GST DAILY DOSE OF UPDATION

GST Update 08.11.2016

GST DAILY DOSE OF UPDATION

In continuation of last update on dispute on distribution of assessees between centre and state, the conflict of interest on control of assessee is proving to be a big hurdle in the progress of GST and if not resolved it would not take time to convert into a bottleneck. Both the centre and state are agreeing that GST is self assessment procedure and only audit and scrutiny of selected assessees will be done by the state and central tax authorities. The dispute is on the audit of the assessee and basically both the centre and state does not want to lose this “lucrative” section of departmental holdings.
We all know that GST will be something highly efficient in the use of technology and almost everything will be online. The filing of returns is self contained and verify everything online. The sale figures uploaded by the assessee will be auto populated in return of buyer and he will take the credit online. Hence, it will be verified online. If there is any mismatch then the system will issue notices. Moreover, the GST audit is to be conducted by a Chartered Accountant. Even the annual return is designed to reconcile with the balance sheets and reconciliation statement is also to be uploaded online. The provisions relating to returns are so strict that non payment of taxes would render the returns invalid. Now to put the major question forward and that is whether the departmental audit in the new regime is really necessary? The government should realise that after a technological revolution in taxation, the audit routine of department will also lose its relevance. It is worth noting that the income and taxes will be matched by the GST portal and then the statutory GST audit will be conducted by chartered accountant also. Looking to above situation, there is absolutely no need of audit by the departmental officers.
Also, look from the point of view of assesses. After filing three returns monthly, getting audit done from a Chartered Accountant, he has to file annual returns also. There are other 12 returns of input service distributor and that of TDS. Then there is departmental audit which is to be completed within three months ( contrary to current department audit which is completed in two or three days). Now the big question is whether he has to do some business also or only to comply with GST rules and regulations? Are we heading towards "EASE OF DOING BUSINESS" ?

It has been argued that even if the departmental audit is not abolished completely, it should be restricted to highly evasion prone units only. But this argument does not hold good. The evasion can be controlled by Anti evasion activities and not by audit. The online GST mechanism will control the accounted frauds very well. But there is no need of audit for the same when the number of returns prescribed are reconciling everything online.
Another issue which is also very important in this discussion of dual jurisdiction. Yes, it is a hard reality which is to be accepted as a necessary consequence of GST, but even if talk of a specific aspect such as refunds, the difficulties arising by it can be clearly visible. It has been mentioned by the model law that not only the refund of CGST & SGST will have to be applied for separately but the assessing authority and the sanction of refund will also be carried separately. Thus, it is inbuilt in the system as well as draft GST law that there will be dual jurisdiction and we cannot avoid it. An exporter, who will apply for the refund of unutilised cenvat credit, has to apply to CGST authorities for refund of CGST and SGST authorities for refund of SGST portion. The concerned authorities will make payment of their part to the exporters. Hence, we cannot avoid the dual jurisdiction in this federal system of dual GST.

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GST Update 08.11.2016

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