‘Consensus emerging on GST levy on fuels’

Users, oil firms to benefit, says Minister

A consensus is being arrived at among States on the issue of bringing petroleum products under the ambit of the Goods and Services Tax (GST), according to Dharmendra Pradhan, Petroleum Minister.

An early decision on bringing the petroleum products under the GST would be ‘better’ both for consumers and oil companies, Mr. Pradhan told the media here on Sunday. Soon there would be a consensus, he said.

The Minister said that initially States were apprehensive about economic returns if the petroleum products were brought under the GST. “We have to pursue the matter with the GST Council now,” he said.

Mr. Pradhan also disclosed that Mangalore Refinery and Petrochemicals Ltd. (MRPL) would start producing BS-VI diesel by March, 2019 and the BS-VI petrolby December, 2019.The Minister said the entire country would have BS VI fuel by April, 2020.

He said the merger beween MRPL and ONGC Mangalore Petrochemicals Ltd (OMPL) was in the final stage. “With this merger, MRPL is going for a mega expansion plan,” he said, adding the investment scope of the expansion is around ₹70,000 crore. When the merger is completed and with the expansion plan, the processing capacity of MRPL is set to go up from the present 15 million metric tonnes per annum (MMTPA) to 25 MMTPA.”

Now the focus of the refinery is on the production of petrol, diesel and liquefied natural gas (LPG) and aviation turbine fuel (ATF). With the expansion, it would also be tilted towards production of petrochemical products. It would give scope for the setting up of ancillary units creating more employment opportunities and bringing additional revenue to the State.

Work related to land acquisition, technology selection and financial assessment were being carried out on a war footing. MRPL would start the expansion during the calendar year itself, he said

Mr. Pradhan said that MRPL received crude from North America, Latin America, Iran, Iraq and different parts of West Asia. The refinery has the capacity to process all kinds of crude, he said.

The Minister said that since the National Democratic Alliance government came to power four years ago the domestic cooking gas connections in Karnataka has gone up from 58% to 89% from 2014.

About 50 lakh new LPG connections were added in Karnataka after 2014. Till then the State had 81 lakh LPG connections, he added.


How GST failed India and ended up helping tax evaders

The number of returns filed each month is limited to 70 lakh, though the number of taxpayers registered with the GSTN is over one crore.

The first day of February was a special in the history of India. No, it had nothing to do with Modi government’s last Budget, but still everything to do with Modi government. This was the day when India, world’s third-largest economy, took its first step towards turning itself into a common market within its boundaries by liberating interstate trade from all sorts of obstructions.

Despite an all-round failure of the big-bang Goods and Services Tax, the business community was more eager to generate its first e-way billfrom the indolent GST network, than listening to the last Budget speech of finance minister Arun Jaitley under current regime. The e-way bill, meant to promote a seamless and digitally-charged movement of goods across the nation, was supposed to be the most essential and far-reaching reform under GST, whether or not it ended up being one. Under this system, every transporter was supposed to carry a system-generated bill to move goods from one place to another where the consignment value exceeds the threshold limit of Rs 50,000.

On February 1, the struggle to dig out the first e-way bill from the slothful GST network and FM’s budget speech had started in tandem and by the time the speech ended, the GST network had crumbled. Some states announced postponing the implementation of GST e-way bill. As the afternoon approached and Budget boxing started in TV studios, the pious GST Council tweeted saying the implementation of the e-way bill was being postponed indefinitely due to technical snags.

And this is how the last and final hope for India’s most promising reform turned into dust.

On March 10, eight months after GST rollout, GST Council ate crow in its 26th meeting:

1) All the hoopla around Digital India failed to help build a credible computer network for the implementation of GST. Leave aside Infosys-managed GSTN, the venerated NIC also failed to provide a dependable network for e-way bill capable of processing 7-8 lakh bills per day.

2) Thus the great GST Council decided to introduce e-way bill for inter-state movement of goods across the country from April 1, 2018. Intrastate date is to be decided subsequently in a phased manner but not beyond June 1, 2018.

3) In its last effort to make e-way bill operational, the GST council offered bulk concessions to reduce traffic on the network.

However, GSTwallahs are still not sure about the April 1 implementation.

So where do we stand after eight months of GST rollout:

Evaders’ bonanza

GST has now become a sorry tale of massive tax evasion. Thanks to creaky GSTN and political rollbacks, GST became a sanctuary for tax evaders right before the Gujarat election. In last September, a politically nervous government had effectively let 95 per cent traders stay out of GST’s regular monitoring net by offering them windows of return filing once in three months (against three in one month) and a benevolent composition scheme. The initial figures of registration under GST were encouraging for government as number of taxpayers had grown by 50 per cent. However, this has failed to reflect in revenue generation.

