DGGI detects Rs 278 crore GST evasion in railway purchases since July 2017

The Directorate General of Intelligence (DGGI) has detected tax evasion worth Rs 278 crore by bidders who were awarded railway tenders since 2017.

The probe by the investigation agency relates to instances of misclassification of rail supplies by winning bidders of railway tenders, the Parliament was informed.

In March, Business Standard had reported that DGGI has initiated an investigation into tenders awarded by the Indian Railways since July 2017 after complaints were made by the Central Board of Indirect Taxes and Customs (CBIC) and the Department for Promotion of Industry and Internal Trade (DPIIT) to the Ministry of Railways. It was found that bidders were indulging in the malpractice of quoting low rate to win bids and evade by misclassifying the supplies to the national transporter.

The alleged practice by bidders was to deliberately classify procurement products under Chapter 86 of the GST tariff that attracts a lower tax rate of 5 per cent, against classifying such products under Chapter 84 that attracts 18 per cent GST.

In its response to a query in Rajya Sabha, Minister of State for Finance Pankaj Choudhary has said 65 cases of evasion has been booked by DGGI since July 2017 to June 2021.

About 12 show cause notices have been issued, and Rs 55 crore has been recovered by the probe body.

To keep a check on evasion, the CBIC’s GST policy wing is also evaluating the legal feasibility of making it compulsory for the recipient or purchaser to mention the HSN code–used for classification of items–of goods or services being procured in business-to-business transactions. The move is aimed at plugging the loophole in the existing system where bidders are deliberating quoting low tax rates as the current system does not require specifying the GST rate of goods being supplied.

SOURCE:https://www.business-standard.com/article/economy-policy/dggi-detects-rs-278-crore-gst-evasion-in-railway-purchases-since-july-2017-121072701505_1.html

Why petrol, diesel must be brought under GST

India levies one of the highest taxes on petrol and diesel in the world. At present, 60 percent tax is being collected on petroleum products.

Currently, petrol, diesel and other associated products are not subject to GST (Goods and Services Tax), but are subject to excise tax (by the Union government) and VAT (value added tax levied by each state at different rates).

The excise duty from petroleum products contributes up to 90 percent of all excise duty collected by the Centre. The Centre levies an excise duty of Rs 33 on a litre of petrol.

VAT varies from state to state. Rajasthan levies the highest local taxes on petrol and diesel, followed by Madhya Pradesh, Maharashtra, Andhra Pradesh and Telangana.

Before May 2014, excise duty on petrol was Rs 9.48 per litre – the current rate is almost three times. On diesel, central taxes were Rs 3.56 a litre, prior to 2014. Today they are almost 10 times that.

·3-min read
 India levies one of the highest taxes on petrol and diesel in the world. At present, 60 percent tax is being collected on petroleum products.

Currently, petrol, diesel and other associated products are not subject to GST (Goods and Services Tax), but are subject to excise tax (by the Union government) and VAT (value added tax levied by each state at different rates).

The excise duty from petroleum products contributes up to 90 percent of all excise duty collected by the Centre. The Centre levies an excise duty of Rs 33 on a litre of petrol.

VAT varies from state to state. Rajasthan levies the highest local taxes on petrol and diesel, followed by Madhya Pradesh, Maharashtra, Andhra Pradesh and Telangana.

Before May 2014, excise duty on petrol was Rs 9.48 per litre – the current rate is almost three times. On diesel, central taxes were Rs 3.56 a litre, prior to 2014. Today they are almost 10 times that.

Prices of petrol and diesel in the neighbouring countries of China, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan and Myanmar are much lower than that in India. They too import a substantial proportion of petroleum, but taxes in these countries are not as high.

In Canada, the tax on these products ranges from 15 percent GST (5 percent in case of non-participating provinces) plus around 2The United States imposes taxes at rates as low as around 15 percent. In the European Union, taxes range from around 45 percent to 60 percent.

High oil prices add to inflationary pressures. Record high prices for petrol/diesel means that the cost of transporting goods goes up across the country which in turn can result in raising the prices of essential commodities.

Household incomes see a perceptible drop and adversely affect the demand. Inflationary risks are higher in 2022-23, as the global oil price forecast has now revised up to $75 a barrel, from $60 previously for 2022, as per Wall Street brokerage Bank of America Securities report.

