Recently, the Centre for Policy Research organised a conference titled ‘The GST Story — Whither Next?’ The speakers were persons who have had a major role to play in the context of GST — Arvind Subramanian and Rajeev Ranjan. Having being actively involved in the build-up to the introduction of GST, Subramanian critically summed up the present position of GST law.

Subramanian was of the opinion that the GST Council has self-converted itself into a need-based rate-cutting panel and that after seven years of GST, the Council should focus on increasing specific GST rates to improve revenue. If revenue increases, the need for a compensation cess reduces.

Ever since the concept of compensation cess was introduced, there have been differences of opinion between the Centre and the States on the amount of cess and the period for which it should be levied.

Subramanian was of the opinion that if one looked closely at GST cess rates, there could be multiple rates.

He also raised concerns over what he described as tax terrorism, where excessive tax demands have become more prevalent under GST.

He emphasised that while tax-related issues have always been part of the Indian system, their intensity has escalated since GST was implemented. The focus, according to him, should be on addressing this problem.

Additionally, he pointed out that GST, introduced on July 1, 2017, aimed to streamline India’s tax structure by consolidating 16 indirect taxes and cesses, previously managed separately by the Centre and States. This resulted in a more unified taxation system.

Tax slabs

At present, the GST system has five broad tax slabs — 0 per cent, 5 per cent, 12 per cent, 18 per cent, and 28 per cent — with an additional cess on luxury and harmful goods. While acknowledging GST as a significant tax reform and a milestone in Indian economic policy, he cautioned that the complexity of the system and the rise in aggressive tax enforcement remain pressing issues that need urgent attention.

It would be hard to dispute any of the points raised by Subramanian. In particular, the tendency to issue a slew of GST notices only with an intention to garner some revenue should be addressed on priority.

There are still some tax assessing officers who are not familiar with the basic concepts of GST laws. In some instances, aggressive assessments are being completed only with a desire to achieve the revenue targets that have been set.

The Central Board of Indirect Taxes and Customs (CBIC) is giving some training to its officers but much more needs to be done considering the sheer scale of the training to be provided.

In many instances, the training needs to be focused only on conducting GST assessments as per the provisions of GST law.

Appellate Tribunals

If there is one area where taxpayers have been short-changed, it has been in the inordinate delay in the establishment of GST Appellate Tribunals across the country and staffing them with qualified members.

The Tribunals are expected to be up and running by March 2025 but they will be loaded with a huge backlog of cases which would take considerable time to be heard and adjudicated on.

The long wait could force many taxpayers to settle the matter with the department, thereby ensuring that the issue is settled fast.

India introduced GST in a hurry and has made innumerable changes to the law over the last seven years. The taxpayer has patiently survived this roller-coaster ride but one can sense a bit of impatience creeping into them.

It would probably be a good time for the GST Council and CBIC to relook the GST law and simplify it. This should be the response to the question “ Whither next” for GST.

The writer is a chartered accountant

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