GST regime is not tax friendly, fix glitches on GSTN: Bombay HC raps govt

The Bombay High Court has rapped the government for the trouble faced by assessees due to the poor execution of the country’s biggest tax reform, the goods and services tax (GST). 

In a strong observation in response to a writ petition, the court said the regime was “not tax-friendly” and there was a need to put grievance redress mechanisms in place. The present system was affecting the “image, prestige and reputation of the country,” it noted, “particularly when we are inviting and welcoming foreign investment in the state and the country”. The government is required to respond to the court by February 16, explaining steps it will take to address grievances.

In its writ petition, automation equipment company Abicor Binzel Technoweld highlighted difficulties related to registration and return filing on the GST Network, the information technology backbone of the new indirect tax. It also raised concerns over difficulties in claiming input tax credit.

“A tax like the GST was highly publicised and termed as popular…The special sessions of Parliament or special or extraordinary meetings of Council would mean nothing to assessees unless they obtain easy access to the website and portals,” the court observed on Tuesday. “The regime is not tax-friendly,” it said.

Eight months after its roll-out, the GST is drawing complaints from industry regarding return filing, input tax credit, and transitional credit refund. Industry is still awaiting transitional credit and input tax credit refunds. Transitional credit on pre-GST stocks stands at Rs 1.3 trillion.

And, amid reports of technical glitches and consignment delays, the government had to indefinitely defer the e-way, or electronic-way, bill on the first day of its countrywide roll-out. 

“While these are teething problems, the court has made a valid point that if these are not resolved, much of the sheen around the GST will fade. Businesses should not be compelled to go to court on such issues and the government should provide upfront relaxation in such cases,” said Pratik Jain, partner, PwC India. There could be an automatic extension of timelines and waiver of penalty if the portal was not functioning fully, Jain said.

Dissatisfied with the state of affairs, the court said it hoped those in charge of the implementation and administration of the tax would “wake up”. It said they must work out a grievance redress mechanism and not leave it to the GST Council. The court also said it hoped it would “not be called upon to administer the implementation of the law, leave alone monitoring and supervising the working of individual officials”.

Taranpreet Singh, partner, TASS Advisors, said: “Though there has been an improvement in the GST website, glitches are faced by taxpayers on a regular basis. With the court taking note, authorities might relax or refund late filing fees paid on account of technical issues post-September 2017.”

Key observations

  • The special sessions of Parliament or special or extraordinary meetings of Council would mean nothing to the assessees unless they obtain easy access to the website and portals
  • Administration must “wake up” and put requisite mechanisms in place. This is necessary to preserve the image, prestige and reputation of the country, particularly when we are inviting foreign investments 

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