Milestones and records are normally tracked in sports. In India, monthly GST collections have almost become a barometer for the performance of the economy. On the first day of every month, the Finance Ministry releases data on GST collections of the previous month. October 2022 GST revenues were ₹1,51,718 crore — the second highest since GST was introduced, next only to the collection in April 2022.

October also saw the second highest collection from domestic transactions. This is the ninth month — and for eight months in a row — that the monthly GST revenues have been more than the ₹1.4 lakh crore mark. In September, 8.3 crore e-way bills were generated, which were significantly higher than the 7.7 crore generated in August.

‘Revenge consumption’

One of the reasons given for the record GST revenues is that consumption increased during the just concluded festival season. Consumer spending was muted over the last two years due to the pandemic, resulting in consumers resorting to “revenge consumption” this year. This could, at best, have had a marginal impact on GST revenues. Many other factors have contributed to the uptick in GST revenues.

Nine months back, Section 16(2)(aa) was introduced in the CGST Act. GST revenues have crossed ₹1.4 lakh crore for eight months in a row. Coincidence? Section 16(2)(aa) added a condition for the taxpayer to be eligible to claim input tax credit — the details of the invoice or debit note have been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under Section 37.

In other words, input tax credit can be claimed only if the counter-party has reflected it in the return and the details appear in GSTR 2B. This restriction on availing input tax credit has also contributed to taxpayers having to shell out more while discharging their GST liabilities.

Extending the gamut of e-invoicing to taxpayers with a turnover greater than ₹10 crore is yet another contributor to increased GST revenues. The menace of fake invoices which was rampant has reduced due to e-invoicing. Aggressive assessment by tax officers complete the list of contributory factors.

The Central Board of Indirect Taxes and Customs is also seeking the blessings of the GST Council to decriminalise certain offences under GST laws. The idea behind this appears to be to differentiate between minor offences and offences that are made with a clear intent to evade tax.

The proposal appears to be to increase the threshold limit for launch of criminal proceedings from ₹5 crore to ₹20 crore. It has been suggested that prosecution will only be initiated in extreme cases, where wilful evasion of GST and misuse of input tax credit can be established.

If this provision is introduced, it will bring GST laws on a par with the provisions of the Income Tax Act where monetary penalties and the power to imprison taxpayers are enunciated in different clauses. The 12 clauses listed out in Section 132 of the CGST Act are very general and can be interpreted in any manner. At present, this section is open to misuse by overzealous revenue officials pursuing targets.

Any relaxation provided under GST laws is always to be welcomed. However, decriminalisation provisions would work well only if the other provisions of GST laws are clear and unambiguous. GST notices and assessments continue to be a source of great concern to taxpayers — in some cases notices are being issued even for trivial reasons and assessments are more revenue-generation exercises than an interpretation of the law.

The GST Council is expected to okay the decriminalisation provisions in its next meeting this month. It should wait for the tribunals to be set up in order that taxpayers have a window to appeal at the appropriate forum against unjustified criminalisation orders.

The writer is a chartered accountant

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