the essay of 20 February 2019 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="left"><font color="#663399"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">FEBRUARY 20, 2019</font></strong></font></p> <p align="center"><font color="#FF6633" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2">A Mouse Made to Government Specifications </font></strong></font></p> <p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u>By Vijay Kumar</u></font></strong></p> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif"sans-serif" style="background-color:#FFFF00" span="span">It is said that an elephant is a mouse made to Government specifications. </font></em></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>I</strong> honestly believe that what the Prime Minister really wanted was a simple tax, as simple as clicking a mouse and he must have asked his government functionaries to design that mouse and in all sincerity, they must have presented him with the elephant. Now all that you have to do is close your eyes and click that government created mouse. Life is good and simple. It gave me tremendous enlightened pleasure to read the recent comments of a great GST expert Yogi Adityanath, <em>"During the implementation of GST, people were criticising the new taxation regime. However, we should be thankful to Prime Minister Narendra Modi who implemented the GST against all odds."</em>. Of course, the not so enlightened Manmohan Singh addressing Management students around the same time said, "<em>The small and unorganised sectors, which were vibrant and contributing to generation of wealth and employment opportunities, have suffered in the wake of disastrous demonetisation and slipshod introduction and implementation of the GST."</em> It is any day better to follow a current Chief Minister than a former Prime Minister. So, I do so. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">While I have absolutely no doubt that GST is a simple tax, I can't say so for the English language and unfortunately, the GST laws and multitude of clarifications are in that not so simple language. <strong>While</strong> I was going through a solemn clarification given by the CBIC this week, I was stuck on the usage of '<strong>while</strong>'. Two sentences in the Board Circular made me <strong>while</strong> away all my time trying to figure out what they really meant. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Applicability of integrated tax on goods transferred/sold while being deposited in a warehouse (hereinafter referred to as the <em>"warehoused goods"</em>) was clarified. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Supply of warehoused goods while deposited in custom bonded warehouses had the character of inter-State supply. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, what does the first sentence mean? Should the goods be transferred/sold <strong>while</strong> being deposited? Should the transfer and deposit take place at the same time? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the second sentence? Who knows what it means? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What they meant was, perhaps, transfer/supply/sale of goods deposited in a warehouse. But things can't be all that simple. We need the huge machinery to function <strong>while</strong> you try to decipher what it all means. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Forget the language, the tax is simple. What the Board has clarified is that suppliers who had paid CGST instead of IGST during a particular period because there was no facility created by the Government to make correct payment, are now excused as a one-time-measure. If you make a mistake because of a government mistake, you will sometimes be pardoned. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>While</strong>, all the <strong>while</strong>, you thought only you could make mistakes! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see CBIC <strong><a href="https://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjUzODM=" target="_blank">Circular No. 91/10/2019-GST</a></strong>, dated 18.02.2019 for more clarity. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has also issued a couple of other instructions this week. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has instructed that all registered persons making supply of goods or services or both in the course of inter-State trade or commerce shall specify the place of supply along with the name of the State in the tax invoice. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If you don't know how to determine the place of supply, the provisions of sections 10 and 12 of the<a href="https://taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/gst/igst_act/2017/igst_act_index.htm" target="_blank"> <strong>Integrated Goods and Services Tax Act, 2017</strong></a> may be referred to in order to determine the place of supply in case of supply of goods and services respectively. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board also warns that contravention of any of the provisions of the Act or the rules made thereunder attracts penal action under the provisions of sections 122 or 125 of the CGST Act. - <strong><a href="https://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjUzODI=" target="_blank">Circular No. 90/09/2019-GST</a></strong>, dated 18.02.2019. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In another Circular, Board has instructed that the registered persons making inter-State supplies to unregistered persons shall report the details of such supplies along with the place of supply in Table 3.2 of FORM GSTR-3B and Table 7B of FORM GSTR-1 as mandated by the law. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here also Board warns that contravention of any of the provisions of the Act or the rules made attracts penal action under the provisions of section 125 of the CGST Act. - <strong><a href="https://taxindiaonline.com/RC2/notDesc.php?MpoQSrPnM=MjUzODE=" target="_blank">Circular No. 89/08/2019-GST</a></strong>, dated 18.02.2019 </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#FF0000"sans-serif" style="background-color:#FFFF00" span="span"><strong>GST Impact: </strong></font></em></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Hon'ble Minister of State for Finance Mr. Shiv Pratap Shukla, in reply to a question told the Lok Sabha recently,<em> "The GST has replaced multi-layered, complex indirect tax structure with a simple, transparent and technology-driven tax regime. It will integrate India into a single, common market by breaking barriers to inter-State trade and commerce, by eliminating cascading of taxes and reducing transaction costs. It will enhance ease of doing business in the country and provide an impetus to "Make in India" campaign. GST will result in "ONE NATION, ONE TAX, ONE MARKET." </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the process, the Government had to revise its Budget Estimates for 2018-19. The GST collection estimates were reduced from 7.4 lakh crores to 6.4 lakh crores and the Minister in reply to another question stated that it is clear that the GST collection in the current FY (2018- 19) has been showing improvement compared to last FY (2017-18). The average gross collection of GST in the current FY 2018-19 is Rs. 97,555 crores (till January'19) as compared to last year average collection of Rs. 89,885 crores. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">What is wrong is not the collection, but the estimates. GST is not only simple, but also a success. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"sans-serif" style="background-color:#FFFF00" span="span"><strong><font color="#FF0000">One e-way bill; three invoices; goods and vehicle detained: </font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the e-way bill generated, the supplier has shown three invoices. Noting that separate e-way bill will have to be generated to each of the invoices, goods and vehicle have been detained by the GST authorities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The matter is before the High Court. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The High Court noted that, it is not a case where e-way bill does not mention all the invoices. There may be practical difficulty for the Department in tracking the invoices, when multiple number of invoices mentioned in the e-way bill generated. Anyhow, the High Court was of the view that goods and vehicle shall be released to the petitioner on executing a bond and ordered that the goods along with vehicle shall be released to the petitioner on executing simple bond. - <a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTQ1OTQ4" target="_blank"><strong>2019-TIOL-447-HC-KERALA-GST</strong></a>. You must be thorough with the Law before taking to the road. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"sans-serif" style="background-color:#FFFF00" span="span"><strong><font color="#FF0000">Where is the Appellate Tribunal</font></strong>: </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Section 109(1) of the CGST Act stipulates, <em>"The Government shall, on the recommendations of the Council, by notification, constitute with effect from such date as may be specified therein, an Appellate Tribunal known as the Goods and Services Tax Appellate Tribunal for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority." </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But where is the Tribunal? Appellate Authorities have been passing orders and the assessees do not know where to go in appeal against the orders of the mighty appellate authorities. One such assessee approached the Allahabad High Court. On 17.4.2018, the High Court issued notice to the Government. Recently, on 13.02.2019, the High Court observed, <a></a></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>In this matter learned counsel for the G.S.T. Council is unable to tell as to whether the Tribunal is constituted or not. Learned standing counsel appearing for the State is also unable to tell as to whether the State has moved in the matter or not. List this matter on 28th February, 2019. On that date in addition to standing counsel, some responsible officers of the State from Lucknow as well as G.S.T. Council will appear in this matter. </em></font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see <a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTQ1OTYy" target="_blank">2019-TIOL-449-HC-ALL-GST</a>. </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Until next week… </font></p> </body> </html>