The number of returns filed each month is still limited to 70 lakh, though the number of taxpayers registered with the GSTN has crossed one crore. Out of over one crore registered taxpayers, around 18 lakh are under composition scheme, who have to file quarterly returns.

For GST bosses, non-filers are not the only pain. The latest data of GST returns shows 84 per cent of initial GST returns filed for July-December doesn’t match the final returns. Mismatch of Rs 34,000 crore tax liabilities reported in GSTR-1 and GSTR-3B is an indicator of risk of massive “evasion” under GST.

The fact of the matter is that under the existing set-up, GST has no mechanism to check the evasion even at the basic level. The e-way bill was intended to track movements of goods, tackle tax evasion which are un-invoicing in nature ie the goods moving beyond the radar of GST system. GST administration has to implement more rigorous measures to tackle the menace of tax evasion through under-invoicing.

Fiscal fracture

GST has now turned into the scariest fault line for both the Union and state budgets. As per a research paper by the National Institute of Public Finance and Policy, the monthly revenue from GST is expected to cross Rs 109,616 crore during 2017-18, gap in monthly GST collection will vary between Rs 19,616 crore and Rs 29,616 crore if monthly revenue collection varies from Rs 90,000 crore to Rs 80,000 Crore. This shows there is a considerable shortfall in GST revenue collection.

The GST revenue shortfall has decisively toppled the Centre and states’ fiscal applecart. The Centre was forced to compensate states to the tune of Rs 60,000 crore for July to March in FY18. The federal budget is expected to gorge out Rs 90,000 crore further in FY19 in order to reimburse loses incurred by states on account of GST.

GST’s debacle has made Modi government’s last Budget a heavily taxing affair. Owing to the revenue constraints, Budget 2018 unleashed record taxation of over Rs 90,000 crore in the form of capital gains tax, increase in customs duty, cess and surcharge.

The consistent fall in revenue collection has made states reluctant to move to the next phase of reforms such as inclusion of petroleum products and real estate in the GST.

The dilemma

GST’s rollback may have saved the day for BJP in Gujarat but it has now turned into the biggest quandary for government. The finance minister, in his post-Budget interviews said strict enforcement would be required to shore up revenues to the tune of Rs 1 lakh crore per month.

Undoubtedly, GST authorities are sitting on a pile of valuable data. However, in order to restore GST, the field formations have to unleash a drive against businesses, especially traders. The BJP, which had burnt its fingers in Gujarat elections, is not in a position to take the risk of annoying traders before the 2019 elections.

Realties are catching up. After going ga-ga over GST, the World Bank, in its latest report, conceded to the fact that “GST is one of the most complex taxes with the second highest tax rate in the world among a sample of 115 countries which have a similar indirect tax system.”

Prime Minister’s Economic Advisory Council chairperson Bibek Debroy thinks that implementation of GST is a process which would take more than 10 years to settle down.

Eight months after its second tryst with destiny, India has arrived at a point where government has left no stones unturned in taxing the people. Consumers are also paying tax diligently. However, whether the businesses would pay that tax back to the government would be known only after our political masters become comfortable with their electoral reckoning.

Undoubtedly, this is not the GST we wished for.


GST implementation may impact IOC by Rs 4,200 crore

Indian Oil Corporation (IOC), the nation’s largest fuel retailer, may have to bear an impact of Rs 4,200 crore per annum due to non-availability of input tax credit under Good Service Tax (GST) on procurement of services and capital goods, oil minister Dharmendra Pradhan said.

New Delhi: Indian Oil Corporation (IOC), the nation’s largest fuel retailer, may have to bear an impact of Rs 4,200 crore per annum due to non-availability of input tax credit under Good Service Tax (GST) on procurement of services and capital goods, oil minister Dharmendra Pradhan said.

“Pursuant to various amendments notified after introduction of GST, it is estimated that there may be an impact of the order of around Rs 4,200 crore per annum towards non availability of proportionate input tax credit of GST paid on procurement of inputs, input services and capital goods, due to exclusion of major petroleum products from the purview of GST,” Pradhan said while replying to a question in Parliament on the impact of GST on IOC.

Crude Oil, Natural Gas, Petrol, Diesel and Aviation Turbine Fuel, while included under the GST Constitutional Amendment Act, are presently, outside the scope of levy of GST, forcing the oil companies to comply with both the old and new tax regime. However, the tax credit cannot be transferred between the two systems.

IOC’s Director-Finance A K Sharma had recently said the company has accumulated stranded input tax credit close to Rs 700 crore post the roll out of GST on 1 July.

