the essay of 4 July 2018 · the untouched capture
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<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399">JULY 04, 2018 </font></strong></font></p>
<p align="center"><font color="#FF6633" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">From Air Conditioners and Hawai Chappals to Milk and Mercedes</font></strong></font></p>
<p align="center"><u><font face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">By Vijay Kumar </font></strong></font></u></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span"><strong>The One Year Journey</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It was grand celebrations right across the country for the first anniversary of GST. From the President, down to the proletariat (which is not a very fashionable word these days), everybody had a comment to make on the success of GST. The CBIC awarded appreciation certificates to 35 of its officers, all richly deserving. The States which got a major share of the Prime Minister's congratulations for the success of GST, were rather subdued in their celebrations. Though the outgoing Chairman of CBIC wanted the CGST Department to celebrate the day in co-ordination and association with the State Governments, it appears that there were hardly any joint celebrations as the States and Central Governments celebrating the much glorified co-operative federalism did not see much of a common cause to celebrate one year of GST. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, much has been written and talked about the greatest tax event in the history of Independent India. GST has made everybody a tax expert. Just yesterday, immediately after the Nation celebrated the first anniversary of GST, I found an ordinary citizen quarrelling with a Bank Manager for deducting GST on a penalty imposed on him for not maintaining a minimum balance. "How can you collect GST; what service have you provided to me; you punished me for my poverty and you want me to pay service tax on that", he thundered. The Bank manager had a tough time to explain that for every rupee charged, there has to be a <em>"goods and services tax"</em>. <em>"But what did you give me?; Neither goods nor services"</em>, asked the citizen and exclaimed in helpless anger, "you charge me because I did not have enough money to maintain the minimum balance and on top of that the government punishes me with a tax on the service alleged to have been provided to me!; If this is service and this is tax, there is something wrong with both" </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Perhaps, even the Bank Manager is not aware that the CBIC had released a <a href="https://taxindiaonline.com/RC2/pdfnoti/gst/expert_panel/FAQs_on_Financial_Services_Sector_04june2018.pdf" target="_blank"><strong>FAQ</strong></a> on 4th June 2018 concerning the Banking, Insurance and Stock Brokers Sector wherein against FAQ 49, on Page 17, it is answered thus – </font></p>
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<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">49.</font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Would imposition of a fine or </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">penalty</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> for violation of a provision of law be a consideration for the activity of breaking the law, making such activity as service? </font></td>
<td><font size="2" face="Verdana, Arial, Helvetica, sans-serif">No. fines and penalties are imposed for breaking the law by a person. they are not in the nature of a consideration for an activity and hence, would not constitute a supply of service. </font></td>
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<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">But what about the GST already collected by the Bank by debiting this "insufficient minimum balance account"? Can it be refunded <em>suo motu </em> to the impoverished account holder? </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Can there be one rate of GST for air-conditioners, chappals, milk and Mercedes? </strong>It all started with air-conditioners and chappals and ended with milk and Mercedes. Writing in his blog on October 26, 2016, the then Finance Minister Mr. Arun Jaitley stated, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Some have suggested that multiple tax rate is disadvantageous to the GST and would neutralise some of the advantages of a uniform tax structure. The reality is that a multiple tax rate in India is inevitable for several reasons. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>Different items used by different segments of society have to be taxed differently. Otherwise the GST would be regressive. Air conditioners and hawai chappals cannot be taxed at the same rate</em>.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Prime Minister agrees, though his choice of commodities is different. While it was air-conditioners and chappals for Mr. Jaitley, the PM chose milk and Mercedes. In an interview to Swarajya, a day before the first anniversary of GST, the Prime Minister said, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>It would have been very simple to have just one slab but it would have meant we could not have food items at zero per cent tax rates. Can we have milk and Mercedes at the same rates? So, when our friends in Congress say that they will have just one GST rate, they are effectively saying they will tax food items and commodities, which are currently at zero or 5 per cent, at 18 per cent</em>.</font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Once you understand the intricacies of chappals and milk on one side heckling air-conditioners and Mercedes cars on the other side, GST is easy. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Finance Minister was emphatic and postulated certain laws as strong as the laws of motion that: </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Different items used by different segments of society <strong>have </strong> to be taxed differently. (Why?) </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Air conditioners and hawai chappals <strong>cannot </strong> be taxed at the same rate. (Why?) </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Prime Minister asks a question, <em>"Can we have milk and Mercedes at the same rates?"</em> and scores a political point against the opposition that it wants to tax food items at 18%. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Though the Finance Minister took air-conditioners as his example, he later took cars also. While speaking in Parliament on the GST Bill, he said, " <em>if you said that a Hawaii chappal and a <strong>BMW car </strong> have one rate, then it will be a regressive tax. That is not possible. You will have to have separate rates for them. </em>" Only difference is, the FM's choice was BMW while that of the PM is Mercedes. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Then, what is this ‘One Nation, One Tax' slogan all about. The FM explained that in Parliament - <em>For one commodity, there will be only one rate in the country. </em></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Arun Jaitley posted a rather long article on his Facebook page titled – 'The GST Experience'. He seems to be smiling broadly at the success of GST and the experiment of the GST Council. He stated, </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>"We have held 27 meetings of the GST Council so far where every decision has been taken by consensus and unanimity. All the rates are fixed through consensus on the recommendation of the Rates Committee. Whenever there are contrarian views in the Council, a representative Group of Ministers of the State is constituted to work out a via media and we try to evolve consensus one way or the other. I do realise that the delicate federal balance in India has to be maintained. The GST Council is India's first experience at cooperative-federalism based decision-making authority. We cannot afford to risk a failure and, therefore, it is functioning as to arouse confidence amongst all States. The meetings have always been consensus based. The only area where unanimity seems to be lacking is the television bites that some Ministers' give after the meeting, which may be necessary for their own political positon. I am willing to live with the experience of a healthy debate and unanimity within the Council and a show of dissent outside the Council meetings.</em>"</font></p>