Centre and states together earn over Rs 5 trillion annually from tax on petroleum products. If they are brought under the GST, it would result in a shortfall of Rs 2 to 2.5 trillion cumulatively to both the Centre and the states.

Finance Minister Nirmala Sitharaman had recently said in Lok Sabha that she would be ‘glad’ to discuss the suggestion of bringing petrol and diesel under the ambit of GST. The duties on petrol are levied both by the Centre and the states and both would have to work together on this. There were no hurdles from the Centre’s side, and the GST Council would have to take a call.

After widespread consultation with stakeholders, the NationalDemocratic Alliance government introduced the 122nd Constitution Amendment Bill in 2014, whereby the only exclusion from GST was alcohol for human consumption and a provision to the effect that the aforesaid petroleum products would be subjected to GST with effect from such date as the Council may recommend.

Such a delayed choice approach was adopted in view of the reluctance of the states to subject around 25-30 percent of their assured tax revenues to the initial uncertainties of a new tax regime.

Accordingly, sections 9(2) and 5(2) of the CGST/SGST Act and the IGST Act, respectively, explicitly provide for levy of GST on these products with effect from such date as the Council may recommend.

This was a far-sighted move on the part of the NDA government which now enables the levy of GST on these products without making any further amendment to the Constitution.

For a post-pandemic economic recovery, economists believe it is important that taxes on petroleum and its products are reduced. It happened during the global financial crisis of 2008-09 and gave an immediate push to factory production and the economy.

Reserve Bank Governor Shaktikanta Das too has urged the government for a calibrated unwinding of fuel taxes to reduce price pressure in the economy. Levying GST on petrol products at 28 percent would go a long way in easing such pressures.

SOURCE:https://in.news.yahoo.com/why-petrol-diesel-must-be-brought-under-gst-085506704.html

Centre not in favour of extending GST compensation period beyond 5 years

GST e-way bill generation gathers momentum in July

E-way bill generation for goods transportation under the Goods and Services Tax (GST) system has improved pace in July, indicating a gradual pick-up in economic recovery.

In the first 25 days of July, average daily e-way bill generation stood at 19.83 lakh, 8.8% higher than the average for June and 54% higher than the May level.

Average daily e-way bill generation was 20.2 lakh in the week ended July 25, compared with 20.4 lakh in preceding week and 19.24 lakh in the first 11 days of July.

Between July 1 and 25, as many as 4.96 crore e-way bills were generated. Higher e-way bills generation will also reflect in GST revenue.

Gross GST collections, after remaining above the Rs 1-lakh-crore mark for eight months in a row, came in at Rs 92,849 crore in June (May transactions), reflecting the blow to the economy from localised lockdowns.

Thanks to reduction in Covid-19 case numbers and easing of the lockdowns, e-way bill generation by businesses rose to 5.5 crore in June from 3.99 crore in May, indicating a recovery of trade and business. About 5.9 crore e-way bills were generated in April.

With the impact of the second Covid-19 wave waning and the vaccination drive making progress, parts of the economy are expected to look up from July.

In recent months, the government’s GST revenue has been robust, thanks to steps taken to curb evasion, increased compliance and also a shift of business away from the informal sector. A nascent economic recovery that appears to have been disrupted by the pandemic’s second surge, also helped.

SOURCE:https://www.financialexpress.com/economy/gst-e-way-bill-generation-gathers-momentum-in-july/2298183/

Rajasthan news :सेंट्रल GST की उदयपुर में बड़ी कार्रवाई, 8 करोड़ की घपले में पंजाब के व्यापारी को किया गिरफ्तार

राजस्थान के उदयपुर जिले में जीएसटी चोरी के एक बड़े मामले का खुलासा हुआ है। इस संबंध में सेंट्रल जीएसटी ने पंजाब के एक व्यवसायी को पकडा है।

