Author: Nandini Tripathy, LL.M IPR and Technology Law from Jindal Global Law School Sonipat.
Abstract
GST also known as the Goods and Services Tax is defined as the giant indirect tax structure designed to support and enhance the economic growth of a country. More than 150 countries have implemented GST so far. However, the idea of GST in India was mooted by Vajpayee government in 2000 and the constitutional amendment for the same was passed by the Lok Sabha on 6th May 2015 but is yet to be ratified by the Rajya Sabha. However, there is a huge hue and cry against its implementation.
The Goods and Services Tax (GST), implemented on July 1,2017, is regarded as a major taxation reform till date implemented in India since independence in 1947. GST was planned to be implemented in April 2010 but was postponed due to political issues and conflicting interest of stakeholders. The primary objective behind development of GST is to subsume all sorts of indirect taxes in India like Central Excise Tax, VAT/Sales Tax, Service tax, etc. and implement one taxation system in India.
The GST based taxation system brings more transparency in taxation system and increases GDP rate from 1% to 2% and reduces tax theft and corruption in country. The paper highlighted the background of the taxation system, the GST concept along with significant working, comparison of Indian GST taxation system rates with other world economies and presented in-depth coverage regarding advantages to various sectors of the Indian economy and outlined some challenges of GST implementation. It would be interesting to understand why this proposed GST regime may hamper the growth and development of the country.
Research Questions
What is the present indirect tax structure in India?
What are the various opportunities and challenges of GST and comparative study on impact of taxes in non-GST regime and GST regime?
What is the implementation process of GST in India?
Objectives
The basic objective of the study is to understand and evaluate the study of implementation and its impact of Indirect Taxes into GST in India is analysed during the last decade. The above primary objective can be sub divided into the following specific objectives: -
a) To study the concept of GST in India.
b) To study the conversion and implementation process of GST in India
c) To overview the present indirect tax structure in India with justification of introduction of GST in India.
d) To understand the core concepts of Goods and Service Tax (GST) with empirical analysis of GST Model.
e) To examine various opportunities and challenges after the implementation of GST along with a comparative study on impact of taxes in non-GST regime and GST regime.
Research Methodology
The research paper is based on empirical study. It is a type of descriptive research paper.
1. The first objective of the paper is to highlight the impact of GST on Indian Economy.
2. The second objective is to explain the working mechanism of GST in India.
Importance of the Study
1. The study will highlight the effect of GST on Indian Economy.
2. It will prove to be of great help to a common man to understand the concept the GST.
3. It will remove the morbid fear of GST from among the business community members.
Data Collection: This paper is a descriptive paper based on secondary data collected from different books, news-paper articles and research journals.
Introduction
GST stands for Goods and Services Tax levied via the Government in a pass to update all the indirect taxes. In India, the concept of GST became pondered in 2004 via the Task Force on implementation of the Fiscal Responsibility and Budget Management Act, 2003, named Kelkar Committee. The Kelkar Committee changed into convinced that a dual GST system shall be able to tax nearly all the products and services and the Indian economic system shall be able to have wider market of tax base, improve revenue collection through levying and collection of oblique tax and extra pragmatic approach of green useful resource allocation. Under the Goods and Service Tax mechanism, all people are prone to pay tax on output and shall be entitled to experience credit score on input tax paid and tax will be only on the quantity of value introduced. The primary purpose of GST is to eliminate cascading effect i.e.
Tax on tax and it's going to lead to bringing about price competitiveness of the products and services each at the national and worldwide market. GST System is constructed on integration of unique taxes and is likely to provide full credit score for enter taxes. GST is a complete model of levying and collection of indirect tax in India and it has replaced taxes levied both by way of the Central and State Governments. GST be levied and gathered at every stage of sale or buy of products or services based on enter tax credit method.
Under this system, GST-registered business houses will be entitled to say credit of the tax they paid on buy of products and offerings as part of each day agencies. The ancient GST or goods and offerings tax has grown to be a reality. Under GST, goods and services fall beneath five tax classes: zero in line with cent, five in line with cent, 12 consistent with cent, 18 in line with cent and 28 consistent with cent. For corporates, the elimination of a couple of taxes will enhance the ease of doing commercial enterprise. And for consumers, the largest advantage would be in phrases of a reduction inside the average tax burden on items. "Inflation will come down, tax avoidance may be tough, India's GDP may be benefitted, and further sources can be used for welfare of negative and weaker section," Finance Minister Arun Jaitley said at GST release event in Parliament. The Lok Sabha has eventually Passed the Goods and Services Tax Bill and predicted to have a giant impact on each industry and each customer. Apart from filling the loopholes of the modern machine, it's also aimed at boosting the Indian economic system. This could be finished with the aid of simplifying and unifying the indirect taxes for all states during India.
