GST- Issues , Challenges, Achievements and the Journey Ahead- Dr. Akhedan Charan

1. Implementation hurdles: Initial difficulties in adapting to
the new system, technical glitches, and lack of clarity on rules and
regulations. With the implementation of GST, A basket of Central and State
Taxes were merged into a single tax. A completely new system of accounting,
reporting of turnover, claiming credit of prepaid taxes and payment of taxes
came into effect. Before implementation of GST, Officer of State Govt. has no
experience to administer taxation of services and GST officer of Central Govt.
has no experience to administer taxation of trading of Goods. A vast training
programmed was launched by State Govt. as well as Central Govt. to train its
Officer in the field they were lacking. Implementation of GST has also brought
challenges to accounting services to accommodate to the new era. Issues were
identified by all the Stakeholders and they have overcome the challenges they
have come across for this Govt. launched a wide hand-holding program.

2. Compliance burden: Small and medium-sized businesses
struggled with the increased compliance requirements, including monthly returns
and invoicing. Initially provision of GSTR-1, GSTR-2 and GSTR-3 mechanism was
issue creating for medium and small taxpayer and put challenges before them to
comply with. Realizing reasonable difficulties faced by the trade, the GST
council considered the issue and made adhoc and appropriate provisions to make
compliance smooth and easier for compliant taxpayer. No one else has gone
through the tough times more than the taxpayer.

3. Tax rates and slab changes: Frequent changes to tax rates and
slabs led to confusion and difficulties in maintaining pricing and inventory.
Seeing economic scenario, public welfare and realizing need of rationalization
of tax rates Govt. has to change from time to time tax rates to give relief to
taxpayers, consumers and to accelerate economic growth of the country. It
creates bit difficulties and taxpayers have to face some issues and challenges
but by the time the system got channelized.

4. Input tax credit (ITC) issues: Disputes and delays in
claiming ITC, affecting cash flow and working capital. Seamless flow of ITC is
spirit of GST. Passing on and claiming of ITC brought some gaps between them.
To cater this issue and handle these challenges necessary amendments were made
on recommendations of the Council by Central Govt. and State Govt.
respectively. The most critical pending GST reform is upgradation of the GST
Network to prevent fake supplies and fraudulent claims of Input Tax Credit
(ITC). Even after 7 years, the GSTN is unable to connect the supplies in a
value chain, resulting in significant revenue loss to the government and
causing problems for honest businesses, according to the Global Trade Research
Initiative. A move is in the works to curb instances of fake invoicing, which
is used to wrongfully avail ITC with no actual supply of goods or services.

The GST Council is
likely to decide on a new rule in GST law under which businesses would be
required to explain the reasons for excess input tax credit (ITC) claimed or
deposit the amount with the exchequer.

5. Anti-profiteering measures: Controversies surrounding the
passing of benefits to consumers under the anti-profiteering provision. The
Govt. has handles this challenge through providing Anti-profiteering measures
in section 171 of CGST Act. It provides any reduction in rate of tax on any
supply of Good or services or the benefit of ITC shall be passed on to the
recipient by the commensurate reduction in price. The authority was empowered
to impose penalty on defaulting taxpayers

6. E-way bill challenges: Technical issues and difficulties in
generating and managing e-way bills. The GST E-way bill is a major concern for most
of the companies which are regularly into the business of transporting goods
and sending material over the locations, the transport company is also trying
to figure out how it would deal with the GST E-way bill provisions. As soon the
bill expires the transport company or the trucker himself has to generate the
GST E-way bill on his own. The GST Council must have taken all these concerns into
strict consideration and ensured easy and simple e-way bill generation. Since
the system was introduced newly and it was necessary to have a valid e-way bill
with in-charge of the vehicle before any commencements of movement of Goods as
per law. One of the major challenge in the journey of e-way bill system was
that the system was does not allow the return defaulters to generate e-way
bill, but later the Govt. realized this reasonable problem and relaxed the same
under specific conditions.

7. Litigation and disputes: Numerous court cases and disputes
related to GST implementation, interpretation, and compliance. After first
appeal GST Law provide a second appeal in GSTAT for many reasons it could not
be constituted when there was a occasion to file second appeal. This put
taxpayer under obligation to seek relief from Hon’ble under article 226 of
Constitution of India. It increased burden of work for Hon’ble Rajasthan High
Court and taxpayer has to bear extra ordinary expenses for litigations. Now
GSTAT is going to be functional very soon and issue and challenges of
litigation after adverse first appeal order will be sorted at this level and
they will have facility to file their second appeal before Hon’ble GSTAT
constituted very soon at much less expenses and this way taxpayer is going to
be benefitted with equally effective and efficacious legal remedy after adverse
first appeal order within less time.

8. Refund and rebate issues: Delays and difficulties in
obtaining refunds and rebates. Initially when GST was implemented there was not
much clarity about process, and jurisdiction of the Officer who will give the
refund order and rebate. Refund order of SGST and CGST were issued by the
respective department for the same tax period. This was effectively resolved by
the Govt. by giving power to issue refund order to the officer who has
jurisdiction over particular GSTIN for a particular time.

