Fresh Start with Exuberance
Whether we can say goodbye to Covid-19 or not and when, is a big question mark! Just like HIV it is going to remain in our vicinity and we all will have to learn to live with it keeping our safe distance by following the Government guidelines and protocols. We are going through huge economic and social turmoil on account of Pandemic. Having said that, we all admit we are confined to the safety of our homes, (which we enjoyed In the beginning but are frustrated now) for more than ever thought of. We are looking forward to having a busy and hectic life as was prior to December 2019. For achieving that we will have to think beyond Covid-19.
Revival of economy will get a momentum with deep patriotism now embedded in our mind. We are looking forward to a better ‘Atmanirbhar’ India. I request all of you to maintain your exuberance for the new life after record days of complete lockdown and wish all the stakeholders in the Tax profession to prosper and attain a greater heights.
As stated earlier, we would be living with Covid-19 and not say goodbye, therefore be wise and smart, do not rush blindfolded. Be careful for you, your family, community and for the Nation at large, to add to the prosperity and to help bringing down the Covid-19 curve.
The e-publication in downloadable form for members
The first e-publication of AIFTP, prepared during complete lockdown on ‘Vivad se Vishwas’ (VSV) theme was available on website for viewing. However, after receiving complaints from many members that the same is not user friendly, the Publication Committee has decided to make available this valuable e-publication running into 414 pages to the members and public at large at a very concessional rate. The members of the Federation would be able to get the E-book at 50% discount at ₹ 250/- plus taxes i.e. for ₹ 295/- only. The added advantage of the e-publication is that the E-book will be revised / amended as and when there is clarification / amendment by the Central Government. The subscribers who have already paid for e-book would have the benefit of getting the revised e-publication for downloading in Pdf without any further cost up to 31st March 2021. An added incentive to buy this book is the reply to the queries raised by the subscribers to the book on VSV by a team of Senior Advocates headed by Dr. K. Shivram. The other features of the e-book are given in the journal. Members are requested to grab this golden opportunity.
The Tran-1 dispute
It is rightly stated that GST was the Act introduced in a great hurry without the required preparedness. The best example of the bureaucratic rigid approach is not allowing filing/revising of Tran-1 by the GST registered persons who have not been able to upload the same within the extended time due to some procedural defects or may be on account of absence of proper knowledge and facility. The article in this review about the Tran-1 credit may please be looked into. The judgment by the Delhi High Court in case of SKH Sheet Metal Component dated 16th June 2020 is worth reading (WP (C) 13151/2019) The Hon’ble Justice Sanjeev Narula has made critical observations as regards the difficulties faced by the dealers at large. They have clearly stated that on account of small clerical mistake the petitioner has to lose huge amount of ITC which they were otherwise entitled under the earlier laws. The Court has also observed “The stand of the respondent, in a nutshell, is that the petitioner committed this mistake – so he ought to suffer for the same. Let us assume that indeed the mistake happen purely on account of a human error, for which the petitioner alone is worthy of blame. Does it mean that for this blunder, the law will provide no restitution and it is a fait accompli for the petitioner? In our view, that should never be the case and law should provide remedial avenue. In our view, the stand of Central Government, focussing on condemning the petitioner for a clerical mistake and not redressing the grievance, is unsavoury and censurable. Tax laws, as it is, are complex and hard to interpret. Moreover, no mater how well the taxpayer well conversant the taxpayer may be, with the tax provision the errors are bound to occur.”
The Hon’ble High Court has also considered the impact of Finance Act 2020 and amendment to Section-140 with retrospective effect The HC held that the rules suffer from vice of vagueness in context of technical difficulties on common portal. The beneficial observation in this judgment is that ITC under the existing laws is a vested right and its credit should vest in favour of the taxpayer and could have been utilized for payment of outgoing taxes under the respective legislation, but for the repeal of existing laws. For the reasons given in the judgment the petitioner is permitted to revise Tran-1 form on or before 30th June 2020 and transition the entire ITC, subject to verification by the respondent. The respondents are directed to open the online portal for filing revised declarations in Tran-1 electronically or to accept the same manually. An important aspect which was not brought to the notice of the Court is that the credit which is claimed in Tran-1 is already passed on to the subsequent buyer by the assessee and therefore the assessee is at a greater disadvantage if the Tran-1 credit is not allowed to be claimed.
In my opinion, the judgment is perfectly in order. However, the deadline of 30th June 2020 will not totally solve the issue. Major metropolitan cities like Mumbai, Delhi, Ahmedabad and many other places, the public transport facilities have not yet started and is not likely to start by 30th June 2020 on account of increase in the containment areas. The Central Government and the Finance Ministry must take the observation made in this judgment in right spirit and suo moto extend the date at least up to 15th August 2020 for Tran-1. The GST Council has already recommended the extension of due dates falling on 30th June and thereafter. A positive well calculated step by the Government would go a long way and give a sigh of relief to many. It would also make the Government taxpayers friendly.
Need to have tax friendly environment
This reminds me of the pertinent question asked by the Hon’ble Chairman of the CBDT to Shri Sadguruji. I had the privilege to be the one amongst nine persons invited by the President of ITAT to have live conversation and question and answer session with Shri Sadguru. The need of the hour, especially when the Government is making all out efforts to rejuvenate the economy, the tax friendly measures would go a long way and would help in increasing the tax compliance rather than tax avoidance. The business class has realized that litigation has no end, there is rising resistance to corruption and therefore the mindset of the registered dealers now is more towards tax compliance than towards tax avoidance. The tax friendly measures by the Government , both under Direct and Indirect Tax would gain the confidence in the Government.
Stop Phishing inquiry
In the recent past, we have seen the GST officials sending notices and calling the registered person to produce all books of accounts like a normal assessment. This can be simply avoided if a proper desk audit is done by the official before issuing the notice. The Government has the details of the entire transactions by the dealer in e-way bill, GSTR-1, 3B, 2A along with the details of each and every invoice raised by the assessee. It is therefore futile to issue a general notice and direct the registered persons to attend with all books of accounts etc. Instead the department can act smart and tax friendly by pointing out the precise discrepancy noticed by their research department / desk audit. This would help the assessee and also would leave considerable space and time with the department to dig into the real offenders.
Webinars and National Tax Conference
Once again, may I remind members to request their friends in the Tax profession to become our members. The fees are destined to be hiked. During the lockdown and till date we had multiple, webinars, Virtual workshops, both under direct and Indirect taxes, to keep our members updated. Till date we have completed 71 webinars. The benefit of membership is having access to all webinars on our website. The GST has opened up the national stage for professionals too. AIFTP provides valuable opportunity to network with like minded professionals throughout India.
Till we are allowed to meet freely in person, the Federation has decided to hold virtual National Tax Conferences. I request you all to look forward to future programme and join in large numbers.
Stay safe, stay healthy.
With best wishes,
Nikita R. Badheka
National President, AIFTP