Model GST law - Feast after a decade long fast

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Model GST law - Feast after a decade long fast
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• Indian Indirect tax payers have been greeted with
  a bouquet of complexities from the time
  immemorial. These taxpayers were in need of a
  single flower as antidote, which they now see
  budding in form of Model GST law released by the
  Union Government. The proposed scheme of GST aims
  to reduce the existing intricacies in
  administration of multiple indirect taxes. The
  much debated beauty and barriers of GST as a
  unified tax on goods and services has finally
  come to the rescue of taxpayers in the form of
  model GST law, framed by the Empowered Committee
  of State Finance Ministers.
• The model law is designed in a manner that it can
  also be used by the states as blue print for
  state GST. At the outset, the model law proposes
  its applicability to whole of India and provides
  that different dates may be appointed for
  different provisions of the Act. The draft law
  appears to be largely premised on the existing
  state VAT laws and an attempt has been made to
  reconcile the philosophies of existing Central
  Excise, VAT and Service tax laws.

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• The scheme of taxation under GST would be on
  supply of goods, thus the draft (i.e. GST Act and
  IGST Act)is accompanied with the Valuation of
  Supply of Goods and Services Rules and there
  exists a predominant emphasis on determination of
  time, value and place of supply in the model law.
  By far and large, the definitions under the model
  law are more precise and clear even when they
  borrow reference from different bye laws. The
  definition of 'services' has been kept same as
  proposed in the Constitution (122nd Amendment)
  Bill, services to mean anything other than goods.
  Such a definition would enlarge the scope of
  taxability on services. The model law has
  distinctly outlined the concepts of works
  contract, job work and tax on right to use of
  goods.
• The draft does not talk about the rate of taxes
  but clears that rate of taxes on various goods
  and services is to be appended as Schedule to the
  Act. Further, in so far as a 'taxable person' and
  'registration' is concerned, the threshold for
  determination in North East states have been kept
  half as the business transactions are
  correspondingly also lower than rest of India.
  Thus the registered persons would be required to
  levy tax if the aggregate turnover exceeds Rs. 10
  lacs in a financial year, and Rs. 5 lacs in north
  east states. This proposal also aims at expansion
  of tax base and uniforms the existing threshold
  as under the different indirect tax laws.
• The draftsmen have made a proposal in the model
  law that the transactions would now be put to tax
  under GST on 'transaction value' basis and this
  value can be challenged by a proper officer in
  case he has reason to doubt the truth or accuracy
  of the value declared.

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• This concept has been borrowed from the Customs
  laws and would certainly pregnant the industry
  with difficulties on valuation of supply in
  proposed GST. Unlike present scheme, the model
  law also proposes a compliance rating score of
  taxable persons to be updated on periodic basis
  and placed in public domain.
• India's proposed GST is more of self-disciplined
  tax module, as conceded by CBEC officers in
  various forums, thus one can see the compliance
  orientation in the model law which carves out
  explicit provisions for requirement and manner of
  registration, payment of taxes, filing of
  returns, issuance of tax invoices, bill of
  supply, credit, debit notes and availment and
  transfer of credits. Model law has also
  introduced the concepts of civil lawse.g.
  presumption as to truth and admissibility of
  'documents', 'mental state', 'burden of proof'
  etc. which one do not find place in many of
  existing tax laws.
• The model law empowers the officers to do audit
  and special audit of taxable persons, to demand
  and recover tax, to inspect, search, seize,
  summon and arrest in identified cases, which is
  largely based on present provisions. Further the
  model law is little more stringent on penal
  provisions to prevent the escape or promotion of
  tax leakages, it also casts a penalty on persons
  who aids, abets the offences provided in law. On
  the other side, keeping in mind the interest of
  taxpayers the draft also provides non-imposition
  of substantial penalties for minor breaches of
  tax regulations or procedural requirements. There
  appears to be absence of personal penalty on the
  officers/directors of the companies, as it exists
  today.

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• Another good news is on the limitation to file
  refund claims, where the model law provides that
  refund claim application may be made within two
  years from the relevant date. Today we have
  maximum of one year to file refund claims, in
  service tax and a lesser period under other tax
  laws.
• A machinery for dispute resolution is required
  for every tax scheme, the model law list downs
  the provisions against such requirement under the
  chapters on settlement of cases, compounding of
  offences, appeals and revisions. One can see the
  need of constitution of national GST appellate
  tribunal, as referred in the model law and the
  coram of bench must have one judicial member, one
  member technical (CGST) and one member technical
  (SGST) for matters exceeding ten lakhs rupees.
  Three member bench would help in overcoming the
  cases of dissecting opinions as we see in case of
  a division bench. Matters before three member
  bench to be decided by majority. The tribunal
  would have one branch for each state known as
  SGST Tribunal. Today we have CESTAT benches for
  customs, central excise, service tax matters but
  not one in each state. The appeal to national GST
  Appellate tribunal may be preferred for any
  amount in dispute but the Tribunal in its
  discretion may dismiss the appeal if the amount
  in dispute is less than 1 lac rupees.

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