Input tax credit allows an oil producer at the time of paying the tax on the final output to deduct the tax already paid on inputs including purchase of machinery and crude oil. As most of the core petroleum products have not been included in the GST ambit, the tax credit which could have been availed cannot be availed under the new tax regime.

Apart from IOC, state-run petroleum explorer Oil and Natural Gas Corp (ONGC) will have to bear a hit between Rs 6,000 crore and Rs 7,000 crore on account of GST, its former Director-Finance A K Srinivasan had last year said, adding that all upstream and downstream companies collectively will have to bear an impact of around Rs 25,000 crore.

Pradhan had said in September last year Finance Minister Arun Jaitley has raised the issue of inclusion of petroleum products in GST.

Shell India Chief Executive Officer (CEO) Nitin Prasad, too, had told ETEnergyWorld in an interview non-inclusion of petroleum products under GST will make oil and gas business expensive. Vedanta Cairn Oil and Gas CEO Sudhir Mathur had also voiced similar concerns on the negative impact of GST on the country’s upstream sector.



HC notices to Centre, state on plea against Gujarat GST Act

The GST Council, the apex decision-making body for the Goods and Services Tax, is headed by the Union finance minister and comprises state finance ministers as members.

The Gujarat High Court has issued notices to the Centre as well as the state government on a petition challenging the constitutional validity of the Gujarat GST Act with regard to some restrictions on firms in claiming input tax credit under the new regime. A division bench of justices Akil Kureshi and B N Karia issued notices last Tuesday, seeking replies from the GST Council, the Centre and the Gujarat government on the petition filed by city company Willowood Chemicals Pvt Ltd.

The GST Council, the apex decision-making body for the Goods and Services Tax, is headed by the Union finance minister and comprises state finance ministers as members. The bench will next hear the matter on April 19. Challenging the constitutional validity of section 140(3) of the Gujarat GST Act, the petitioner submitted the Act has imposed certain restrictions on firms “for taking input tax credit on taxes already paid under the (previous) Value-Added Tax (VAT) Act” in case of non-submission of forms in time.

The petitioner’s lawyers submitted that the input tax credit already earned under the Gujarat VAT Act, which was in force before the GST Act was implemented, was allowed to be retained and utilised for payment of VAT or Central Sales Tax (CST). The petition said neither under the state VAT Act nor the CST Act, “there is any provision to deny input tax credit in case of failure to furnish statutory declaration”.

It was also submitted that when a firm is already liable to pay differential tax, interest and penalty for non- submission of various forms, it is “arbitrary and confiscatory” to not to carry forward input tax credit for not submitting forms. “In the disguise of Section 140(1) of the Gujarat GST Act, the government is adjusting future liability against current credit”, the petitioner told the HC.

Further, the court was told that section 140(1) of the Gujarat GST Act is ultra vires (beyond one’s legal power or authority) to Article 279A of the Constitution.

The article provides for constitution of the GST Council to decide on the rate of tax under the new tax regime. “Article 279A does not empower the GST Council to make recommendation for adjustment of a tax liability which may arise in future under the CST Act, a central Act, against an acquired right given under the VAT Act, a state Act,” the petitioner submitted.


Cong MP urges PM to remove GST on ‘langar’ at Golden Temple

Congress MP Pratap Singh Bajwa today wrote to Prime Minister Narendra Modi demanding revocation of the GST on purchases made for “langar/prasad” at the Golden Temple, Durgiani Mandir and Ram Tirath temple in Punjab.

Congress MP Pratap Singh Bajwa today wrote to Prime Minister Narendra Modi demanding revocation of the GST on purchases made for “langar/prasad” at the Golden Temple, Durgiani Mandir and Ram Tirath temple in Punjab.

His appeal came a day after the Punjab government decided to waive its share of the GST imposed on purchases made for “langar” (community kitchen) at the Golden Temple.
“The imposition of the GST on langar items at the Golden Temple is onerous and burdensome. The doors of the Golden Temple are open to members of all religious communities and lakhs of devotees are provided langar on a daily basis.


No GST exemptions for northeast, hill states: Minister

The government on Thursday said that no exemptions from refund had been given to the northeastern and hilly states under the Goods and Services (GST) regime till March 2027.

It said the had in September 2016 decided that all entities exempted from payment of indirect under the then-existing incentive scheme will have to pay in the GST regime.

“It was also decided that the decision to continue with any incentive given to specific industries in existing industrial policies of states or through any schemes of the shall be with the concerned state or Central government,” told the Rajya Sabha in a written reply.

