“It seems that postponement of measures under the GST
regime such as matching returns, the e-way bill, and the reverse charge mechanism has led to tax avoidance, which is reflected in the revenue for October. This has prompted a hardening stand on revenue leakages,” said a senior government official.
In July, the Central Board of Excise and Customs (CBEC) had asked its officers to go easy on taxpayers till the time the GST
stabilised. It had asked them to avoid sending notices.
However, now CBEC Chairperson Vanaja Sarna in a letter to officers has said “sending out notices to those assessees under your jurisdiction who have failed to file their returns as per schedule may be considered”.
GST collections slowed to their lowest at Rs 83,346 crore in October as the integrated GST was used as credit and rates were revised downward. Collections in November could be even lower as the rates of more than 200 items were lowered, against 27 in October.
The last date for paying taxes for November is December 20.
The official cited above said that reduction in the GST rates for more than 200 items in November might affect collections further. The slowdown in revenue collections also prompted the GST Council in its meeting on Saturday to go for a nationwide roll-out of the electronic way bill on interstate movements of goods from February 1 and for intrastate carriage from June 1. Though the e-way bill was expected to roll out in October earlier, the Saturday decision was advancing timelines, compared to the April 1 deadline formally set by the Council.
“It was seen that due to absence of border checkposts, taxpayers were concealing income and not paying taxes. Therefore, an early roll-out of the e-way bill was decided,” Bihar Deputy Chief Minister Sushil Modi told Business Standard. In comparison to last year, interstate transactions were much lower, suggesting there was some leakage somewhere, Modi added.
E-way bills will help the central and state tax authorities track interstate and intrastate movements of goods. Tax commissioners or an officer empowered by them will be authorised to intercept any conveyance to verify the e-way bill or the number in physical form for all supplies.
The GST Network has introduced a facility for tax officers of all states and Union Territories to view the details of returns and ledgers.
The division of administering assessees between the Centre and the states is in process.
“I would request you to make all-out efforts to complete the exercise on division of taxpayers at the earliest,” Sarna said in the letter. The division will be in the ratio of 90:10 between the states and the Centre for assessees with an annual turnover of up to Rs 1.5 crore and 50:50 for an annual turnover more than that.
Pratik Jain of PwC India said: “It seems that the GST Council believes that immediately enforcing the system is necessary to check tax evasion. If implementation is not done properly, it could lead to significant supply chain bottlenecks and somewhat dilute the objective of one nation, one tax.”