9. GSTN portal issues: Technical glitches and downtime on the
GST Network (GSTN) portal. With this wholly new regime new forms were
introduced, taxpayers need time to adapt to the new system which was completely
as online system. Initially adjudication order, enforcement activity like
survey and transport checking were carried out offline. Since the portal was
introduced newly it was in learning and developing phase. All the functionality
in all the modules could not be rolled out at once. Some modules were not
available on the portal so officers of the Department took up these tasks
offline like adjudication, survey and transport checking and refund, As process
goes on and requirement came to take action about previous already taken action
like an order was required to be appealed against but since order was passed
offline no ARN was available on the system and system was designed to take
second, third and so on action on the basis of previous ARN only. It was a
tedious job to make all the offline action taken online on the portal and till
it is done appeal and likewise action was not possible. In many cases even
appeals were accepted offiline and decided offline since there was not ARN of
adjudication order and ARN of appeal order no refund application was possible
to be filed by the taxpayer on the portal. It was taken on the top priority by
the department to make all the adjudication order and appeal order relating g
to it on portal. Now all these issues have been resolved and initial and
subsequent actions are smoothly being performed on the portal. Taxpayers are
smoothly able to file their registration applications, returns, refund
application, appeal, application for advance ruling, appeal against an order of
advance ruling authority and can make payment, . Officer of the Department are
able to perform all the functions online smoothly like issuance of registration
certificate, scrutiny of returns, conduction of audit, initiate and record
proceedings related to survey and transport checking, issue refund orders and
issue order as appellate authority and appellate authority and for advance
ruling

10. States’ revenue concerns: States’ concerns about revenue
losses and compensation from the central government. This was the main purpose
for introducing new tax regime in form of Goods and Service Tax Act to make
available seamless ITC till Business to consumer sale and to ensure correct
complete and timely payment of State dues without any leakage and widening the
tax base. As the Goods and Service Tax enter into its seventh year as it was
launched in 2017 the Govt. is doubling on leakage in the tax system though
now  GST system is stabilized but still
it need curative measures as it needed even before. It was introduced to remove
inefficiency in the prior tax regime. Many things has to be done to achieve
this goal. Inefficiencies of the earlier system have been removed but
inefficiency of this system exists in the system i.e. leakage of revenue.
Studies show that in all these seven years while this new regime was
stabilizing the tax evasion was increased. At the national level when the new
system was introduced indirect taxes was in tune of 7.19 lakhs crores. The
revenue has now grown to about 20 Lakhs crores. At the time of introduction of
GST number of taxpayers was 67 lakhs now it is about 1.5 crores. It may be
necessary to keep plug on other mode of evasion like declaring not correct
value of supply, time of supply and place of supply, remaining unregistered in
spite of liability, taking ineligible ITC, taking erroneous refund, Taxability
of the goods or the services and rates thereof. But main threat to the Govt.
revenue is fake registration and passing on fake ITC. The Council, the Central
Govt. and the State Govt., GSTN and NIC is taking innovative steps to detect
these frivolous persons (i.e so called taxable persons) at earliest stage and
detect any suspicious transaction and curb the evasion by preventing these type
of frivolous persons in tax base  and
take earliest action if any act of issuing of invoice without supply or taking
invoice without receiving supply is suspected. BIFA (Business intelligence and
fraud analysis) newly known as GAIN create and use algorithm on various bases
and examine activity of taxable person on various risk parameter. It generates
various reports based on such parameters and algorithms which are used to tax
authorities to tap the fraudulent person before his malafide next step.

NIC has developed a utility to provide tax authorities new
facilities and in depth report based on very complex algorithm and very diverse
parameters to curb evasion and to catch tax evaders before they are able to
cause any loss to the exchequer.

Registration is gateway and pass to enter the tax system and
first step to the tax administration. GSTN has developed a new system based on
very logical and reasonable parameters to identify the applicant for
registration that are dubious and without any human interference it allots PV –
Physical verification. This ensures that suspicious applicant be verified
before issuance of registration and this system generated PV lessen scope of
corruption in allotment of PV by tax officers.

Despite these challenges, GST has also brought about significant
benefits, such as reduced tax cascading, increased tax base, and improved tax
compliance. Efforts are being made to address the challenges and improve the
GST system.

The Council, the Network the stakeholder
Govts. are on the way to phase wise rollout to GEOTagging and Biometric based
Aadhar Authentication System. This will further eradicate any possibility of
getting fake registration and subsequently passing on fake ITC and causing loss
to the exchequer.

Disclaimer: Author of this Article is working as Additional
Commissioner of State Tax in State tax Department, Rajasthan. But the fact and
opinion are not in any mean official version or authenticated. These facts have
been collected by personal efforts from various Source and opinion expressed is
in personal capacity.