It has been a year and four months since the Goods and Services Tax (GST) came into existence. But the problems over implementing it persist. A big issue is the jurisdictional overlap between the field officers of Centre and State. Though the GST Council chaired by Finance Minister Arun Jaitley had decided to split the work between the Centre and States based on turnover of the business, the confusion over territory has resurfaced, thanks to a new circular issued this October which empowers both to investigate and take action against tax evaders. As per the original Council work division, 90 per cent of all assessees with a turnover of ₹1.5 crore or less will be audited and scrutinised by State authorities, the remaining 10 per cent by the Centre, and above that limit Centre and States will assess in a 50:50 ratio. And each assessee will be assessed by only one authority.
Clear enough on paper but what has been happening in practice, as a senior officer involved with GST implementation says, is that more and more assessees preferred to deal with Central service officers as they are well-versed in handling Service Tax and refunds. Under GST, central indirect levies, including excise duty, service tax, State-level and local levies as well as value-added tax, were merged. Therefore, the officers had to be trained to deal with all components of indirect taxation. Also, there have been simmering differences between State and Central authorities as well as between the Indian Administrative Service and Indian Revenue Service officials.
The demarcation of assessment between the Centre and States ruffled feathers for close to 80,000 IRS officers, who felt let down by their board. Some believe the IAS lobby was instrumental in the significant tilt towards States in work division “because an IAS officer will always be loyal to his/her State”. To be fair, when preparing for GST roll-out in July 2017, the Finance Ministry did re-organise the field offices of central excise and service tax. Besides, the erstwhile Central Board of Excise and Customs (CBEC), now Central Board of Indirect Taxes and Customs (CBIC), and the States also had to re-organise their value-added tax and excise officers so that no one felt ‘ignored’. Anup K Srivastav, Indian Revenue Service, President, IRS (C&CE) Association, believes that the “concerns raised have been, by and large, addressed as the tax assessee base is expanding and there is much more role for the cadre.Besides, we had feared that the posts will be diverted, but this did not happen.”
Echoing similar views is H Rajesh Prasad, Commissioner VAT/GST, Delhi Government, who feels the gains will be seen in the medium to long term. “Once return filings and invoice matching takes off, compliance will improve as also revenue buoyancy,” he adds. But not all States are as sanguine. “Don’t you get it — paisa bolta hai. Prior to GST, visit to local sales tax officer was kind of a must. Things have changed today,” says a trader. Vanaja N Sarna, who was the first chairperson of CBIC, says, “Yes, discussions and deliberations did happen. But we had to adopt a long-term approach. We had to see how things would be at the ground level. And today we find that the Central officers have more cases than States.”
Ask her if technology – GSTN – will impact the hiring of IRS staff in future, and Sarna responds, “Well, not immediately. A human face will be needed. The cadre restructuring work is in progress. Earlier cadre restructuring was done logically, but now, with practical knowledge from the ground with GST implementation, we can see adjustment of staff between GST and customs formation accordingly. Besides, there has been an appreciable increase in work on the customs side, which also needs to be re-looked at, from an additional staffing point of view.”
Amidst all these existing differences, now comes this new circular by CBEC, giving both Central and State officials the authority to scrutinise cases. Trader bodies have raised their voice against this decision, which they feel dilutes the “one authority” fundamental of GST and may lead to harassment. Praveen Khandelwal, National Secretary General, Confederation of All India Traders, says they have taken up the issue with the Finance Minister.
On October 1, Khandelwal wrote to the Finance Minister drawing his attention to it. Bimal Jain, Chairman, Indirect Taxes Committee, PHD Chamber, feels that assessment by two authorities at any given point of time will flout the principle of ease of doing business and traders will find it difficult to comply with the prescribed rules and regulations, being answerable to two tax authorities.