Centre or States? GSTCouncil lists norms on administrative control of taxpayers

In a bid to clarify the issue of administrative control and improve coordination between the Centre and the States, the Goods and Services Tax (GST) Council has defined the parameters for control over taxpayers.

According to a recent notification, the division of taxpayers under GST in each State will be done by computer at the State level, based on stratified random sampling.

“It could also take into account the geographical location and type of the taxpayers, as may be mutually agreed,” said the notification, adding that the State-level committees should begin work on dividing taxpayers.

The decision was taken at the Council’s last meeting in Hyderabad on September 9.

However, the issue has been under discussion for a long time although the GST Council had in January agreed to a broad formula for cross-empowerment under which 90 per cent of the small taxpayers with an annual of less than ₹1.5 crore would be under the administrative control of States. The remaining 10 per cent are with the Central tax administration.

Similarly, all administrative control of larger taxpayers above ₹1.5 crore turnover was divided equally in the ratio of 50 per cent each for the Central and the State tax administration.

At present, there are over 90 lakh businesses registered under GST.

But with no clarity over exactly who would have powers to investigate and audit exactly which assessee, officials of both Centre and State GST had said that since the roll out of GST from July 1, jurisdiction has been a challenge as neither are sure who has authority over the assessees.

Even taxpayers have been worried over being monitored by two sets of tax assessees for the same transaction.

The GST Council has also fine-tuned the definition of turnover for the basis of division.

The thumb rule for taxpayers registered only under Central excise or service tax would be to use the total annual turnover declared in their returns as the basis for division.

But, for taxpayers registered only under value added tax, the total annual State turnover under VAT (including inter-State sales, exports and exempt goods) would be the basis of division.

For businesses registered under both VAT and Central excise, the annual State turnover under VAT would be the basis for division.

Similarly, for taxpayers registered under both VAT and service tax, the total non-overlapping turnover (total of VAT and Service Tax and excluding any turnover which is included in both) would be the basis for division.

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