In just six years, the Goods and Services Tax (GST) has increased significantly. From around 68 lakh in 2017 to around 1.4 crores the number of assessees would have twice, indeed the average monthly revenue has also climbed approx to the identical rate from near to Rs 90,000 crore in 2017-18 to Rs 1.69 lakh crore in the present fiscal year.
On a bigger level, the same has contributed to the formalization and digitization of the Indian economy.
But it’s still a long way from being the “good and simple tax” that was supposed to be the solution all along. There are still a number of legal issues to be resolved; the two most significant and generally applicable ones are covered below.
GST Credit Claiming Process
The ITC claim would be the major point of argument under GST with every example of the GST fake/fraud invoicing directed to stringent the perspective of GST authorities and a rise in the invocation of strict enforcement powers, the taxpayer stated that the department trust would have suffered and the real assessees are rising at the receiving end of the suspicion and even instances of the abuse of the power through the GST heads on the foundation.
Because of the concerns expressed about the reliability of even one of the suppliers in a supply chain, taxpayers across the nation have petitioned high courts to stop arbitrary cancellations of GST registrations and excessive denials of input credits.
Although strict guidelines have recently been released to strengthen the process of verifying GST registration applications, combating the scale of identity theft-based GST evasions would require strict technological solutions to increase the current statutory provisions (which already give GST officers a wide range of authority and do not require further strengthening).
For instance, live video verification may be implemented in place of using copies of PAN and Aadhaar cards, allowing the relevant person to hold the identity document in question in front of the camera. This will at least reduce GST fraud based on identity theft. Several insurance/investment organizations have already adopted this live video verification trend (they do live video KYC automatically through a BOT/app).
In any case, the fight against GST fraud is a never-ending battle that necessitates eternal vigilance, something that GST authorities must never forget. The government should make sure that honest taxpayers cannot be threatened or forced by GST officers on the ground level in the name of curbing evasion. The government must take strong action against cases of GST officers abusing their authority against sincere taxpayers in order to preserve balance and ensure accountability.
Legal Difficulties in the Absence of GSTAT
Second, the absence of the GST Appellate Tribunals even after six years presents a significant legal difficulty for taxpayers, who are left with no choice but to constantly file claims with the high courts. The following actions need to be completed even though the necessary legal provisions for GST Appellate Tribunals were ultimately enacted earlier this year:
The GST Council’s final approval of the GST Tribunals’ tiniest operating elements, is anticipated to happen at its future meeting this month.
Subsequently, the implementation of the tribunal will require the enactment of appropriate legal provisions, which have already received approval from the GST Council. The necessary amendments to the Central Goods and Services Tax Act, 2017 have been carried out in the Union Budget 2023, although these amendments have not been officially notified. Additionally, the relevant rules, circulars, and other regulatory measures must be put into effect. This can only be achieved once all the State legislatures pass corresponding amendments to their respective State GST statutes.
Once the legal framework is established, it will be imperative to undertake the recruitment of tribunal members/judges and administrative staff. Moreover, sufficient budgetary allocations and infrastructure developments must be made nationwide.
Considering the remaining steps aforementioned, it is highly unlikely that the GST Appellate Tribunals will be fully operational before January-February 2024.
However, the effectiveness of the GST Appellate Tribunals will ultimately rely upon the recruitment of judges/members. In this regard, it would be relevant to learn from the experiences of advanced ruling authorities under GST, which have faced widespread criticism due to their apparent inclination towards revenue generation. Lessons can also be drawn from VAT/Sales Tax tribunals in various states.
Subsequently, the implementation of the tribunal will require the enactment of appropriate legal provisions, which have already received approval from the GST Council. The necessary amendments to the Central Goods and Services Tax Act, 2017 have been carried out in the Union Budget 2023, although these amendments have not been officially notified. Additionally, the relevant rules, circulars, and other regulatory measures must be put into effect. This can only be achieved once all the State legislatures pass corresponding amendments to their respective State GST statutes.
Once the legal framework is established, it will be imperative to undertake the recruitment of tribunal members/judges and administrative staff. Moreover, sufficient budgetary allocations and infrastructure developments must be made nationwide.
Considering the remaining steps aforementioned, it is highly unlikely that the GST Appellate Tribunals will be fully operational before January-February 2024.
However, the effectiveness of the GST Appellate Tribunals will ultimately rely upon the recruitment of judges/members. In this regard, it would be relevant to learn from the experiences of advanced ruling authorities under GST, which have faced widespread criticism due to their apparent inclination towards revenue generation. Lessons can also be drawn from VAT/Sales Tax tribunals in various states.
Concerns have already been voiced over the GST Appellate Tribunal’s inability to consider practising attorneys as judges or members. Taxpayers will keep knocking on the high courts’ doors unless the GST Appellate Tribunal (GSTAT) gives them the chance for a fair hearing, which will lengthen the time that cases are pending and create bottlenecks in the justice delivery system.
One genuinely hopes that the aforementioned legal problems would be lessened and properly addressed by the time we prepare to celebrate the seventh anniversary of GST, given all the accomplishments GST has achieved in its first six years as the largest tax reform in India since independence.
