Typically obtuse

After GST was rolled out on July 1, it did not take long for the first GST bills to be circulated on social media. Unsurprisingly, most of these bills were from restaurants. While some bills did not break up the tax component into CGST and SGST, others just mentioned GST without taking the trouble of classifying the tax.

While these snafus can be attributed to the fact that GST was introduced in a tearing hurry, it sends out a message that there should be absolute clarity in the procedures to be followed under GST. Invariably, the procedures are laid out through Rules and implemented through Notifications.

So far, 79 notifications have been issued before and after the advent of GST. The notifications have been segregated into two categories: those relating to Rate and Others. One can expect a significant number of notifications to follow, covering an eclectic mix of areas. If the taxpayer is to deal with such a quantum of notifications, the least he can expect is that the notifications are worded clearly and tell what has to be told unambiguously.

Sadly, the GST law seems to be suffering from the same malaise that plagues current ones: great in quantity but poor in quality. For instance, notification No.12/2017 reads: “In exercise of the powers conferred by clause (xiii) of section 20 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) read with sub-section (3) of section 54 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council hereby notifies that no refund of unutilised input tax credit shall be allowed under clause (xiii) of section 20 of the said Integrated Goods and Services Tax Act, read with sub-section (3) of section 54 of the said Central Goods And Services Tax Act, in case of supply of services specified in sub-item (b) of item 5 of Schedule II of the Central Goods and Services Tax Act, 2017. 2. This notification shall come into force with effect from the 1st day of July, 2017.”

Invariably, the first half of all GST Notifications read the same and can be ignored — they commence with “In exercise of the powers” and go on till “recommendations of the Council”. The essence of all notifications lies in the second half.

If one were to summarise notification 12/2017, it states that there would be no refund of unutilised input tax credit to tax payers who are in the business of construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier.

The notification takes great pains to state this by using the word Section four times, and the words sub-section and clause twice. The fact that tax payers engaged in the business mentioned in the notification are not eligible for refund of unutilised input tax credit has been clearly stated in the rates of service tax.

The GST Council is aware of the fact that a whole of bunch of taxpayers are entering the GST family. They should also be aware of the fact that a barrage of unclear notifications is going to scare them away from compliance, and can hurt India’s ranking in the Ease of Doing Business parameter.

The writer is a chartered accountant

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