the above proposals are well thought ones after due research on reduction of litigation based on the experience gained during the last nine years. To sum up, each and every proposal that was approved or referred to the Committee are excellent initiatives from all concerned, be it CBIC or State authorities. The message coming out is loud and clear that as and when all these proposals are completely implemented, the litigation is bound to come down in a drastic manner.

All the proposals as considered by the GST Council in their 57th meeting were covered in various articles published in taxtmi.com . The request to convene the meeting as quickly as possible, the request to conduct more council meeting every financial year, the request to avoid improper invocation of section 74, 129 and 130 of the CGST Act etc are available in the articles already published during the last one year. This gives me lot of encouragements to continue to write more and more articles on GST in the future as well.