 सतीश शर्मा, उदयपुर।
सेंट्रल जीएसटी टीम ने रविवार को उदयपुर में एक बड़ी कार्यवाही को अंजाम दिय़ा। यहां टीम ने फर्जी इन्वॉयसेस (fake invoice) के आधार पर आयरन स्क्रैप (iron scrap) का व्यापार में करते हुए करोड़ो की जीएसटी चोरी (GST evasion worth crores) कर रहे एक व्यापारी को गिरफ्तार किया। टीम ने पंजाब मूल के अनिल कुमार अरोड़ा उर्फ सेंटी को गिरफ्तार किया, जो इस गिरोह का मास्टरमाइंड भी है। दरअसल, अनिल फर्जी इनवॉयसेस बनाकर राजस्थान के कई शहरों से पंजाब (Punjab)में स्क्रैप का परिवहन करवा रहा था। गिरफ्तारी के बाद पूछताछ में सेंट्रल जीएसटी (Central GST investigation ) की टीम ने आरोपी अनिल कुमार पर 44 करोड़ के बिलों पर 7.97 करोड़ की जीएसटी चोरी भी पकड़ी हैं।2 ट्रक भी जब्त

जानकारी के अनुसार इस कार्रवाई में जीएसटी टीम ने आयरन स्क्रैप से भरे 2 ट्रक भी पकड़े हैं, जिन पर करीब 16 लाख का टैक्स अलग से बनाया गया। जीएसटी टीम के अधिकारियों की मानें तो आरोपी मार्च महीने में पंजाब के पवन कुमार शर्मा के पकड़े जाने के बाद से राजस्थान में इस कारोबार की कमान संभाले हुए था। गिरफ्तारी के बाद सेंट्रल जीएसटी की टीम आरोपी को उदयपुर से जोधपुर न्यायालय (Jodhpur court ) में पेश करने ले गई है। टीम ने आरोपी के उदयपुर आवास से लैपटॉप, मोबाइल फोन और अन्य दस्तावेज भी बरामद किए है।आरोपी ने बना रखी थी दो फर्मे!

आरोपी अनिल बगैर बिल और बिना ई-वे बिल के ही आयरन स्क्रेप की खरीद-बेचान कर रहा था। यही नहीं इसके लिए उसने बालाजी सेल्स कॉपोरेशन और करनी एंटरप्राइजेज नाम की फर्मे भी बना रखी थी। आरोपी कम वक्त में ज्यादा कमाने के लालच में सरकार को जाने वाला करोड़ो रूपये का टैक्स बचाने के लिए यह सब कर रहा था।

Delhi-based businessman arrested for Rs 128 cr GST-related fraud

A Delhi-based businessman here has been arrested for an alleged Rs 128 crore GST-related fraud, a senior official said on Sunday.

Investigations conducted by the officials of the Chandigarh zonal unit of the Directorate General of GST (Goods and Services Tax) Intelligence (DGGI) revealed that the accused was allegedly involved in issuing invoices without actually procuring goods and thus passing on input tax credit (ITC) to various beneficiaries at several places, including Delhi and Chandigarh.

ITC means that a businessman can reduce taxes already paid on the input while paying tax on the output.

The accused had set up six firms with an intention of passing on the fake ITC to multiple beneficiaries, the official of the Chandigarh zonal unit of the DGGI said.

He said the accused had passed on fraudulent ITC worth Rs 128 crore.

The GST officials also conducted searches at the business premises and residential places of the accused in Delhi and Himachal Pradesh, he said.

Raids were also carried out at the premises of some of the suppliers, the official added.

Investigation further revealed that the items, which were shown as sales, were never bought and similarly some items, which were shown as purchases, were never sold by the firms.

The vehicles, which were shown for transporting the goods, were found to be operating in some other parts of the country.The accused was into the business of readymade garments, chemicals, cigarettes, among other things. PTI

source:https://www.tribuneindia.com/news/delhi/delhi-based-businessman-arrested-for-rs-128-cr-gst-related-fraud-288168

GST: End hibernation on dispute resolution

The adage “old is gold” is not necessarily true, and has exceptions. The same applies to the pre-GST indirect tax landscape of India. The long-queues of trucks at state-borders (with entry upon cascading and exorbitant entry taxes), the rampant tax evasion on inter-state characterisation of local sales, etc, and the incoherent and localised VAT policy, with cascading effect, rate-wars between states, etc, many ills marked the past. Hence, GST is a shining example of the present being better than the past. Having said that, the foundations of a bright future do not rise on a stand-still present. In fact, more work is required, over the hard work already done. Unfortunately, time is not on the side of the policymakers. The expected buoyancy of GST collections is yet to be achieved, many distortionary taxes (like stamp duties and those on petroleum, electricity, stamp duties) continue. The clock is ticking, and it is now less than a year before the true contours of cooperative federalism, the idea on which GST is based, begin to get perceived. Some policy issues are identified here as requiring urgent action.

