Two years of GST implementation

[Ganeshan Kalyani]

GST completed two years since its implementation from 01.07.2017. Initially the GST was proposed to be implemented from 01.04.2010. However, due to lack of political consensus the GST could not be implemented by 2010.

Brief History as available in www.gst.gov.in is reproduced herewith for knowledge purpose: On 19th December, 2014, The Constitution (122nd Amendment) Bill 2014 was introduced in the Lok Sabha and was passed by Lok Sabha in May 2015. The Bill was taken up in Rajya Sabha and was referred to the Joint Committee of the Rajya Sabha and the Lok Sabha on 14th May, 2015. The Select Committee submitted its report on 22nd July, 2015. Thereafter, the Constitutional Amendment Bill was moved on 1st August 2016 based on political consensus. The Bill was passed by the Rajya Sabha on 3rd August 2016 and by the Lok Sabha on 8th August 2016. After ratification by required number of State legislatures and assent of the President, the Constitutional amendment was notified as Constitution (101st Amendment) Act 2016 on 8th September, 2016. The Constitutional amendment paved way for introduction of Goods and Services Tax in India.

After GST Council approved the Central Goods and Services Tax Bill 2017 (The CGST Bill), the Integrated Goods and Services Tax Bill 2017 (The IGST Bill), the Union Territory Goods and Services Tax Bill 2017 (The UTGST Bill), the Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation Bill), these Bills were passed by the Lok Sabha on 29th March, 2017. The Rajya Sabha passed these Bills on 6th April, 2017 and were then enacted as Acts on 12th April, 2017.

Thereafter, State Legislatures of different States have passed respective State Goods and Services Tax Bills. After the enactment of various GST laws, GST was launched with effect from 1st July 2017 by Sh.Narendra Modi, Hon'ble Prime Minister of India in the presence of Sh.Pranab Mukherjee, the then President of India in a mid-night function at the Central Hall of Parliament of India.

Challenges: In the last of week of June 2017, CBIC had released 38 notifications regarding rate, exemption amongst other. In 2017, the GST was to be implemented from 01.04.2017  but it got postponed by three months. There was total chaos among taxpayer. However, taxpayer embraced GST and slowing started understanding it and adopting it. The taxpayer had to make changes in the Tax invoice format, update their billing software with the GST rates, update GSTIN of the supplier and the customers in system. At first instance the GSTIN were required to be collated from the suppliers and the customers. Some service provider came up with a service of calling the parties and collate GSTIN . GSPs GST Suvidha Provider came in to the play. They assisted the big company with filing of return.  

Compliance: GST TRAN-1 was the return to be filed to carry forward the unutilized input tax credit of the erstwhile tax regime. The credit which was appearing as carry forward credit in the last return of the previous tax regime was allowed to be carry forwarded to the GST through GST TRAN-1. Also, the Central Excise duty involved in the closing stock which was lying with the trader as on 30.06.2017 was allowed to be carry forward through GST TRAN-1 return. Also, GSTR TRAN-2 was to be filed by the dealer declaring the outward supply of the stock which was declared and credit was claimed on the CGST payable.

Thereafter GSTR-3B was introduced to be filed as a summary return furnishing outward supply and inward supply and compute the tax and pay the tax before filing of return. GSTR-1 was also filed on a monthly/quarterly basis by the taxpayer. GST refund was also linked with filing of return in GSTR-3B and GSTR-1. GSTR-2 & GSTR-3 did not came into effect.

Scrutiny of transitional credit: The transition provision allowed full credit if the stocks lying as at the trader place is supported by Central Excise invoice. Otherwise the credit was restricted to 60% /30% of the duty. Many manufacturer had their stock lying at various depots where the goods did not directly received from their factory. The stock travelled from factory to main depot and then to regional depot and then to local depot. Thus the stock at local depot will not have duty paying document but they have duty component in them. Hence, company claimed full credit but department did not allowed.

Amendments to GST Law: I did counted the number of notification, circulars etc in the CBIC website as on 26.07.2019. In total 716 notification, circular, orders were published by CBIC.

GST Council: GST Council consists of Union Finance Minister as Chaiperson, The Union Minister of State, in-charge of Revenue, Min. of Finance as members, The Minister In-charge of Finance or Taxation or any other Minister nominated by each State Government as members. GST Council ensures the harmonization on different aspects of GST between the Centre and the States as well as amongst the States.

The Constitution (One Hundred and First Amendment) Act, 2016 provides that every decision of the GST Council shall be taken at its meeting by a majority of not less than 3/4th of the weighted votes of the Members present and voting. The vote of the Central Government shall have a weightage of 1/3rd of the votes cast and the votes of all the State Governments taken together shall have a weightage of 2/3rd of the total votes cast in that meeting. One half of the total number of members of the GST Council shall constitute the quorum at its meeting.

So far 36 GST Council meetings has taken place. Tax rate were reduced on several products.

E-way bill: E-way bill was introduced from June 2018 on compulsory basis in all India level. The threshold limit common to all State was ₹ 50,000/-. But later on States on their own increased the limit to ₹ 100000/-. E-way bill is required for invoice value more than ₹ 50,000/- or ₹ 100000/-. The website for e-way bill is https://www.ewaybill.nic.in/

Annual Return: GST annual return in Form GSTR-9, 9A and 9C is required to be filed by the taxpayer subject to conditions prescribed in the GST provision. The annual return for the very first year 2017-18 consisting 9 months period is to be filed by 31.08.2019.

New Return: New return in GST RET-1, 2, 3 is going to come in phased manner from October 2019. The prototype of new return is given in www.gst.gov.in

Benefit of GST: Freedom from number of taxes and their Act, Rules etc. Each State had their own Value Added Tax Act and Rules, Each States website was required to be checked every day to see if any changes has come or not. There was problem with entry tax law which is applicable to certain product. There was Local body tax as well which was applicable on movement of goods from one municipal limit to another municipal limit. The taxpayer has to liason with Central Excise Department, Value Added Tax Department, Service Tax officers, Entry tax Officer etc. Taxpayer had to issue / collect statutory forms.

All these difficulties of liasoning with different department is done away with. Refer each State Act, Rules is also not required now. The GST has given relief to the consultant, taxpayer and the GST officer. In fact GST has widened the scope of GST consultant. Now consultant can give opinion to client in another State as the law is same. SGST Act, Rules are replica of CGST Act, Rules.

More challenges to come: Once new return comes in to effect the taxpayers will get fully occupied with inward supply reconciliation. Taxpayer will have to co-ordinate with the supplier, concern purchase team member within the organization. Technical difficult is ought to come. Need to see how far the information technology is ready for online reconciliation of inward supply by all the taxpayers on a continuous basis. A dedicate person will be required in a big organization to take care of GST reconciliation where the transactions are in huge in numbers.

Further, requirement of Invoice Reference Number (IRN) is going to come in near future. The taxpayer will have to fill up the form in GSTN and upon submitting the details a reference called IRN will be generated. The same number will have to be shown on the face of the invoice. Once this comes into effect the requirement of e-way bill will be done away with.

Source: www.gst.gov.in