And in case the state or decides to continue any existing exemption or incentive scheme, it shall be administered by way of a reimbursement mechanism through the budgetary route, he added.

He said the had notified a scheme for grant of budgetary support to the eligible units which were earlier availing exemption or refund benefit under erstwhile Central Excise regime.



As formalization lags, logistics firms pin hopes on GST e-way bill, better implementation

Given the omissions and fragmented structure of the logistics sector, implementation of the GST e-way bill in the current form may not spur a rapid transition in the short term

The goods and services tax (GST) that was expected to fast-track the formalization of the logistics sector is proving to be a rather gradual process. Mahindra Logistics Ltd recently told SBICAP Securities Ltd that GST has only led to a gradual shift from the unorganized to organized logistics, unlike the disruptive change that was expected initially. As goods transport agencies largely remained under the reverse charge mechanism (in which they do not have to register under GST and pay lower taxes) the shift towards organized sector was stymied, says Sandeep Mathew, an analyst at SBICAP Securities.

The scenario is expected to change as the government implements the e-way bill beginning next month. E-way bill is an electronic documentation aimed to track goods movement and prevent tax evasion under GST. Compliance is expected to benefit the organized logistics sector. But given the omissions and fragmented structure of the sector, implementation of the e-way bill in the current form may not spur a rapid transition in the short term, some fear.

Deepal Shah, chief executive officer (customs clearance and freight forwarding) at Avvashya CCI Logistics Pvt. Ltd, a subsidiary of Allcargo Logistics Ltd, says transport agencies (a segment in logistics sector) could slow down the transition, as they enjoy special taxation status and other exemptions. “With the current changes in e-way bill implementation, there have been a lot of exceptions in the eligibility criteria for an e-way bill requirement,” adds Shah.

An analysis by Aseem Chawla, partner at Phoenix Legal, and his team, says that the e-way bill by itself may not fast-track the transition to the organized sector as the e-way bill requirement for the transporter is not linked with mandatory registration for transporters under the GST.

“Further, at present, there is no requirement to generate e-way bill where an individual consignment value is less than Rs50,000, even if the transporter is carrying goods of more than Rs50,000 in a single conveyance,” said the study by Chawla and his team.

P.C. Sharma, CEO of TCI Express Ltd, reasons that the transition will take time as the industry was heavily dependent on the unorganized sector. Further, with the final form of the e-way bill yet to take shape, one should wait for changes, he adds.

Of course, the e-way bill is still evolving and is expected to be implemented in a phased manner. As the implementation gathers pace, the formalization of the logistics sector is expected to gain momentum. Some are already seeing the initial benefits in consolidation of warehouses and realignment of supply-chains.

But the need of the hour, as Sharma of TCI Express says, is proper implementation and a focused approach towards the reforms.

Shah of Avvashya CCI Logistics says compulsory registration under GST and implementation of the reverse charge mechanism in a phased manner can ensure better compliance and faster transition from unorganized to organized logistics. Overall, while GST still holds promise for the logistics sector, much depends on the implementation.



GST officer arrested for taking Rs 30,000 bribe

PUNE: The state anti-corruption bureau (ACB) on Wednesday arrested a class-I officer of the goods and services tax (GST) department for allegedly demanding and accepting Rs 30,000 bribe from a government contractor for not taking action against the latter in a case of payment of a lesser value added tax for works executed in 2013.
A team headed by superintendent of police (ACB, Pune) Sandeep Diwan and assistant commissioner Jagdish Satav nabbed assistant commissioner (GST) Prasad Purushottam Patil red-handed while accepting the bribe on the premises of the GST office canteen.


Satav told TOI that the government contractor had constructed a compound wall of a firing range located in Wanowrie. The Pune Municipal Corporation (PMC) had given the contract to him.


According to the ACB, the contractor paid 5% VAT as per the government rules at that time for the work that he had executed. In 2013-14, the office of issued a notice to the contractor stating that he was supposed to pay 8% VAT instead of 5%.

However, according to the government rules, the contractor needed to pay only 5% VAT for a government work executed. This was fulfilled by the contractor, ACB said. Adhering to the notice, the GST office asked him to pay the fine of Rs 6.35 lakh with interest of Rs 5 lakh and other fees. The total amount calculated by the GST office was Rs 17 lakh.

In order to settle this amount ‘at mutual understanding’ and the officer demanded bribe of Rs 50,000. When government rule was shown to him by the contractor, the officer asked for Rs 35,000 and finally settled down for Rs 30,000. But the contractor informed ACB about this and trap was laid down. Patil walked into the trap.


