Centre, state tax officials at loggerheads over GST
June, 03rd 2016
As the government struggles to get the Opposition on board for the passage of the Constitution Amendment Bill for the goods and services tax (GST) in the Rajya Sabha, Central and state revenue officials are engaged in a turf war over the unified indirect tax regime.
The administrative concerns, if not ironed out, may significantly dent the ease of ease of doing business objective of the key reform resulting in harassment of taxpayers and rise in litigation, according to experts.
Central revenue officers are concerned that states want control over taxes and assessments, rendering the Central Board of Excise and Customs toothless.
STILL A LONG ROAD AHEAD Central revenue officers are concerned that states want control over taxes and assessments, rendering the Central Board of Excise and Customs toothless
States, including Gujarat, Maharashtra, West Bengal, Tamil Nadu and Karnataka, are pressing for authority over tax assessments and dispute resolution for entities with annual turnover of up to Rs 1.5 crore
This essentially means most service tax cases will move out of the Centre's domain
"There are administrative concerns over the GST that may result in a rise in litigation and harassment of taxpayers. The GST may end up with the worst rules from state laws and central laws," said an official who did not wish to be named.
"States are striking off almost all our recommendations at the GST meetings," he added.
Gujarat, Maharashtra, West Bengal, Tamil Nadu and Karnataka are pressing for authority over tax assessment and dispute resolution for entities with an annual turnover of up to Rs 1.5 crore. This essentially means most service tax cases will move out of the Centre's domain. "Almost all service tax cases barring those of big companies will go to the states," added another official.
However, cases over the Rs 1.5 crore threshold, there will likely be dual authority, with both states and centre having the power of assessment.
"It is unfair that states want exclusive rights over Central GST (SGST), State GST (SGST) and Integrated GST (IGST) up to Rs 1.5 crore. Nothing is exclusive for the Centre beyond the limit also," he said.
States also want to extend revisionary powers. Senior central revenue officers can now revoke orders passed by juniors within three months, against up to infinity in some states. The move could lead to a rise in uncertainty for tax assessees. "Some things are good in central Acts and some in state Acts. The Centre has a better system of review," an official said.
Parity is another contentious issue. "Chief commissioners have a service of 30-32 years against 16-17 years for state commissioners. How can they be put at par?" another official said. In Maharashtra, the Centre has seven chief commissioners and 30-40 commissioners, but one commissioner from the states.
"If a joint commissioner from the state and commissioner from the Centre pass orders on the same case, whose will hold?" argued another officer.
"Our intake of officers is 200 each year. What will happen to them if service tax is no more in our domain?" an official said.
"These are valid points. The litigation level will go up with each authority taking a different view. These need to be sorted before the GST comes into effect," said Saloni Roy, senior director, Deloitte.