GST Council Defers Decision On Setting Up Of GST Tribunals

The GST Council, during its 48th meeting held on Saturday, decriminalised certain tax offences but deferred a decision on setting up tribunals.

A decision on taxation of online gaming, casinos and horse racing also remained pending as a GoM report on the matter was received only on Thursday. “Both GoMs on capacity-based taxation on tobacco, gutkha and GSTAT (Goods and Services Tax Apellette Tribunal) was also not taken up,” Finance Minister Nirmala Sitharaman said at a press conference.

The GoM on setting up GST tribunals was formed in July this year. Since then, however, India’s courts have seen a spike in the number of GST-related cases.

The GST Council had a 15-point agenda at its 48th meeting, of which it could take up only eight due to a paucity of time. Discussions on the rest were deferred.

What’s New: Decriminalisation Of Offences

1. The minimum threshold for launching legal action under GST law has been doubled. The monetary threshold of tax amount for launching prosecution has been raised from Rs 1 crore to Rs 2 crore, except for in the case of the offence of issuance of fake invoices.

2. To ease the workload of courts, the compounding amount has been reduced from 50%-150% of tax amount to 25%-100%.

3. The council also effectively decriminalised three offences:

  • Obstruction or preventing any officer in discharge of his duties.

  • Deliberate tempering of material evidence.

  • Failure to supply the information.

“With focus on digitisation, the government has more resources to catch offending taxpayers and may be in a position to offer relief to other tax payers by raising this threshold further,” Archit Gupta, founder and chief executive at online tax portal Clear, said. “Ease of doing business has been high on the government’s agenda, and therefore taxpayers were expecting further relief on this matter.”

Rate Clarifications

  • Items relating to cattle feed including husks of pulses won’t be taxed.

  • GST rate on ethanol used by oil refineries reduced to 5% from 18%.

  • Fryums to attract 18% GST.

  • Compensation cess at the higher rate of 22% is applicable on vehicles popularly known as SUV, subject to specifications.

  • No claim bonus offered by insurance companies will not attract GST.

Lack Of Decision On GSTAT To Hurt Courts

The formation of GST tribunals is crucial to reduce the burden of cases on courts, Abhishek Rastogi, founder at Rastogi Chambers, told BQ Prime after the GST Council meeting. “People will have no choice but to go to the courts now, courts will be burdened by litigation.”

“The GST system is now five years old, and investigations, audits and arrest are happening throughout the country, but there is no action on a tribunal which will serve as the fact-finding authority,” he said.

Mahesh Jaising, partner and leader (indirect tax) at Deloitte India, expects this will increase the number of writ appeals at the high courts.

“The critical discussion of setting up of GST tribunals basis the GoM report has been deferred. This further delays the redressal mechanism of disputes on the ground… This has been a long pending ask from industry that needs to be addressed soon,” Jaising said.

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