GST amendments: A bid to iron out the issues

On September 20, taxpayers were looking forward to the outcome of the 37th meeting of the GST Council expecting some relief measures for the economy in general, as well as for certain sectors such as automobiles and textiles in particular. Long before the GST Council meeting commenced, the Finance Minister diverted attention by slashing income tax rates drastically. Eventually, the decisions taken at the GST Council meeting paled in comparison to the big-bang income tax announcement. No sector-specific reliefs were provided, nor was there any path-breaking announcement.

Composition dealers and those with a turnover of up to ₹2 crore should heave a sigh of relief, since the need to file the annual return in Form GSTR 9 has been removed. For the others, the government has stated that a Committee of Officers would be appointed to recommend simplification of the forms. This is bound to frustrate these taxpayers, since they have attempting to understand and file this form correctly for quite some time now with little success. Instead of investing further time in changing and amending forms in an attempt to simplify them, the government would do well to permit a one-time revision to the GSTR 3B form for March 31, 2018 and March 31, 2019. 3B is a form that most taxpayers are familiar hence filing this revision should not pose any issues. Introduction of the new system of filing returns has been postponed to April 2020.

The GST Council also cancelled the controversial Circular No.105/24/2019-GST, which attempted to clarify various doubts relating to post-sales discounts but ended up creating further confusion. The Circular had some strange clauses, such as “if the additional discount given by the supplier of goods to the dealer is the post-sale incentive requiring the dealer to do some act like undertaking special sales drive, advertisement campaign, exhibition etc., then such transaction would be a separate transaction and the additional discount will be the consideration for undertaking such activity and therefore would be in relation to supply of service by dealer to the supplier of goods. The dealer, being supplier of services, would be required to charge applicable GST on the value of such additional discount”. What should worry the GST Council is how and why such Circulars which bring up more questions than answers are being issued. It could probably be traced to a lack of training and awareness on the part of the tax officers on the intricacies of GST laws. The CBIC should proactively engage with the officers to ensure that controversial circulars are not issued.

The GST Council did not provide any specific relief to the automobile or textile industries. Instead, they proposed reduced rates on an eclectic variety of items, such as slide fasteners, wet grinders (consisting of stone as a grinder), marine fuel and dried tamarind. Probably with a view to encourage tourists, GST on room tariff and outdoor catering were reduced. The GST Council also solved the controversy surrounding the levy on fishmeal by providing an exemption between July 1, 2017 and September 30, 2019. There were doubts with regard to taxability of fishmeal in view of the interoperatational issues. However, any tax collected for this period shall be required to be deposited.

As the GST journey continues, it is becoming increasingly apparent that both the Department as well as the taxpayer are facing issues due to a law which was implemented in a hurry and added unnecessary baggage when introduced. It could probably take another couple of years for the law to settle, provided the GST Council, CBIC and the taxpayers continue the process of learning and unlearning.

The writer is a chartered accountant