GST Update on disharmony in CGST and SGST

The Central Goods and Services Tax (Amendment Act, 2018) received the assent of the President on 29.08.2018 wherein the various sections contained in the CGST Act, 2017 have been amended. It is submitted that it is very well known that the provisions contained in the Central Goods & Services Tax Act, 2017 and State Goods and Services Tax Act, 2017 are akin and are in alignment with each other. The Central Goods and Services Tax (Amendment Act, 2018) that has amended CGST Act, 2017 has been approved by the President and has already been passed in the Official Gazette on 29.08.2018. However, none of the States have approved the amendments made in the CGST Act, 2017 till date. It is submitted that proper synchronisation between the provisions of CGST Act, 2017 and SGST Act, 2017 is must for effective implementation of GST but it is a very rare phenomenon to observe. The GST Law was introduced with the objective of bringing uniformity in the indirect taxation reform but the very purpose of the government is being defeated. It is commonly observed that the States approve provisions of GST Law as per their own will and convenience without even considering the impact of the gap created in both the Acts. This is not the first time when there is disharmony in the effective date of implementation of certain provisions. The best example is the implementation of E-way bill mechanism for ‘Intra-State movement of goods’ by different States on different dates. Furthermore, certain States have also fixed their own ceiling for generation of e-way bill for movement of goods within State.

It is submitted that delay in approval and implantation of the amendments made vide the Central Goods and Services Tax (Amendment Act, 2018) by various States will only invite litigation as regards the effective date from which the said amendments are to be complied with. Say for example, one of the major amendments that have been made is with respect to ineligible input tax credit specified in section 17(5) of the CGST Act, 2017. Prior to 29.08.2018, there was no restriction as regards availment of input tax credit with respect to repair and maintenance of motor vehicle and this interpretation was backed by FAQs and reply given by the government on the twitter handle operated by the government. However, the substituted provision seeks to deny the input tax credit of repair and maintenance of motor vehicle except when used for specified purposes w.e.f. 29.08.2018. Now, as no amendment has been made by the State Government till date, the question that arises is whether assessee is ineligible for availing CGST portion only on the repair and maintenance services and whether SGST portion can be availed until the respective State Government also approves the amendment made in section 17(5) of the CGST Act, 2017? Well, the government should remove such technicalities by declaring that the amendments made in CGST Act, 2017 are to be implemented irrespective of the date on which respective State Government approves such amendments in the SGST Act, 2017.

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GST Update on disharmony in CGST and SGST

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