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Decriminalising GST: Govt talks to industry bodies; rules to be overhauled

The Central Board of Indirect Taxes and Customs (CBIC) has constituted a group of officers to complete consultation exercise with industry bodies

Nirbhay Kumar | August 28, 2020 | Updated 16:33 IST
Decriminalising GST: Govt talks to industry bodies; rules to be overhauled

Key Highlights

  • Directorate General of Goods and Services Tax (DGGST) has written to industry bodies to give their inputs on decriminalisation of certain GST offences  
  • The move is said to bring cheers to the industry which has been complaining of harassment by tax authorities
  • Central Board of Indirect Taxes and Customs (CBIC) has constituted a group of officers to complete consultation exercise at the earliest so that necessary changes in the GST law can be made
  • To facilitate trade and business in the country, and reduce litigation, the government had earlier converted over a dozen criminal offences in the Companies Act 2013 into civil wrongs

The government has kicked off mega overhaul of GST laws to decriminalise various offences. The move is set to bring cheers to the industry which has been complaining of harassment by tax authorities.

Directorate General of Goods and Services Tax (DGGST) has written to some of the industry bodies seeking their inputs on decriminalisation of certain offences.

"There is a proposal to undertake comprehensive review of GST laws with focus on decriminalising certain offences and wider use of compounding provisions, with the objectives of improving ease of living, improving business sentiments and reducing litigation," the DGGST has stated in its communication to industry.

The Central Board of Indirect Taxes and Customs (CBIC) has constituted a group of officers to complete the consultation exercise at the earliest so that necessary changes in the GST law can be made.

"GST arrest provisions are based on 'reasons to believe' which is not good as innocent people may fall in trap. Interestingly, arrests have even been made without concluding the investigation process. The issuance of charge sheet is not enough as the show-cause notice (SCN) should be adjudicated before concluding on the offence," said Abhishek A Rastogi, Partner at Khaitan & Co, who is already arguing plethora of writs on arrest provisions under GST.

Vivek Jalan, Partner, Tax Connect Advisory Services noted, "There is need to decriminalise certain sub-sections of Section 132 of CGST Act, relating to availment of input tax credit. An innocent taxpayer or recipient of goods or services should not be punished for fraudulent actions of others."

To facilitate trade and business in the country and reduce litigation, the government had earlier converted over a dozen criminal offences in the Companies Act 2013 into civil wrongs.

Decriminalisation of Companies Act violations involve minor technical and procedural defaults such as shortcomings in CSR reporting, inadequacies in Board report, filing defaults, delay in holding of AGM. The Amendments will de-clog the criminal courts and National Company Law Tribunal (NCLT).

While announcing measures to fight economic crisis caused by pandemic, the government had said in May that 7 compoundable offences would altogether be dropped and 5 would be dealt under alternative framework.

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