The GST regime
A new system is always introduced to rectify the lacunas of the old ineffective system. Similarly, the GST system was introduced in India with the idea to revamp, reshape and to repair the indirect taxation system of India. Therefore, in order to recognize the effects of the revamping and reshaping of indirect taxation structure of India it is imperative to understand the pre-GST regime, post-GST regime and to draw a comparative analysis of the same.
The previous structure has a multi-tier taxation structure which had been adversely affecting the economy in the long run. The tax ecosystem levied taxed on two levels i.e. the Central and the State level which resulted in imposition of a number of taxes, thereby leading to a ‘cascading effect of taxes’.
The cascading effect of parallel taxation had been making tax as cost of product resulting into burden on the pocket of the consumer. For example in the earlier tax regime, a product X was manufactured and sold by manufactured for Rs 100/-. That product was added with the burden of excise duty of 12% , Central VAT tax of 5%, State VAT of 14% and the trader was not permitted to claim input tax credit with respect to services opted by him/her in their business. Input tax credit could be availed only when the input and output tax are of the same head.
However, in the Pre-GST regime from manufacturer to the consumer at every stage there was a different head of indirect tax which failed to provide input tax credit to the businesses resulting into tax being a cost and a heavy burden on the pocket of the consumer and therefore, the GST regime was introduced whereby the indirect taxes were made uniform so that the input tax credit facility can be availed from manufacturer to the consumer at every stage which ultimately reduced the burden of tax being a cost on the pocket of the consumers.
Goods and Services Tax (GST) – Current Scenario
Core Concept Of Gst
Indian industries are not able to compete in the global market because of the various limitations of Indirect Taxes such as complicated and comprehensive tax structure, lack of transparency and more legal conflict due to different interpretation. GST is one indirect tax for the whole nation, which will make India a unified common market. GST is one tax that is levied on supply of goods and services, which will be shared among the Central Government and the State Governments as per the GST council.
BRIEF HISTORY OF GST IN INDIA
The introduction of GST is a historical reform in the Indian taxation system. GST aims to alleviate the cascading effects of the complex tax system and promote the economic growth of the nation. The prices of the commodities will also be impacted since any indirect tax paid before would be imposed on the consumers in the final stage. GST is proved to be an effective tool of fiscal policy. India has enacted this new proposal to project itself as a beneficial market to international investments.
The mitigation of double taxation or the elimination of the cascading effect of taxation is one of the most important benefit. A way has been paved for a common national market in respect to the initiative. Post GST implementation, the competitive level of Indian goods in international and domestic markets have risen comparatively. The overall tax burden would have a 25% to 30% marked reduction from the viewpoint of the consumer. It’s also easier to administer The GST on an overall scale, due to its self-policing and transparent nature.
ORIGIN OF GST
Several countries have already established the Goods and Services Tax. In Australia, the system was introduced in 2000 to replace the Federal Wholesale Tax. GST was implemented in New Zealand in 1986. A hidden Manufacturer’s Sales Tax was replaced by GST in Canada, in the year 1991. In Singapore, GST was implemented in 1994. GST is a value-added tax in Malaysia that came into effect in 2015.
July 2000, is the year of origin of Goods and Services Tax, the Empowered Committee of State Finance Ministers with the Hon’ble State Finance Ministers of West Bengal, Karnataka, Madhya Pradesh, Maharashtra, Punjab, Uttar Pradesh, Gujarat, Delhi and Meghalaya were set up as members by the Government of India with the following objectives:
to monitor the implementation of uniform floor rates of sales tax by States and Union Territories.
to monitor the phasing out of the sales-tax based incentive schemes.
to decide milestones and methods of States to switch over to VAT.
to monitor reforms in the Central Sales Tax system existing in the country.
TYPES OF GST CGST
(Central GST): CGST is levied on supply of goods and services within a state and the revenue collected belongs to the central government.
SGST (State GST): SGST is levied on supply of goods and services within a state and the revenue collected belongs to that state government.
UTGST (Union Territories GST): The union territories in India are accounted under a specialized taxation called UTGST.