 The GST Council must evolve the rules for adjudication in time, lest a solution on resolving disputes itself becomes dispute-ridden

 

AdvertisementThe clock is ticking, and it is now less than a year before the true contours of cooperative federalism, the idea on which GST is based, begin to get perceived. Some policy issues are identified here as requiring urgent action.
The adage “old is gold” is not necessarily true, and has exceptions. The same applies to the pre-GST indirect tax landscape of India. The long-queues of trucks at state-borders (with entry upon cascading and exorbitant entry taxes), the rampant tax evasion on inter-state characterisation of local sales, etc, and the incoherent and localised VAT policy, with cascading effect, rate-wars between states, etc, many ills marked the past. Hence, GST is a shining example of the present being better than the past. Having said that, the foundations of a bright future do not rise on a stand-still present. In fact, more work is required, over the hard work already done. Unfortunately, time is not on the side of the policymakers. The expected buoyancy of GST collections is yet to be achieved, many distortionary taxes (like stamp duties and those on petroleum, electricity, stamp duties) continue. The clock is ticking, and it is now less than a year before the true contours of cooperative federalism, the idea on which GST is based, begin to get perceived. Some policy issues are identifie

 

From July 1, 2022, states will be on their own, the cushion of GST compensation lapsing, given that there is no formal acceptance by the Centre—much less an amendment in law—to extend compensation timelines. This is a far cry from last year’s scenario, the entitlement with which the states cajoled the Centre to borrow on its own and compensate the states for Covid-led economic diminution. It is an open secret that the underlying objective of the five-year compensation window (allowing states to conclude capacity-building, officer-training, and other initiatives) has not materialided into self-sustaining economic realities for most states. Why should it be a national concern if some states have chosen to ignore investments in capacity-building? The answer is clear. Vertical inequities amongst states result in dehyphenated policy-solutions with local issues superseding national developmental goals. Lop-sided and disjointed state interests imply a divided house, which is likely to result in frequent deadlocks in the GST Council. This will threaten the ability of this constitutional body to work. That GST Council should take immediate stock of such harsh realities can’t, thus, be overemphasised.

This requires conceptualising and implementing macro-economic solutions to bridge the economic divide amongst states. However, that alone would not be enough. The GST Council can’t rule out the possibility of a hung house. So far, it has worked with Group of Ministers (GoMs) to address differences among states. Whether it be the impasse on sugar cess, flood cess, or other issues, GoMs have performed satisfactorily. However, one cannot ignore the salient effect of the Centre compensating the states. With no such cushion around, disagreements with the states or their overt refusal to heed GST Council recommendations may turn out beyond the influence of Union finance minister’s office. An external intervention hinges upon guidelines for adjudication mechanism to address disputes amongst GST Council members owing to the constitutional stipulation for adjudication as the dispute resolution mechanism. It would be prudent for the Council to evolve the rules for adjudication in time, lest a solution on resolving disputes itself becomes dispute-ridden. It is notable that in absence of pre-defined adjudication mechanism, all political disputes may have to be tried as judicial ones by the constitutional courts.

Entrusting relatively junior officers with the responsibility to quell doubts of taxpayers does not appear to have yielded dividends for the GST Authority for Advance Ruling (AAR), a mechanism which was expected to impart certainty and obviate disputes. Even a two-tier machinery, with appeals against AAR being heard by senior tax officers, was found wanting in its objective of resolving inadequacies of AAR rulings. This led to creation of a third-institution—National Appellate Authority—to hear disputes arising from ‘conflicting advance rulings’. As on date, however, this forum is dysfunctional, with members yet to be appointed. Even otherwise, in most cases, the quality of AAR rulings has not been inspiring for taxpayers, often inviting interjection of the High Courts. There is urgent need for policy-makers to take stock. An ideal solution would be to replace the three-tier system with a single-tier AAR, like the ones recently-introduced for income tax and customs laws, with very senior officials determining request for advance ruling and working under appellate supervision of the High Courts.

