Sansad TV Perspective: 48th GST Council Meet

In the series Sansad TV Perspective, we bring you an analysis of the discussion featured on the insightful programme ‘Perspective’ on Sansad TV, on various important topics affecting India and also the world. This analysis will help you immensely for the IAS exam, especially the mains exam, where a well-rounded understanding of topics is a prerequisite for writing answers that fetch good marks.

In this article, we feature the discussion on the topic: 48th GST Council Meet

Anchor: Teena Jha

Guests:

1. Subhomoy Bhattacharjee, Consulting Editor, Business Standard
2. Abhishek Atrey, Senior Advocate, Supreme Court
3. Bimal Jain, Chair, Indirect Taxes Committee, PHD Chamber of Commerce & Industry

Context: 48th GST Council Meeting.

Highlights of the discussion:

• Introduction
• Significance of the meeting
• Reasons/Significance
• Appellate Tribunal
• Existing Issues

Introduction:

• The 48th meeting of the Goods and Services Tax Council was chaired by Finance Minister Ms Nirmala Sitharaman. Meeting after a gap of six months, the Council took up and approved 8 of the 15 items on the agenda due to paucity of time. 
• One of its key decisions has been to decriminalize certain offences, doubling the threshold for launching prosecution under the tax law to Rs 2 crore. However, for fake invoicing, the limit of Rs 1 crore has been retained. 
• The Council also clarified the definition of SUVs for the levy of compensation cess over GST and decided to come out with parameters to define MUVs. 
• Some other decisions include scrapping the 5% GST levy on a cattle feed ingredient — the husk of pulses; and the reduction of the levy on ethyl alcohol used by refineries to blend with petrol to 5% from 18%. 
• There are also taxes on new areas like paan masala, gutka, and online gambling.

For more information on the GST, read here: Goods and Services Tax Act

Reason and Significance of Decriminalization of Various Offences:

• The Government of India is gradually phasing out provisions of criminal prosecution from various laws. For example, corporate law, the Companies Act, various income tax provisions, etc.
• Government is willing to ensure that process of tax paying is smooth and easy. Furthermore, taxpayers are not victimized due to various strict provisions of the law.
• India also wants to display its ease of doing business approach to both domestic and international players.
•  It is important to decriminalize certain harsh provisions as the GST collections are soaring massively (averaging around 1.45 trillion for several months). This would boost the confidence of all the stakeholders like business houses and citizens.
• The government has also realized that the business environment has become pro-GST as more people are willing to pay GST and thus they should be rewarded by easing the GST Act for them.

For more information on Ease of Doing Business, read here: Ease of Doing Business Report (EoDBR) by World Bank

Key Decision for the Industry and Industries’ Reaction:

• There are twelve specified offences under Section 12 of the CGST Act that invites prosecution. The council has made the following recommendations in this regard:
  • Raise the minimum threshold of tax amount for launching prosecution under GST from Rs. One Crore to Rs. Two Crores, except for the offence of issuance of invoices without the supply of goods or services or both;
  • Reduce the compounding amount from the present range of 50% to 150% of the tax amount to the range of 25% to 100%;
  • Decriminalize certain offences specified under clauses (g), (j) and (k) of sub-section (1) of section 132 of CGST Act, 2017, namely
    • obstruction or preventing any officer in the discharge of his duties;
    • deliberate tampering of material evidence;
    • failure to supply the information.
• The industry has welcomed these changes. Though it was expecting a higher threshold, even these changes are appreciated as they have acknowledged their suggestions.

Provision of Appellate Tribunal:

• The decision on setting up an appellate tribunal could not be reached during the meeting due to paucity of time, even though it was mentioned in the agenda of the meeting.
• The establishment of a tribunal has been demanded for quite a long time as the High Courts of the country are already overburdened and lack experts in the field of tax issues.
• The failure to reach a decision on this matter has caused disappointment to many stakeholders.
• There are also counter-views regarding the setting up of an appellate tribunal, as the effectiveness of several other tribunals has not been exemplary. This was the reason that several tribunals were given fresh thought and discontinued.
• There is the question of under whose authority would such a tribunal function.
• A similar issue about authority and power was also opened by the Supreme Court itself.

Materialization of Proposed Amendments:

• Most of the time, GST Council’s decision means corresponding changes in the CGST and SGST laws.
• There are speculations that a Finance Bill regarding the same can be introduced in the Winter Session of the Parliament.
• However, several other experts are of the view that certain recommendations can be introduced by way of circular after the notification, and ambiguities and contentions can be agreed upon in a span of three to four days. And, other provisions that require an amendment to the GST laws themselves can be introduced through bills and ordinances.
• There is also a third view, where it is suggested that the new changes will be introduced in the Budget Session of 2023 thereby inserting the new amendments in the CGST Act and corresponding State Acts.

Associated issues during the meeting:

• It should be noted that the taxation rates are considerably higher in India (the median rate is 18%) which was not addressed during the meeting. From consumers’ point of view, this is a major concern.
• Furthermore, as the compensation rates will be discontinued in the coming year, it would require extra effort on the part of the state.

Read all the previous Sansad TV Perspective articles in the link.

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