IGST (Integrated GST): The inter-state trade and commerce activities that involve the movement of commodities and services will be levied with IGST. The revenue out of IGST is shared by state government and central government as per rates fixed by the authorities.
Need for GST- Goods and Services Tax
As in line with the reports of Task Force on Goods and Services Tax (2009), the Indian taxation device led to misallocation of resources and lower productiveness in terms of monetary boom, worldwide exchange, and overall improvement of the Indian financial system. Therefore, there has been an emergent need to replace the existing tax machine with a brand-new engine of taxation of goods and services to achieve the following objectives:
The tax occurrence fell in the main on home intake.
The optimization of efficiency and fairness of the Indian machine is desired.
There have to be no export of taxes across the taxing jurisdiction.
The Indian marketplace must be delivered underneath a single umbrella of not unusual marketplace.
Enhancement to the purpose of cooperative federalism.
An Overview of Present Indirect Tax Structure
The growth and prosperity of any economy in the World is exclusively depends upon the revenue generated from both indirect and direct taxes. The finance is the pre-requisite strength for creating the basic and core infrastructure in order to facilitate trade, industry and other ancillary services.
The taxation policy of Govt. aims to meet its legitimate need to collect the tax revenue to fund public services and developing core infrastructure in phased manner which is the important instrument for stimulating industrial growth, promotion of trade and commerce and generating employment opportunity for young India. The structure of Indirect Taxes as existing up to 30.06.2017 was based on three lists in Seventh Schedule to Constitution of India in 1950, which was based on Government of India Act, 1935.
The Ministry of Finance, Govt. of India has initiated many tax reforms and made structural changes in economic policy in phased manner in order to strengthen our tax regime.
Benefits of GST to the Indian Economy
Removal of bundled oblique taxes consisting of VAT, CST, Service tax, CAD, SAD, and Excise.
Less tax compliance and a simplified tax coverage compared to modern tax shape.
Removal of cascading impact of taxes i.e. Gets rid of tax on tax.
Reduction of manufacturing costs because of lower burden of taxes on the producing region. Hence expenses of consumer goods can be likely to come down.
Lower the weight on the not unusual guy i.e. Public will should shed much less money to shop for the identical merchandise that were high-priced in advance.
Increased demand and consumption of products.
Increased demand will cause increase deliver. Hence, this may in the end cause upward thrust in the manufacturing of products.
Control of black cash circulate because the device normally followed via buyers and shopkeepers will be positioned to a mandatory test.
Boost to the Indian financial system in the end.
These are possible best if the actual benefit of GST is surpassed on to the very last client. There are different factors, which includes the seller’s earnings margin, that determines the very last rate of goods. GST by myself does now not determine the final rate of products.
Advantages of GST to the Consumers
1. The major advantage of GST is that it decreases the cost of product and services. So, consumers will get the products and services in lesser cost as compared to prices as per previous tax structure under VAT. It will result in increasing purchasing power and capacity of savings.
2. It will increase the employment opportunities in India.
3. There will be uniformity in prices throughout the country.
4. It will increase transparency in the tax system.
Advantages of GST to the Producers
1. GST is a single taxation device with the intention to lessen the quantity of oblique taxes. From now, a single taxation time period might cowl all those indirect taxes.
2. The costs of services and products might lessen; consequently, this system might prove to be beneficial for the those who are bored stiff of paying high expenses.
Three. This would reduce the load from the state and the relevant authorities. With the creation of GST, all oblique taxes would come underneath a single roof.
Four. GST could no longer be charged at every factor of sale like different indirect taxes so on this way, marketplace could be advanced.
5. Corruption-free taxation device. GST would introduce corruption-unfastened taxation gadget.
6. Less tax compliance.
Impact of GST on Manufacturers, Distributor, and Retailers
GST is a boost competitiveness and performance in India’s production area. Declining exports and excessive infrastructure spending are simply some of the worries of this sector. Multiple oblique taxes had also improved the executive fees for manufacturers and vendors and with GST in place, the compliance burden has eased, and this region will grow greater strongly. But because of GST commercial enterprise which changed into no longer below the tax bracket formerly will now must register. This will cause lesser tax evasion.
Impact of GST on Service Providers
As of March 2014, there had been 12, 76,861 carrier tax assesses. Out of which handiest the top 50 paid greater than 50% of the tax gathered nationwide. Most of the tax burden is borne through domain names together with IT services, telecommunication services, the Insurance industry, commercial enterprise help offerings, Banking and Financial services, and so on. These pan-India corporations already work in a unified market and will see compliance burden becoming lesser. But they may should one at a time check in every place of job in each country.
Impact of GST on Various Sectors
Goods and Services Tax will unite the Indian economic system into one commonplace marketplace under a single umbrella of taxation quotes, leading to easiness of beginning and doing groups, leading to boom in savings and price discount among numerous sectors. Some industries can be empowered by using GST because of reduction in tax quotes, whilst some will lose because of higher charge of GST pursuits. In this segment, we talk diverse sectors and complicated the effect of GST on them:
(i) IT Companies
GST will permit greater implementation of virtual structures and services. GST will boom the fee of tax from 14 -15% to 18%, for you to increase the fee of digital merchandise like mobile phones, laptops, etc.
(ii) FMCG Industry
GST will have a sizable impact on the FMCG zone. Some meals gadgets are exempted underneath GST like grains and cereals, milt, meat, fish, culmination and veggies, candy etc. Before GST, FMCG agencies paid 24-25% tax together with Excise Duty and so on. With GST, the rate of return could be 17-19% leading to sturdy effect in manufacturing and consumption.
(iii) Online Shopping
With the introduction of GST, diverse Ecommerce organizations will face a good deal burden of work in fee of filling taxes and cost could be increased.
(iv) Telecom Sector
With the current VAT expenses of 15% being changed by18% GST price, the rate of cellular calling, SMS, and broadband services could be impacted. This will have a negative impact for big telecom giants like Airtel, Vodafone, Idea, etc.
ISSUES AGAINST GST IN INDIA
1. The fundamental issue against GST is relating to compensating State Governments. Under VAT, indirect taxes were levied by central and state governments, which was contributing major part of earnings to the state governments. Now, because of GST, state governments have to be relied upon Central government and Financial Commission, State government are supposed to face losses.
2. It may be possible that current tax in some products are higher than it was in previous taxation system.
3. All type of credit is available online only, so the small businesses may find it hard to use it.
Limitations and Issues Pertaining to the Existing Indian Taxation System
Various taxes are imposed on the Indian populace through Central and State Governments like Central Excise, Service Tax, VAT, and so on. Before the creation of VAT in Sales Tax and CENVAT in Central Excise and Service Tax, the Indian Taxation System changed into very complicated and this had cascading results. The tax imposed on one destination turned into additionally taxed on every other. However, in recent times, the taxation device has seen awesome revolutions. Many adjustments in taxation have been applied, this is, VAT, and implementation of Service Tax by using Central Government. In Central Excise taxation machine, the authorities brought CEVAT via placing off taxes on inputs, whilst producing output merchandise. With advent of VAT based taxation gadget in India, the inspiration stone of GST implementation became laid.
The following points spotlight the number one and extreme problems pertaining in Indian indirect tax shape machine:
(i)The CENVAT (excise duty) became imposed on the goods synthetic in India. But issues originated regarding product valuations. The issue concerning implementation of CENVAT handiest at the manufacturing level acted as a critical barrier to efficient and impartial flow of tax credit score. This caused the replacement of VAT to GST in many countries.
(ii)The Indian Constitution has distributed the taxation machine between Central and State Governments. The State government has proper to impose any form of tax on any count number or item below the country. In Service Tax, the Central authorities enjoys the strength to impose tax however in Work Contracts, the State authorities has the dominance. This kind of machine creates distortions in revenue era and distribution for the authorities.
(iii) Various such things as copyrights, patents, software program are not considered for taxation machine with the aid of the authorities. So, complexity again arose for classifying these goods under the taxation regulations.
(iv)With the booming of the carrier zone, the Central authorities has monopolistic proper to impose tax. The State Governments, on the other hand, are dropping their revenue via now not implementing any tax at the carrier region.
(v) Considering CST on inter nation sales of products, no spark off became allowed, which elevated the cascading effect.
(vi) For better tracking and management of taxes, fundamental adjustments in era are required, that's high-priced and time ingesting and has to be redressed.
(vii) Lack of move verification of returns filed underneath Central and State taxation systems led to lot of discrepancies.
(viii)Under the Indirect taxation machine, there have been greater than 15 different taxes which had to be filled under one-of-a-kind norms. So, it required instant and one system law of filling and calculating taxes.
(ix)The Indian taxation gadget turned into bulky and full of burdens and one of a kind taxes on same merchandise in one-of-a-kind states brought about excessive inflation, which needed to be redressed.
Is GST helping the Indian economy for the better?
The Goods and Services Tax is a reform designed to create an atmosphere wherein unfastened and fair opposition can thrive.
The country and centre in unison decided to pool in their aid and sovereignty to create this economic consolidation for the not unusual intention of monetary prosperity. India’s first federal organization, the GST reform does away with the vintage multilayer arbitrary tax scheme, making it simpler to administer taxes whilst making sales series greater efficient.
When country and centre have the autonomy to levy costs based on their options, the complete system is distorted, and the motion of goods also will become hard. Therefore, rooting out redundancy in a tax regime is essential to escape the tax on tax effect. GST has installed area easy and homogeneous tax, the spoils of which may be utilized by the nation and the centre similarly. A wide rate drop throughout the spectrum is considerable, something that was absent in the preceding tax regime. The creation of a unified country wide market across the use of a -under the banner of GST-has increased manufacturing activities. In the current GST council meet, the important thing area of cognizance turned into the cottage industry. The quotes for several uncooked substances have been rationalized in a bid to enhance the country’s small-scale enterprise. In these elements, it resonates with the Make in India Programme which pursuits at making India a production hub.
GST has driven the economic system one step toward a not unusual marketplace i.E loose movement of capital and services. Doing commercial enterprise now has come to be less difficult and the hassle-free movement of the goods enables smoother transport thereby plugging in the logistical inefficiencies. The introduction of a GST Network and E-Way bills has solidified the country's supply chain and installed region a structure that allows transparency. Now a provider can track their shipments whether or not it is intrastate or interstate.
Despite the heavy criticism, the economic system seems to be selecting up tempo and hopefully the advantages of GST will become even more outstanding. A proper analysis of GST’s effect at the financial system can most effective be performed once the coverage has completely taken shape. There are lot extra changes but to come back, but we as a state must take pleasure in in which we stand nowadays with GST. Implementing this kind of huge scale rollout is a frightening mission, one which the authorities has accomplished with much dexterity.
How will GST impact the Indian Economy?
Reduces tax burden on producers and fosters increase via greater manufacturing. The modern taxation structure, pumped with myriad tax clauses, prevents producers from producing to their highest quality capacity and retards growth. GST will deal with this problem by means of supplying tax credit to the manufacturers.
Different tax boundaries, inclusive of test posts and toll plazas, cause wastage of unpreserved items being transported. This penalty transforms into predominant fees due to better wishes of buffer stock and warehousing fees.
There might be greater transparency within the machine as the clients will recognise precisely how a whole lot of taxes they may be being charged and on what base.
GST will upload to the government sales via extending the tax base.
GST will offer credit score for the taxes paid by using producers in the goods or services chain. This is anticipated to encourage producers to buy raw material from distinctive registered dealers and is hoped to herald more companies and suppliers below the purview of taxation.
GST will take away the custom duties relevant on exports. The country’s competitiveness in overseas markets will increase attributable to decrease expenses of transaction.
The Key Highlights of Economic Survey 2018-19
Investment the "key driver" of simultaneous growth in demand, jobs, exports & productivity
Govt proposes to increase retirement age
Data need to be “of the people, by way of the human beings, for the human beings", says government
Govt proposes whole overhaul of minimum wages in India
Dwarfs (companies with less than one hundred workers) regardless of being extra than 10 years antique, account for more than 50% of all organized companies in manufacturing by way of variety. Contribution of dwarfs to employment is best 14% and to productivity is a mere 8%.
To acquire the PM Narendra Modi's imaginative and prescient of $5 trillion financial system with the aid of 2024, India wishes to shift its gears to boost up and maintain a real GDP increase fee of 8%, says Economic SurveyUsing insights from behavioral economics to create an aspirational agenda for social exchange:
From ‘Beti Bachap Beti Padhao’ to ‘BADLAV’ (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi).
From ‘Swachh Bharat’ to ‘Sundar Bharat’.
From ‘Give it up" for the LPG subsidy to ‘Think about the Subsidy’.
From ‘Tax evasion’ to ‘Tax compliance’.
Limitations of the Study and Scope for Future Research
The following are the limitations of the study:
(a) GST continues to be in maturity segment, so tax reforms can occur once in a while through GST council meetings regarding finalization of tax prices or even imposition of recent rates and even deduction of existing fees.
(b) The short-term impact of GST is expected to be impartial-to poor for the broader financial system.
(c) Production processes are possibly to take some time to align with the brand-new framework as corporations regulate to the input tax credit machine and higher manipulate working capital requirements.
(d) For clients, it will likely be a mixed bag as some goods come to be inexpensive even as others will be luxurious.
(e) Services becomes high-priced e.g. Telecom, banking, airline etc.
(f) Being a new tax, it's going to take some time for the people to understand its implications.
(g) It is less complicated said than achieved. There are continually a few headaches attached. It is an intake-based tax, so in case of offerings the area where service is furnished needs to be decided.
Inspection, Search & Seizure of Goods under GST
I will be discussing about...
Introduction:
Inspection:
Search:
Seizure:
Power of Officer conducting Search
CASE 1:
CASE 2:
Inspection and Search under GST
When does inspection under GST occur?
Search under GST
Who can order search under GST and when?
Seizure under GST
Procedure for seizure
How long will the books/documents remain with the officer?
What happens after seizure?
Seizure of products is a greater stringent provision beneath the Goods and Service Tax (‘GST’) regulation. A seizure operation ought to be authorised through an officer at the level of Joint Commissioner or a Superior Officer. Further, the applicable targeted officer can authorise a search and seizure simplest if they have ‘motive to believe’ that the person being searched has items liable to confiscation or any files / books / document / matters, that allows you to be useful for or applicable to any complaints. All seek and seizure operations underneath GST have to be performed in accordance with the provisions of Criminal Procedure Code, 1973.
During the quest and seizure operation, any or all goods, files, books, facts or other things which could upload value to the court cases can be searched or seized. If it isn't practical to seize items or items, then the products or object may be detained.
All files or gadgets taken at some stage in a search and seizure operation should be lower back unless it's far required for exam/enquiry/proceedings. If the report is not required, then it must be lower back inside 30 days from the issuance of display reason note. Also, seized items may be provisionally launched by using GST Authorities on execution of bond and furnishing a security or on payment of applicable tax, hobby and penalty. If no word is issued inside a length of 6 months, then all such items are to be again to the taxpayer. In a few cases, the length of 6 months may be extended via the Commissioner for every other six months on sufficient cause. In the beyond, the taxpayers have filed writ petitions earlier than diverse High Courts searching for remedy from the payment of applicable tax, interest and penalty, notwithstanding the specific stipulations below Section 67 of the CGST Act.
Recently, the Supreme Court in various petitions filed before it, has held that no writ petitions need to be entertained with the aid of the High Court(s) against order of seizure of goods by the GST Authorities and expressed displeasure on intervening time orders passed that are contrary to the provisions of Central Goods and Services Tax Act, 2017 (‘CGST Act’).
The first appeal is in the case of the State of Uttar Pradesh vs. Kay Pan Fragrance Pvt. Ltd. Thinking an interim order passed by using the High Court directing the release of seized goods on the deposit of safety, apart from cash or bank guarantee or indemnity bond. In the second one set of enchantment filed via the taxpayer became to quash the seizure order surpassed under Section sixty seven(2) of the CGST Act, putting forward such search and seizure lawsuits to be void, and restraining the GST Authorities to take any action in opposition to the taxpayer.
The Supreme Court disposed of all pending appeals, relating to seizure of products, in which faulty orders have been exceeded by means of High Court(s). Given underneath is a precis of the Supreme Court’s choice: When a entire mechanism is envisaged in the CGST Act and Rules for release and disposal of the seized goods, the High Court must now not have entertained writ petitions wondering the seizure of goods and issued directions for its launch. The High Court must have directed the taxpayer to the appropriate authorities for complying with the manner prescribed in Section 67 of the CGST Act examine with the relevant CGST Rules for release of seized items. Taxpayers need to be directed to take recourse of the relief mechanism supplied underneath the CGST Act and Rules for launch, on a provisional foundation, upon execution of a bond and furnishing of a safety, in such manner as can be prescribed.
The High Court has erroneously insisted on coins charge of tax with the aid of the taxpayer, which is opposite to Section 67(2) of the CGST Act. Consequently, the GST Authorities should now not provide effect to the orders exceeded by the High Court, which are contrary to the provisions of the CGST Act. Instead, the GST Authorities have been instructed to technique the claims of the taxpayer afresh, as consistent with the provisions in Section 67 of the CGST Act read with the applicable CGST Rules.
Seizure of products is a greater stringent provision under the Goods and Service Tax (‘GST’) law. A seizure operation has to be authorized by way of an officer at the extent of Joint Commissioner or a Superior Officer. Further, the applicable exact officer can authorise a search and seizure most effective if they have ‘reason to trust’ that the man or woman being searched has items vulnerable to confiscation or any documents / books / file / matters, which will be useful for or applicable to any proceedings.
All seek and seizure operations below GST must be carried out according with the provisions of Criminal Procedure Code, 1973. During the quest and seizure operation, any or all goods, documents, books, facts or other matters which would add value to the court cases may be searched or seized. If it isn't always realistic to capture goods or items, then the goods or object can be detained. All files or gadgets taken at some stage in a seek and seizure operation ought to be lower back until it's far required for exam/enquiry/court cases. If the file isn't required, then it ought to be again inside 30 days from the issuance of display purpose word.
Also, seized items can be provisionally launched by GST Authorities on execution of bond and furnishing a safety or on charge of applicable tax, hobby and penalty. If no observe is issued inside a duration of 6 months, then all such goods are to be back to the taxpayer. In a few instances, the period of 6 months can be extended with the aid of the Commissioner for another six months on sufficient cause.
In the beyond, the taxpayers have filed writ petitions before numerous High Courts looking for relief from the payment of relevant tax, interest and penalty, notwithstanding the express conditions under Section 67 of the CGST Act. Recently, the Supreme Court in numerous petitions[1] filed before it, has held that no writ petitions need to be entertained by the High Court(s) towards order of seizure of products through the GST Authorities and expressed displeasure on interim orders handed which can be opposite to the provisions of Central Goods and Services Tax Act, 2017 (‘CGST Act’). The first enchantment is within the case of the State of Uttar Pradesh vs. Kay Pan Fragrance Pvt. Ltd. Wondering an interim order handed via the High Court directing the discharge of seized items on the deposit of safety, apart from cash or bank guarantee or indemnity bond. In the second set of appeal filed by means of the taxpayer turned into to quash the seizure order surpassed under Section 67(2) of the CGST Act, asserting such search and seizure lawsuits to be void, and restraining the GST Authorities to take any movement towards the taxpayer.
The Supreme Court disposed of all pending appeals, relating to seizure of products, wherein faulty orders have been surpassed by means of High Court(s). Given beneath is a precis of the Supreme Court’s selection: When a complete mechanism is envisaged inside the CGST Act and Rules for launch and disposal of the seized goods, the High Court should no longer have entertained writ petitions thinking the seizure of products and issued guidelines for its launch.
The High Court must have directed the taxpayer to the precise authorities for complying with the system prescribed in Section 67 of the CGST Act examine with the applicable CGST Rules for release of seized items. Taxpayers should be directed to take recourse of the relaxation mechanism supplied under the CGST Act and Rules for launch, on a provisional foundation, upon execution of a bond and furnishing of a protection, in such manner as may be prescribed. The High Court has erroneously insisted on coins charge of tax by way of the taxpayer, that's opposite to Section 67(2) of the CGST Act. Consequently, the GST Authorities need to now not provide effect to the orders exceeded by the High Court, which can be contrary to the provisions of the CGST Act. Instead, the GST Authorities had been informed to system the claims of the taxpayer afresh, as per the provisions in Section 67 of the CGST Act study with the relevant CGST Rules.
Based on the aforesaid Supreme Court ruling, various High Courts might also now refuse to exercise jurisdiction below Article 226 of the Constitution of India to provide remedy to the taxpayer for seizure of goods.
Inspection
Inspection is a lighter provision than a seek. It permits the right officials to enter into any place of job of a taxable man or woman and also the place of business of the person that is engaged in transportation or storage of goods in the warehouse or go down. As in step with Section 67 of the CGST Act, Inspection can be performed via the proper officer simplest if he has written authorization of the officer of Joint Commissioner or above. As according to Section sixty seven(1), such authorization by using the better authority shall be given best if they have reason to trust that:- A taxable individual has suppressed any transaction of deliver of goods/ services, suppressed inventory details, the incorrect declare of Inputs or contravened any other provision of the act. Any character worried within the transportation of goods or garage of goods and has kept goods that have escaped from charge of tax regardless of the fact that a such man or woman is a Taxable man or woman or not.