Punjab waives its share of GST on langar at key shrines

CHANDIGARH: Chief minister Amarinder Singh on Wednesday announced waiver of the state government’s 50% share in the Goods and Services Tax (GST) on community kitchen (langar) at Golden Temple, Durgiana Temple, Bhagwan Valmiki Tirath and key shrines of the other communities.
The Punjab assembly also unanimously passed a resolution seeking complete waiver from the Centre as it was the BJP that had majority representation in the GST council.

The issue came up during the discussion on the governor’s address and Congress Dera Baba Nanak MLA Sukhjinder Singh Randhawa said it was unfortunate that despite having representation in the Union cabinet, Shiromani Akali Dal (SAD) had got been able to get the GST exemption.

To this, SAD’s former finance minister Parminder Singh Dhindsa said the decision has to be taken by the GST council where Punjab is represented by finance minister Manpreet Singh Badal. “The Centre cannot waive it. The council has to do it with a majority,” he said.

During the course of the discussion, the suggestion for state waiver of the GST came from leader of the Opposition Sukhpal Singh Khaira, who said while the matter is taken up with the Centre, the state should take the lead by exempting Golden Temple’s community kitchen from the GST. “Thousands of devotees partake langar at the Darbar Sahib and losing out on some revenue should not matter,” he said.

Manpreet said it was a matter of record that the Punjab government had thrice raised the issue of getting the GST waiver for Darbar Sahib in meetings of the GST council. “But it is the BJP states that have majority there. Union finance minister Arun Jaitley has out rightly rejected the demand. Turks, Afghans and British have ruled Punjab but they never imposed tax on Darbar Sahib. I would make a request to the CM to make an exemption of the state’s share,” he said.

Amarinder told the House, “This is not the first time that such a discussion is taking place in the assembly. During the previous regime of the Congress in 2002 replacing Akalis, there used to be sales tax that was charged on Guru Ram Das Langar. We had stopped it. Now we will put an end to the GST.”

This was followed by a thumping of desks and sloganeering. AAP’s Khaira welcomed the decision. “Jaitley cannot reject the demand and we should send a resolution to Delhi for a total waiver,” he said. Dhindsa said the SAD too welcomed the decision.


Parliamentary affairs minister Brahm Mohindra said it should be passed unanimously. Manpreet, however, insisted that the SAD should give an assurance that the resolution will be followed and approved from the Centre or the party’s representative will resign from the Union cabinet.

On a clarification sought by BJP’s Som Prakash, Amarinder said there would be similar waiver on the GST on langar or prasad for Durgiana Mandir and Bhagwan Valmiki Tirath Sthal. Amarinder also directed officials of the department concerned to work out modalities for similar waiver at revered religious shrines of other communities.

The resolution moved by Manpreet Badal and seconded by Brahm Mohindra, was passed by voice vote. The House unanimously passed the resolution to press the central government to immediately waive off its GST share on the langar items at Sri Darbar Sahib and Durgiana Mandir.

Meanwhile, Amarinder criticised the SAD and its ally, the BJP, for not opposing the imposition of the GST before the GST Council. Pointing out that this was not the first time the subject came up for discussion in the House, he said it was obvious that SAD was only trying to gain political mileage from the issue as it was not doing anything to force the BJP-led government at the Centre to waive off the GST on langar.

Tea exporters worried over delayed refund of GST claims

“It is not just non-refund of GST amount but the paper work and documentation that is putting the tea traders under pressure. We are in a spot. At this juncture, the situation looks grave,” a leading tea exporter told BusinessLine, voicing concern over the mounting claims week after week.

The GST refunds, due to the members of the South India Tea Exporters Association (SITEA) is estimated at over 50 crore, as on date.

“The refunds have been pending since July last. We paid 5 per cent GST on the value of the teas purchased at auctions and filed refund claims online. We have not received any sum so far by way of refund. Officials of the State GST and the Central Board of Excise and Customs — at various levels — are demanding multiple sets of hard copies of tax invoices, shipping bills, bill of loading, etc for verification, defeating the very purpose of online filing of GST returns,” said Rony Elias Tharakan, Vice-Chairman, SITEA.

He further said that the exporters had availed loan from banks and their working capital situation is squeezed at present as the refund amounts have been locked for many months.

“If this situation continues, a good number of exporters will be forced to slow down export operations or exit from business. This will have an adverse affect on the tea auction sales. Volumes on offer may not be taken up fully for want of funds and the competition on the auction floor will go for a toss. The resultant impact would be on the price. When the price drops, it will affect the small growers in Tamil Nadu, who depend on the auction system for their livelihood. It is a vicious cycle,” Tharakan said, appealing for early settlement of refund claims.