MARCH 30, 2022
THERE was some interesting discussion in the Lok Sabha on GST, while the Finance Bill 2022 was being passed last week. Hon’ble member, Mr. GAURAV GOGOI said,
You may remember what happened with GST. There was a hasty implementation. Not taking into account the ecosystem, not orienting them, did more damage than benefit.
On GST, the position of our States is extremely doubtful, and extremely vulnerable. They rely a lot on the GST compensation. The timing of GST compensation has been extremely poor. It is completely at the hands of the Central Government. They release it when it suits them but that does not suit the State Governments. The State Governments have to pay salaries. They have to fund their social welfare schemes. They have to also put in money for development. The Government may say that there is a GST Council. There have been enough, both within and outside, views raised by the State Governments that the GST compensation has not been released adequately. It has not been released on time. Also, under the Act, the tenure for GST compensation is coming to an end. I would request the Government to again extend the tenure for GST compensation by a year or two.
Time has also come to evaluate the GST. What was the volume of income that was collected as part of the Indirect Taxes pre- GST and comparing that with the post-GST era, what is the volume of revenue collected from the Indirect Taxes? Does this Government have any data? Is it same? Has it decreased or has it increased? The Government should talk about it.
I am sorry to say that the States have no other option than playing with excise-based income. They are either extending the timings of wine and liquor shops or they are trying to increase the taxes. All the sovereign power of the States to raise revenue, has gone into the GST. So, fiscally, we are in a very bad position. Our hands are constrained.
Hon’ble member, Mr. N. K. Premachandran:
We have to control tax evasion effectively, make tax administration accountable, remove the uncertainty for taxpayers, and move away from the statistic revenue principle to the progressive principles.
I think that Shri Gaurav Gogoi today morning has rightly said that it is the right time to review GST. I think that a special Session or a special discussion is highly essential so as to review the performance of GST during the last 4 ½ years. The basic purpose of introduction of GST was to avoid multiplicity of rate of tax, strict tax compliance, increase the tax base, and one nation-one-tax. This was the principle that we had adopted at that time when late Shri Arun Jaitley was introducing the GST.
I would like to quote certain speeches of late Shri Arun Jaitley ji. The first statement of his, which I would like to quote was made in 2014. Late Shri Arun Jaitley ji said,
“Consistency and transparency of taxation laws are essential for a consistent growth of revenue of the Government”.
The second which echoes in my mind is from his speech at Peterson Institute for International Economics in Washington in April 2015. “The government sees Taxpayers as partners and not as potential hostages or victims.”
And the third one I would like to cite is the comment of a Judge of the High Court of Gujarat, during an online hearing.
“It is very easy to reach the
moon…we would take a chance…but to understand your policies and intricacies of this tax…Oh God, with folded hands, we say that it is beyond our capacity to understand”
These are the wordings of a Judge regarding the tax structure which is prevailing in our country.
We have merged the GST to make it simpler and more effective and to have strict tax compliance. Sir, the GST law is the most intricate Tax law the country has ever seen. Even after four and a half years of its implementation, still the entire system of GST is in a premature stage. Transparency, Consistency, easy compliance and seamless transactions were the assurance made at the time of its introduction. It may be noted that the slogan on the eve of implementation of GST Act in 2017 was “Good & Simple Tax” and “File your returns over a single click of the mouse”
Presently, even a nil return cannot be filed with a single click of the mouse. That is the situation which is prevailing as far as the GST is concerned.
Sir, I am not here to protect the interests of the cunning habitual tax evaders, but I am here to reflect the agonies suffered by an innocent micro, small and medium taxpayer in fulfilling his duties to the country. Were we able to maintain the consistency and transparency of taxation laws in the country? Do we register a consistent growth in revenue of the Central and State Governments? Are the taxpayers made partners of the system or are they still treated as potential hostages or victims of the tax system?
I would like to draw the attention of the Hon’ble Finance Minister regarding an amendment. I am moving an amendment also on this issue. Seamless Input Tax Credit has been provided in the original GST but it is quite unfortunate because traders are complaining about the new amendment to Section 38 of the Central GST Act and by virtue of Clause 108 of the present Finance Bill, this is being taken away.
