On GST Dispute Settlement – How to make GST less taxing

Source: This post on GST Dispute Settlement has been created based on the article “How to make GST less taxing” published in “Indian Express” on 25^th January 2024.

UPSC Syllabus Topic: GS Paper 3 Indian Economy – Indian Economy and issues relating to mobilization of resources.

News: The article discusses the various issues arising regarding GST implementation and how they can be tackled.

A detailed article on GST can be read here.

What are the issues arising regards to GST implementation?

1. Substantial increase in the number of show-cause notices and other recovery proceedings in the last few years. This is due to a lack of understanding of the new law and procedures, numerous amendments and the impact of frequent portal glitches.
2. Classification disputes arising out of differential rates of tax because of multiple notifications.
3. There is no GST Appellate Tribunal in place for obtaining relief. The GST Tribunal is yet to be formed.
4. The strength of the existing Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has not been increased.

What should be done?

1. GST settlement scheme: This will enable assessees to pay a percentage of the disputed tax and bring thousands of pending proceedings to a close.
   The author suggests that the scheme should provide for a flat payment of 33% of the disputed tax amount with a complete waiver of interest and penalty.
2. Keeping Fines Low: The percentage of taxes to be paid under the scheme should not be high and there should be a complete waiver of interest and penalty.
   For instance, Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was a huge success because it provided for waiver of interest and penalty subject to payment of a reasonable percentage of taxes demanded or disputed.

This would make GST adoption more attractive and lead to the closure of several disputes. It would also greatly reduce the number of appeals filed before the proposed Tribunal.

Read more about the Direct Tax Vivad Se Viswas Act, 2020.

Question for practice:

What are the various issues arising regarding GST implementation? How can they be tackled?