GST tribunals have become a ping-pong in the apparent ego-clash between policy and law. Having to bear the brunt of adjudication owing to lack of tribunals, the Allahabad High Court and other High Courts have directed the policy-makers to urgently operationalise these. Almost parallelly, the Madras High Court quashed the legal provisions relating to the tribunal, highlighting lack of independence of its members owing to restricted qualification of members. The GST Council has not yet acted on the judicial opinion. As a result, there is not a single GST tribunal despite rise in GST disputes, especially those arising from refund claims and goods-confiscation. A recent guidance of the Supreme Court in the context of tribunals seems to vindicate the Madras High Court’s observations. Thus, this can brook no further delay, even by pleading that the matter is sub-judice. Being without tribunals implies locking precious tax revenue in litigation, which is self-defeating for GST reform. Piling tax refund claims and resorting to criminal law measures for recovery with breakdown in adjudication mechanism needs urgent intervention and an overhaul.

There is no room for procrastination. Covid-induced lockdown can influence tax collection, but should not be a reason for policy-inactivity. One would hope that the mechanism to seek resolution is put in place well in time to avoid disputes reaching unmanageable levels.

source:https://www.financialexpress.com/opinion/gst-end-hibernation-on-dispute-resolution/2297352/

GST officials arrest Delhi-based businessman for passing on fake ITC of Rs 128 cr

GST Intelligence officials have arrested a Delhi-based businessman here for allegedly fraudulently passing on input tax credit (ITC) worth Rs 128 crore, a senior official said on Sunday.

Investigations conducted by the officials of the Chandigarh zonal unit of the Directorate General of GST (Goods and Services Tax) Intelligence (DGGI) revealed that the accused was allegedly involved in issuing invoices without actually procuring goods and thus passing on the ITC to various beneficiaries at several places, including Delhi and Chandigarh.

ITC means that a businessman can reduce taxes already paid on input while paying tax on output.

The accused had set up six firms with an intention of passing on the fake ITC to multiple beneficiaries, the official of the Chandigarh zonal unit of the DGGI said.

He said the accused had passed on fraudulent ITC worth Rs 128 crore.

The GST officials also conducted searches at the business premises and residential places of the accused in Delhi and Himachal Pradesh, he said.

Raids were also carried out at the premises of some of the suppliers, the official added.

Investigation further revealed that the items, which were shown as sales, were never bought and similarly some items which were shown as purchases were never sold by the firms.

The vehicles, which were shown for transporting the goods, were found to be operating in some other parts of the country.

The accused was into the business of readymade garments, chemicals, cigarettes, among other things

source:https://www.businesstoday.in/latest/economy/story/gst-officials-arrest-delhi-based-businessman-for-passing-on–itc-of-rs-128-cr-302344-2021-07-25

Put ATF under GST: Civil Aviation Ministry Asks MoF, Parliamentary Committee says GST Council Should Resolve This Issue

The Civil Aviation Ministry has formally asked the Finance Ministry to bring ATF under the ambit of GST at an applicable rate not higher than 12% with full input tax credit, as per a submission made by the Civil Aviation Ministry before a parliamentary standing committee.

“The issue of inclusion of ATF under GST has been a long standing issue and requires final resolution by the GST Council,” the committee has noted in its report which was tabled in Parliament on Friday. This was after the Secretary, Ministry of Civil Aviation apprised the Committee that Ministry has taken up the proposal with the Ministry of Finance to bring ATF under GST for “coherence and simplicity in the tax regime” and that the matter is pending with the GST Council.

The Civil Aviation Ministry in its written note to the committee said the proposal is that applicable GST rate on ATF may be no higher than 12% with full input tax credit. “Output tax on sale of tickets both on business and economy air passenger transport services may be levied at a uniform rate of 12%. Output tax on air cargo transport, and ancillary services such as Catering, Premium Services and Services on Add-ons may be levied at 12%. Airlines may be allowed full input tax credit for GST paid on all goods and services,” the note said on the proposals.