If the Seamless Input Tax Credit as envisioned by the Legislature through three tier system of return filing, that is, GSTR I, GSTR II and GSTR III, is implemented, majority of present-day grievances and cases would not have occurred. So, Seamless Input Tax Credit, which is an assurance given at the time of introduction of the GST, is not being complied with or is not being honoured with. This has to be taken care of, for which, I have already given a notice of amendment, which is pending, and which would be taken up at the time when Bill is taken up for consideration.
The hon’ble MINISTER OF FINANCE Ms. NIRMALA SITHARAMAN:
These provisions were made as per the recommendation of the GST Council where States are also equally present and, in fact, that one line is, actually, the answer or my response for every suggestion which has come about GST, including the suggestion given by hon. Member N.K. Premachandran. Some suggestions related to GST have come. Some comments have also been made on the amendments which we have brought in the Finance Bill related to GST. They have not been brought by me; they are not brought by the Ministry of Finance; they are brought by us post the GST Council’s suggestion saying, ‘yes, this should go through’, so we are bringing it in the Finance Bill. So, it is not that they are being brought in by the Central Government.
Shri N.K. Premachandran ji said: “GST is not simple.”
He invoked the statement of the former Finance Minister, Shri Jaitley, saying: “No, it will be a very simple tax.” Definitely, difficulties which were there, we have periodically sat with the stakeholders and tried to remove it. Nil return under GST, both, GSTR 3B as well as GSTR 1, can be filed without logging in on to the GST portal by a simple SMS through mobile. So, if the portal through which you had to do it is a bit cumbersome for you, there is also an alternative way of using the SMS facility. But the other issues related to the CGST Act and items that has got to be looked at for differential rates, I would go back to the GST Council’s suggestions which have been brought in here. They are not mine. I just want to highlight that.
Hon’ble member, Mr. N. K. PREMACHANDRAN :
My amendment is to Section 38 of the Central GST Act. This is the genuine and serious demand of the small and medium- scale traders because the seamless Input Tax Credit is being chalked out by virtue of this amendment. That is why I am moving some amendments. The hon’ble Minister has responded that this House is not able to make the amendment and we have to go to the GST Council. At the time when Shri Arun Jaitley was moving the Bill, we supported the Bill in letter and spirit. Now, I am feeling guilty that the Parliament is not able to even make any amendment to this. To go and appeal to the GST Council for having the amendment means the sovereign function of the Parliament itself is in question.
The pathetic situation of the Parliament of India is, if we want to put some tax, then the Central Government has to go to the GST Council.
Madam, kindly take up this matter to the GST Council. It is a genuine and serious demand of the small-scale and medium-scale traders as far as the seamless Input Tax Credit which is to be given is concerned. There is no cascading effect.
Now, this raises important constitutional questions. Is the Parliament not empowered to pass/amend laws without the permission of the GST Council? Is the GST Council superior to Parliament
As per Article 279A (4) of the Constitution, the Council shall make recommendations
to the Union and the States on important issues related to GST, like the goods and services that may be subjected to or exempted from GST, model GST Laws, principles that govern Place of Supply, threshold limits, GST rates, special rates for raising additional resources during natural calamities/disasters, special provisions for certain States, etc.
So, strictly, the role of the Council is only recommendatory and theoretically, Parliament is free to pass any law. But any recommendation made by the GST Council is a recommendation by the Central Government and at least twenty States. The Central Government remains a government only if it commands a majority, at least in the Lok Sabha. So, a Bill brought in by a majority government with the support of about twenty States cannot be ignored by Parliament. It is not really a pathetic situation, as described by the Hon’ble Member. But the Hon’ble Minister says,
I would go back to the GST Council’s suggestions which have been brought in here. They are not mine. I just want to highlight that.
If the GST Council has recommended something, the Central Government has an important part in it. Without the Centre’s support and consent, nothing can be recommended by the GST Council. So, the Bill introduced in Parliament on the recommendation of the GST Council is the Bill by Central Government and the government will ensure that it is passed. In such a situation, an amendment by a Private Member cannot go through and no government will allow it to go through. Thus, finally the Hon’ble Member rightly beseeched the finance minister to take up the matter with the GST Council and that does not make the GST Council superior to Parliament. It is how things are done and should be done – cooperative federalism in action.
There is another complication to this problem. It is not enough if Parliament amends the CGST Act; all the States have to make identical amendments in their SGST Acts – as recommended by the GST Council. What will happen if some States don’t amend their Acts?
Maybe time has come to review the GST. With our experience of five years, we should be able to clear the clutter and move forward to a Swachh GST.