GST Council may take up red-tapeism
NEW DELHI: The GST Council is expected to discuss alleged Kafkaesque bureaucratic decisions to enforce compliance of goods and services tax, which may have serious implications for the industry, during the council’s meeting on Friday.
Punjab finance minister Manpreet Singh Badal has informed Union finance minister Nirmala Sitharaman that bureaucratic decisions—ranging from restricting input tax credits to cancellation of GST registration—set a dangerous precedent by delegating excessive powers to bureaucrats. He said Punjab will not incorporate such legal changes in state legislation in the future unless they were cleared by the council.
Punjab highlighted the hardships faced by many businesses owing to sustained tightening of rules to improve tax compliance at a time when the second wave of infections has led to muted consumption demand and disrupted cashflows.
Badal referred to the substantive nature of the decisions by the GST implementation committee, comprising officers tasked with routine and procedural matters, and the changes in rules, such as for the payment of minimum tax in cash when tax credit is available, or the cancellation and suspension of GST registration on additional grounds, restrictions on validity of e-way bills, and e-invoicing requirements for companies with ₹100-500 crore in sales, which has led to higher compliance burden.
Badal said the rules must either be withdrawn or be placed before the council for formal approval with retrospective effect.
“..GST is being increasingly perceived to be causing excessive harassment and arbitrariness (eg. freezing of productive assets of businesses, suspension of registrations and denial of eligible tax credits) and moving away from a fair and non-adversarial tax system that forms the foundation for a progressive tax regime,” Badal said in his letter to Sitharaman on Monday. Mint has seen a copy of the letter.
Email queries to the finance ministry seeking comments for the story remained unanswered till press time. Industry representatives said the situation for businesses is very bad. “This is not the time for tighter compliance. Many offices remain closed and consultants do not have the wherewithal to do the work of their clients from home. Relief on all compliance obligations relating to GST and income tax should be given till December,” said an entrepreneur, seeking anonymity.