The Ministry added that states have been requested “to provide full support” for bringing ATF within the GST’s ambit at the earliest during the deliberations on the matter in the GST Council, and in the interregnum to reduce the VAT/Sales Tax on ATF at their airports. It said that in wake of the pandemic and its adverse fall-out on the airline industry, airlines had suggested that till ATF is placed under GST, VAT should be capped at 5% and the 11% excise duty should be eliminated.

The committee in its report seems to back the Civil Aviation Ministry’s case saying it takes “serious note” of the high ATF prices prevailing in the country which is “further aggravated by high taxes such as customs duty, excise duty, sale/State tax, Value Added Tax (VAT) levied thereon”. The report says the Committee understands that the cost of ATF nearly forms 40% of the total operating cost of airlines and impacts the financial viability of their operations and hurts their competitiveness because Indian carriers are unable to compete against the global airlines on account of the exorbitantly higher prices of ATF

The Committee is constrained to note that ATF prices in the country are distorted because it is subjected to multiple taxes by different entities. The airline industry is capital-intensive and works on very thin profit margins. This is why most Indian carriers are reeling under losses despite tremendous growth in air traffic. Therefore, relief on ATF is crucial for the viability of airline industry and would be a major incentive for airlines to augment their operations,” the report says.

Representatives of private airlines who deposed before the Committee said that Indian aviation fuel is taxed in the highest possible slab and no country in the world of equivalent size or equivalent aviation market taxes fuel at India’s rates. “In the written reply furnished by the Civil Ministry, it has been stated that cost of ATF is a formidable challenge for the financial health of airlines,” the committee report has noted.

The report says that the Committee is concerned to note that the State Governments have shown reluctance to reduce the VAT on ATF for flights other than those operated under UDAN scheme.

“The Committee is of the view that reduction in VAT on ATF would be a notional revenue loss for the States, which can be offset by enhanced economic activities, which would be the result of increased air connectivity to the region. The Committee desires that the Ministry may pursue this issue with the States, in order to rationalize and minimize the State level taxes/surcharges on ATF and bring much needed relief and help, to the airline sector,” the report says

SOURCE:https://www.moneycontrol.com/news/business/economy/put-atf-under-gst-civil-aviation-ministry-asks-mof-parliamentary-committee-says-gst-council-should-resolve-this-issue-7216051.html

PIL seeks setting up of GST tribunal to cut backlog of cases

The constitution of National and other Benches of the appellate tribunal under Section 109 of the CGST Act, 2017 is an absolute necessity of the hour and the respondents (government) cannot drag its constitution for an indefinite period,” Sahni said, adding that the litigants are unable to get speedy justice.

A PIL in the Supreme Court has sought directions to the Centre for setting up of the Goods and Services Tax Appellate Tribunal, as mandated under the Central Goods and Services Act, 2017, to avoid hardships caused to litigants and to curb huge backlog of cases.

Even after four years of the CGST Act coming into existence, the tribunal has not been constituted, activist lawyer Amit Sahni alleged in its PIL. The GST Bill was passed in both the Houses of Parliament in 2016 and the Central Goods and Services Act, 2017, came into force from July 1 that year only.

The constitution of National and other Benches of the appellate tribunal under Section 109 of the CGST Act, 2017 is an absolute necessity of the hour and the respondents (government) cannot drag its constitution for an indefinite period,” Sahni said, adding that the litigants are unable to get speedy justice.

Stating that the government was deliberately not setting up the GST tribunal, Sahani said GST was introduced with the objectives to simplify the taxation laws by subsuming multiple tax laws at different central and state levels into a single one and to lessen the burden of payment of multiple taxes from the shoulder of common citizens.

“Any person aggrieved by the order passed by the Appellate Authority under Section 107 or by the Revisional Authority under Section 108 may appeal to the appellate tribunal under Section 112 within three months of passing such order,” the petition said, adding that these appeal arising against the orders/directions passed by the appellate authority are pending due to absence of any appellate tribunal, thus defying the objectives of introducing the GST Act.

Earlier this year, the Allahabad High Court had also directed the central government to specify by notification under the CGST Act, the creation of the state bench of GST Tribunal at Allahabad and four area benches at Ghaziabad, Lucknow, Varanasi and Agra.

SOURCE: