1. Model of GST law has been formulated by Empowered Committee of State Finance Ministers on 14 June 2016 as Goods and Services Tax Act, 2016. GST will be a cocktail of State VAT, Central Excise and Service Tax. The Entry Tax, The Entertainment Tax and Luxury Tax are likely to be repealed. Constitutional Amendment Bill is still to be passed by Parliament and further assent of President will be required. Meanwhile paper work has been done by Government of India to implement the GST in India as early as possible.
2. The Goods and Service Tax Council will be constituted by President within sixty days of amendment in the Constitution. Union Finance Minister will be Chairperson, The Union Minister of State in charge of Revenue will be Member and The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government will be Members. This Council will decided the modalities and resolve the disputes.
3. There are three terms under GST which will decide the area of operation of Central and State Government. First is SGST which means State Goods and Services Tax, second is CGST which means Central Goods and Services Tax and third is IGST which means Integrated State Goods and Services Tax. SGST & CGST will deal intra state i.e within State transactions and IGST will deal with inter state transactions i.e. between two States transactions.
4. Inward Supply and Outward Supply decide the receipt/supply of goods and services. Inward supply will include the transaction of purchase/acquisition with consideration and without consideration. Outward supply will constitute supply of goods and/or services of transaction of sale, transfer, barter, exchange, licence, rental, lease and disposal of goods in the course of business. Any property given on rent/lease for business will come under the purview of GST. Goods can be returned within six month of supply otherwise benefit of tax will not be available.
5. Outward Supplies details are to be submitted by the registered dealer by 10th of every month for the previous month. Further Inward supplies details are to be submitted by 15th of every month for the previous month. Details of tax credit availed, tax payable, tax paid are to be submitted by 20th of each month. Quarterly return is to be submitted within 18 days after the end of quarter. Dealer will not be allowed to file the current return unless he has filed the previous period return. An annual return will also be filed by 31 December after the end of financial year. Failure to supply of inward/outward details will be penalized with one hundred rupees for every day subject to maximum of rupees five thousand. Failure to supply of return will be penalized for 100 rupees per day subject to maximum of an amount calculated at a quarter percent (0.25%) of his aggregate turnover in the return.
6. Electronic cash ledger will be used for making any payment towards tax, interest, penalty, fees or any other amount payable under the provision of the Act and further an electronic credit ledger may be used for making any payment towards tax payable under the provisions of the Act. Input tax credit on account of IGST available in the electronic ledger shall first be utilized or payment of IGST and remaining can be adjusted towards payment of CGST first and then for SGST. CGST available in the credit ledger will be utilized towards the payment of CGST and remaining will be utilized for IGST payment. INPUT AX ON ACCOUNT OF CGST SHALL NOT BE UTILISED FOR PAYMENT OF SGST. SIMILARLY INPUT TAX CREDIT ON ACCOUNT OF SGST SHALL NOT BE UTLISED TOWARDS PAYMENT OF CGST. Input tax available in SGST can be adjusted against SGST first and remaining can be adjusted towards the payment of IGST.
7. Refund of tax will be available in two cases, first in the case of export and second in the cases where the credit has accumulated on account of rate of tax on inputs being higher then the rate of tax on output tax. Refund of less than 5 lakh may be given on self declaration of having the all necessary documents with him without any documents submission. In another cases refund of 80% amount may be allowed provisionally subject to some conditions, limitations and safeguards may be prescribed. Remaining 20% can be paid after verification of documents.
8. Electronic Commerce will be taxable. Supply of goods and services on an electronic network will be taxed. Person engaged in supply of goods and services on his own behalf will not be included in the e-commerce. Electronic Commerce Operator will deduct the tax as prescribed and pay to the Government.
9. Every dealer will self assess his turnover and pay the tax accordingly. If the dealer is not in position to self assess the turnover he may apply for provisional assessment. Officer will allow payment on provisional basis and pass a final order within six months. Summary assessment will be done in the cases with the permission of higher authorities. This assessment can be withdrawn by higher authorities if they consider such order is erroneous.
10. Audit of the business transactions can be ordered by Commissioner of CGST/SGST. Taxable person will be informed 15 days in advance to conduct audit in the manner prescribed. Audit is to be completed within 30 days and further 60 days extension may be granted by the Commissioner. Further a Special Audit can be ordered by Commissioner. Chartered Accountant or Cost Accountant nominated by Commissioner will give his report within 90 days and expenses will be paid by Commissioner.
11. Any dealer pay less amount of tax or claim excess input credit then he will be informed and he has to pay the tax with interest within 30 days. Otherwise he will be penalized with 10% of tax or rupees ten thousand which ever is higher. The person willingly claim wrong input and pay less tax then he will be penalized @15% before issuing the notice and @25% after issuing the notice.
12. Goods value upto rupees fifty thousand may be carried with invoice only and no additional documents will be required but the goods exceeding rupees fifty thousand may require additional documents as prescribed. Inspection of business premises can be done by Officer as directed by Additional/Joint Commissioner. Commissioner of CGST/SGST will have the power to authorize Officer to arrest any person committed any cognizable offence under the Act and produce before magistrate within twenty four hours.
13. There will be a general penalty of rupees twenty thousand for an offence not mentioned in any provision of Act. Any registered taxable person who repeatedly makes short payment shall be liable to a penalty of rupees ten thousand or ten percent of the tax short paid whichever is higher. A person short deduct the tax or did not deduct the tax will be liable to a penalty of rupees ten thousand or an amount equivalent to tax whichever is higher. Any conveyance used for transportation without document can be confiscated and will be released after payment of fine equal the tax payable on the goods.
14. Appeals can be filed before Commissioner (Appeals)/Tribunal within three months. Time will be calculated to file appeal from the date of receipt of the order appealed. More then three adjournment will not be given to either party in hearing of appeal. Revisional power of Commissioner will be available under SGST Act but there is no provision of revision under CGST Act.
15. At last I conclude that more or less the provisions of VAT/Service Tax/Central Excise are incorporated under the GST Act with some changes. Concept of supply of goods added in GST will lessen the problem of taxation on contractors/developers. Other dealers will also be relaxed since at present they are under the dilemma whether they are liable to pay service tax or VAT.
The author can also be reached at rkjadvocate@yahoo.co.in
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