From today onwards, India and all the stakeholders connected with supply and receipt of taxable goods or services or both shall experience, “one tax one nation” concept called GST. Our Prime Minister calls it “Good & Simple Tax”. Many people call it as a biggest reform India would have ever experienced after independence; some call it a GDP growth driver between 1.5 to 2% and still some other calls GST good for all of us Consumers. The law making process, the Rules, the Notifications, completed or not completed, GST will have a “profound impact” on our personal disposable incomes. The cat fight between the industry, trade and Government is for their own survival or growth or profits. But entire GST law as made shall pass on the entire burden to us – Consumers.
GST will put an onerous accountability on Tax Administration, its authorities as well as the tax professionals, both chartered accountants and lawyers engaged in this field. The Tax Administration, specially the GST Commissioners, both at State and Central level will have to be reformist and judicially honest. The procedural laws, as happens with every new tax laws, will have to be liberally interpreted. Any high-ended approach may cause a serious setback to acceptability of GST and its mechanics as a good law. Tax professionals who wish to practice GST as a career will have to study more and more and give opinions to the stakeholders which are based on laws as framed. Final GST law has no concern with socio-economic consideration. Tax professionals will have to interpret the law and only law.
My Take is that it is too early to even dream that the entire GST mechanism that India face today will result in increase or reduction in prices for Consumers. Any prima facie conclusion drawn on interpolation or extrapolation of statistics or numbers will be an “illusion” only. Now GST is in – the various tax rates and classifications are in. We as professionals have to understand their impact on key sectors that drive our economy i.e. import & export, service sector, real estate, electrical energy, infrastructure etc. No doubt GST shall have serious impact on these sectors. Above all the sectors out of GST i.e. notified petroleum products, electrical energies, real estate shall also contribute to the input cost.
The celebration for GST era – we should all welcome. Whether the realism that the Government takes credit for will in fact happens, it is too early to predict. It is not possible to give any prediction because this is not the GST system that Kelkar Committee recommended, this was not the GST that was conceptualised by the earlier Governments and this was also not the GST where economic disparities among the States shall be balanced by transferring thousands of crores of indirect taxes from manufacturing States to consuming States and then compensating the manufacturing States from GST Compensation Cess Law. No country in the world has ever experienced this law and, therefore, there is no research that says such a law should be good or bad.
The happening of last twenty days in GST Council shows beyond doubt that the final law approved is not legally solid. Already many notifications have been issued and I am very sure many more will follow from today onwards. When we draft a new law, the legal principle is we should be more creative and sell such a law in a democratic way to all the stakeholders. The Government, as it seems today, does not seem to have done so. The last ten days of retail sale, halt at manufacturing units, widespread agitation and protests and international experts terming our GST law as “highly complex law” may be “knee-jerk” reactions but still these are genuine reactions.
GST will have impact on farmers, GST will have impact on huge labour class in the country, GST will have impact on our infrastructure specially the power sector, GST will have impact on real estate sector and above all, GST may also impact our individual “personal disposable incomes”. If the impact is negative, economy will slow down. Let us hope as we unfold this law into realism, the impact is favourable as we all are hoping for.
One thing the Government must ensure is judicially honesty in dealing with the huge litigation that will follow in GST. The advance ruling mechanism must be implemented in a very honest manner and not as usual in a revenue biased manner. The appellate mechanism, which is four level, should have been time-bound. The enforcement machinery including seizure and detention should be used with a lot of caution. While it is impossible to stop corruption in any tax regime; through GST, if human interface with the Tax Administration and the so called “Inspector Raj” is curbed, perhaps there is a semblance of hope that corruption may come down.
GST Council has to be very modern and proactive and must meet every week for the first year. The long returns forms, the cumbersome procedures, the clarity of classifications of goods or services or both must remain a continuous exercise. GST law must not be made a notification law. Wherever required on six monthly basis, the Act must be amended so that the stakeholders do not have to carry on with hundreds of notifications and their interpretation.
“Huge Education Spread” must continue and the dialogue between the Tax Administrators, Human Resource Training & Development and interaction of GST Council directly with the stakeholders must remain as ongoing and effective exercise.
Let us welcome GST with open hearts and embrace it with dignity, honesty and transparency. We all have responsibilities to speak against people who try to unjustly enrich themselves by not passing on a tax benefit, wherever possible, to the Consumers from today onwards. Let us file complaints against such businessmen u/s 171 to ensure they do not misuse this law.
CA Rashmi Jain
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