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<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span"><strong>But who is the Finance Minister of India? </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Normally, this would have been an easy question to answer, but I found this question to be tougher than any question under the GST and as in GST, I did not get a single answer. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The website of the Cabinet Secretary says that Mr. Arun Jaitley is the Minister without portfolio. It also says that Mr. Piyush Goyal is the Minister of Finance. A communication from the Cabinet Secretariat No.1/34/1/2018-Cab, dated 14th May 2018, states that "<em>Shri Arun Jaitley relinquished the charge of the office of the Minister of Finance and the charge of the office of the Minister of corporate affairs and assumed the charge of the office of the Minister without portfolio </em>." It also states that Shri Piyush Goyal has assumed the charge of the office of the Minister of Finance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Income Tax Department's website says that Shri Arun Jaitley is the Finance Minister, which is confirmed by the CBIC website, though not very strongly. You find a picture of Mr. Jaitley on the right hand top corner and when you click there you are taken to a page which says, "page not found". The Finance Ministry's website also tells us that Mr. Jaitley is the Finance Minister. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr. Arun Jaitley himself affirms that he is the Finance Minister, both in his Twitter and Facebook accounts. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In GST or in any other matter, it is not always wise to go by what the official website declares; you better see the original order/notification/circular/Act and then try to arrive at your conclusions, which most likely will be wrong. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span"><strong>CBIC Chairman Retires </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While the celebrated event of the first anniversary of GST drew a lot of attention, another happening went almost unnoticed. The Chairman of CBIC, Ms. Vanaja Sarna retired on 30.06.2018. GST came into existence during her tenure as Chairman of CBIC (then CBEC). Though these things are seldom recorded and rarely remembered, she can always proudly recall that GST was introduced in India during her Chairmanship of the Board. In her D.O Letter to her colleagues on 1 st July 2017, Ms Sarna said, "A new era in indirect taxation dawns from today bringing along with it a renewed sense of rejuvenation." The new Chairman Mr. S. Ramesh who started his tenure with the GST Day celebrations has only less than a year of service left to steer the GST administration in the country. There is a talk of enhancing the retirement age of government servants. </font></p>
<p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Seizure story ends…well, almost! </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In my previous Jest GST column dated 27th June 2018 titled<em> "<a href="https://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=33896" target="_blank">Story of a Seizure</a>"</em> I had mentioned the following about the private Jet Airbus 319 belonging to Vijay Mallya's Kingfisher and which was put up for auction for recovery of Service Tax dues. </font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#663399">"The official Liquidator has now issued an E-Auction Notice to hold the auction on 28.06.2018. There were heavy rains in Mumbai during the last few days. It is not known whether the aircraft is standing still or floating. </font></em></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>The Valuation Report attached to the Auction document states - </em></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1 The Aircraft is not preserved as required by Civil Aviation Regulation. </em></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>2 The aircraft was very dirty and in a very poor aesthetic condition. </em></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>3 The aircraft has not been preserved for over 5 years and has not been washed for more than 30 months. </em></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>4 Garbage and bird activity is present in the engines. </em></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>5 There are clear signs of corrosion given the geographical location of the aircraft both humidity and the fact that the aircraft has been stored in a coastal city for over 5 years. </em></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>6 Only a nominal value can be attributed to the aircraft."</em></font></p>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Incidentally, the PTI has reported on GST day that the Service Tax department has sold Mallaya's luxury jet for a <strong><em>paltry </em></strong> Rs.34.8 crores (USD 5.05 million). </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The PTI news states - </font></p>
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<td><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">The service tax authorities had put the luxury A319 jet, which Mallya used to crisscross the world to solicit business deals, under the hammer to recover their dues to the tune of Rs 800 crore accumulated on account of non-payment of service tax before his erstwhile Kingfisher Airlines went belly up in October 2012. </font></td>
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It seems that nice words have found their way into government reporting these days. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">[<font color="#993300">Dictionary meaning:Belly up – If you've ever had a goldfish, you probably noticed how it looked when it dies: belly-up. The same term can be used for financial failures…</font>]</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">By the way, even the word "farrago" [noun – a confused mixture] was considered worth using in this PIB <a href="https://taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=33936">news item</a> carried by us and pertaining to the GST day celebration. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The line reads - </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">Before implementation of GST, Indian taxation system was a <em>farrago </em> of central, state and local area levies. </font></p>
<div align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And we all know who brought this word into the limelight!</font></div>
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