Clearing tax disputes

Some years ago, taxpayers would pass judgments on ‘how good the Union Budget is’ after going through all the Budget documents. These days, judgment is instantaneous and reaches a wider audience thanks to social media. Even before the Finance Minister had finished her speech, the popular consensus appeared to be that this was more of a policy statement than a Union Budget.

Not much was expected on GST as the GST Council had met recently and taken some decisions. The Budget speech and accompanying documents highlight the achievements made over the past two years on GST. In order to settle past disputes, the Budget introduced a dispute resolution scheme with a strange combo title — Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

The relief under the scheme varies from 40-70 per cent of of the tax dues for cases other than voluntary disclosure cases, depending on the amount of tax dues involved. The scheme also provides relief from payment of interest and penalty. For voluntary disclosures, the relief is regarding waiver of interest and penalty on payment of full tax dues disclosed. The person discharged under the scheme shall also not be liable for prosecution. While this is a welcome scheme, the CBIC should ensure that the same topics that are resolved under the scheme do not reappear in the GST era.

A significant portion of litigation under both service tax and GST can be classified into two dozen common areas as the laws are invariably the same. The Finance Minister reiterated the simplified processes that had already been proposed by the GST Council such as simplified quarterly returns and e-invoicing.

Both the Economic Survey as well as the Budget summarised the reduction in tax rates that have happened over the last two years. An opportunity to implement the “ Nudge” that was the star feature of the Economic Survey was missed in the Budget. Implementing the nudge principle for GST could have been made by announcing measures to correct the disconnect that is very visible between the intentions of the government regarding GST and what is happening in the offices of the GST departments.

As a revenue-generating measure, the Budget trained its guns on Customs and Excise duties. Petrol and diesel cess has been increased. It is also proposed to increase customs duty on gold and other precious metals from 10 per cent to 12.5 per cent. Penalty and prosecution provisions have been introduced for resorting to unfair practices to avail undue concessions and export incentives. Misuse of duty free scrips and drawback facility involving more than ₹50 lakh will be a cognisable and non-bailable offence.

Many firsts

This Budget had many firsts, such as the Finance Minister dumping the usual leather briefcase for a “ bahi khata ” and no reference to the word ‘fiscal deficit’ in the speech. In the area of GST, the Kerala Flood Cess which could be construed to be trampling on State’s authority.

Having taken the decision to enter into the nitty-gritty of GST, the Finance Minister lost an opportunity to streamline provisions regarding input tax credit. Recently, the Odisha High Court ruled in the Safari Retreats Vs. Chief Commissioner of GST & CE (2019 TIOL 1088) case that Section 17(5)(d) of the CGST Act is to be read down and a narrow interpretation of this Section is frustrating the objective of the CGST Act.

With the GST Appellate Tribunals still in the process of being set up, litigation under GST will pile up.

The writer is a chartered accountant

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