The Goods and Services Tax (GST) Council will look at a slew of options to iron out the differences between states and the Centre over administrative control over assessees.
The next meeting of the GST Council is scheduled on December 22 and 23. Disagreement over this issue is threatening to derail the indirect tax reform, which the government plans to roll out from April 1 next year. One of the options that the Council will look at is the random choosing and division of five per cent assessees between the Centre and the states, using a computer programme.
The parameters on which the assessees will be chosen would be inbuilt in computer software, written for this purpose.
“The draft laws have provided for some options to implement cross empowerment. There is also near unanimity between the Centre and states on cross-empowerment,” said an officer aware of the development.
The Centre is likely to recommend dividing randomly chosen five per cent assessees, picked by a system for audit and scrutiny in the beginning of the year, instead of a turnover-based division, which is technically called horizontal division.
“In income tax, the assessees do not know who the assessing officer is. There could be something similar in GST as well,” the officer added.
While the Centre and states agree that there should be no dual control, there are differences over division of powers between them. States want sole administrative control over assessees with an annual turnover of up to ~1.5 crore and division of control or cross-empowerment over that. The Centre is pressing for cross-empowerment for all assesses. It will be recommending a division of just five per cent assessees to be scrutinised. “There should be no human interface. Only five per cent assessees will be picked randomly for scrutiny or audit by a computer-based GST network, which could be divided between the Centre and the states,” another senior government officer said.
The GST Bill has provided to do away with dual control over the same assessee: “Under this, a central officer or state official will carry out assessment, scrutiny, audit and pass order under SGST and IGST as well for an assessee along with CGST.” Satya Poddar, tax partner, policy advisory group, EY, said differences over the administrative turf between the Centre and states were basically a job security issue.
Under GST, the Central and state officials would need to help of each other. The former do not have wherewithal to deal with small dealers; state officials have not dealt with service tax, Poddar said.
Also, there would be automatic checks in GST, as there is system of input credits on the basis of which a trail could be established, he added.
Administrative control has proved to be the most contentious issue in GST, delaying the finalisation of legislations. While the sixth meeting of the GST Council on Sunday did not discuss the contentious issue, it is likely to be taken up in the next meeting. Finance Minister Arun Jaitley said he has a few options in mind to resolve the issue. The roll-out of GST from April 1 seems impossible now as the Centre will not be able to table it in the winter session of Parliament. If the GST Council reaches a consensus in the next meeting, it will be tabled in the Budget session.
Business Standard,13 December 2016