Inspection can also be carried out for the duration of transit by way of the right officer and the man or woman sporting and in rate of a consignment of a value of greater than Rs. 50,000 shall on demand provide prescribed documents and gadgets together with Invoice or Bill of supply or delivery challan because the case may be and a copy of E-way invoice either in physical shape or mapped to an RFID embedded on conveyance to the right officer. Such Inspection in transit can be achieved even without the authorization of the Joint Commissioner.
Search
In any taxation law, implementing authority should were furnished the right of entering into and inspecting any vicinity, place, person, and many others so one can locate anything hid with the goal of tax evasion. To ensure search and seizure below GST should be performed in a obvious manner, the act adopts the provisions of the Criminal Procedure Code, 1973 to behaviour Search and seizure beneath GST. No search operation may be carried out by means of any officer without right authority. Proper Authority to Issue Search Warrant below GST is an officer of the rank of Joint Commissioner or above.
A search warrant issued need to incorporate Violation underneath the act, Name of the man or woman legal to go looking, Premises to be search, Period for which each time search may be done, and so on.
Seizure
The seizure has not been mainly described underneath the act but the general meaning of seizure is to take into custody of any belongings by using enjoyable prison requirements. A seizure is generally carried out via the enforcement crew all through Inspection and Search operations in the event that they have found something, which may be useful for the branch for calculating Tax call for or helpful in tax complaints for the officer.
Power of Officer conducting Search
An officer carrying out seek has the energy to search and Seize any goods which are at risk of confiscated and Books/things which they sense applicable for any complaints below the act. If get admission to the premises has been denied to the officer, He has the electricity to interrupt the lock and perform seek operations. Also, if at some stage in search get admission to of any almirah/container/ room is denied and it is suspected that there are a few goods or documents are hiding then additionally He has the energy to get access of the same.
If it isn't plausible to capture goods which include items of perishable, Hazardous Nature, Arms, and ammunition or items of very excessive extent, then he can detain such items and in such case of detention Custodian or proprietor of the products shall now not do away with, or otherwise address the products without prior permission of such officer.
GST Registration
The person from whom any documents and books are seized has the right to take extract or reproduction of seized facts earlier than its seizure. The seized information needs to be saved in custody most effective until the time they may be required for lawsuits and if these have no longer relied on the case then the identical will be back inside 30 days from the problem of SCN.
As per section 122(1) If any man or woman disposes of or tampers any items detained or seized beneath this act, he shall be vulnerable to pay a penalty of Rs. 10,000 or quantity of tax avoided whichever is higher and additionally as per section 129(1) where any character transports any goods or shops any goods while they are in transit in contravention of this act then all such goods and conveyance shall be vulnerable to be detention or seizure.
Conclusion
The proposed GST regime is a 1/2-hearted try to rationalize oblique tax shape. More than a hundred and fifty international locations have carried out GST. The government of India need to have a look at the GST regime set up through diverse nations and their fallouts earlier than enforcing it. At the same time, the authorities need to make an attempt to insulate the extensive terrible population of India in opposition to the probable inflation due to implementation of GST. No doubt, GST will simplify present oblique tax device and could help to take away inefficiencies created by means of the present modern heterogeneous taxation machine most effective if there is a clean consensus over problems of threshold restriction, revenue rate, and inclusion of petroleum merchandise, energy, liquor and actual property. Until the consensus is reached, the government need to face up to from enforcing such regime.
References
https://www.academia.edu/39722032/THE_STUDY_OF_IMPLEMENTATION_OF_GST_AND_ITS_IMPACT
https://www.researchgate.net/publication/323007997_A_Comprehensive_Analysis_of_Goods_and_Services_Tax_GST_in_India
https://www.omicsonline.org/open-access/a-research-paper-on-an-impact-of-goods-and-service-tax-gst-on-indianeconomy-2151-6219-1000264.php?aid=82626
https://cleartax.in/s/gst-analysis-and-opinions
Dani S (2016) A Research Paper on an Impact of Goods and Service Tax (GST) on Indian Economy. Bus Eco J 7: 264. doi: 10.4172/2151-6219.1000264
Garg, Girish (2014), “Basic Concepts and Features of Good and Service Tax in India”, International Journal of Scientific Research and Management, volume 2, issue2
Kumar, Raj. "Comparison between Goods and Services Tax and Current Taxation System A Brief Study." International Journal of Allied Practice, Research and Review III, no. IV (2016): 9-16.
P, Lourdunathan F and Xavier. "A study on implementation of goods and services tax (GST) in India: Prospectus and Challenges." International Journal of Applied Research, 2017: 3(1): 626-629.