Virtually All States Support GST - FM
"VIRTUALLY all states have supported the idea of GST today barring Tamil Nadu which has expressed some reservations. Tamil Nadu has offered a few suggestions which have been noted by the committee.", said the Finance Minister yesterday after a meeting of the empowered committee of State Finance Ministers. He said that there was no deadline as such but hoped to get the laws in place by the end of this year. The Finance Ministry released the Model GST Law for public scrutiny. And every line will be dissected in the coming days. I am personally very pessimistic about GST being a reality in the near future and am really scared about the monster that is going to be unleashed, but a few observations on the Draft Act may be not out of place.
The Mysterious Competent Authority: In Government, there is a latent mysterious "Competent Authority" who seems to be all powerful but rarely visible. In most of the cases, we do not know who this 'competent authority' is. The GST Act also has this 'competent authority' propping up many times. The 'competent authority' can
1. Authorize distrain and detention of property for recovery of tax;
2. Extend the period for return of seized goods;
3. Authorize an officer to summon any person;
4. Compound offences;
5. Decide on persons authorized to represent;
6. Transfer proceedings from one officer to another;
7. Decide on publication of names of offenders;
8. Issue written instructions;
9. Delegate powers;
10. Extend the period for return of goods cleared for job work.
But who is this omnipotent 'competent authority'?
There is however one place where the 'competent authority' is defined. For issue of completion certificate for construction of a complex. In the days to come let's hope to find this authority, who is going to be the unseen hand that is going to run the GST regime.
Capital Goods under some schedule: The model Act defines Capital Goods as;
"capital goods" means: -
(A) the following goods, namely:-
(i) all goods falling within Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading6805, grinding wheels and the and the like, and parts thereof falling under heading 6804 of the Schedule to this Act;
The schedule to this Act has no Chapters and headings; what is meant is obviously the schedule to the Central Excise Tariff Act.
Retrospective Notifications: The Act seeks to confer certain 'retro' powers on the officers. Section 132 provides for - The Central Government (or the State Government) may, on the recommendation of the Council, make rules, including rules conferring the power to issue notifications with retrospective effect under those rules, to carry into effect the purposes of this Act. As per Section 21, the registration can be cancelled with retrospective effect.
What is input tax credit? Section 2(58) defines "input tax credit" as credit of 'input tax' as defined in section 2(56) - and section 2(56) defines "Input Service Distributor"!
GST compliance rating:
(1) Every taxable person shall be assigned a GST compliance rating score based on his record of compliance with the provisions of this Act.
(2) The GST compliance rating score shall be determined on the basis of parameters to be prescribed in this behalf.
(3) The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain in the manner prescribed.
Lawyer friendly: The Law seems to be as lawyer-friendly as possible.