In the initial years, people struggled in understanding the impact of the new regime on their businesses, getting their internal systems revamped and training personnel to undertake the requisite compliances.
The implementation of GST in India marked the beginning of the transformation of the indirect tax framework in the country. GST laws have evolved at a rapid pace with frequent amendments and clarifications. Even from a compliance perspective, requirements such as filing different return forms, undertaking reconciliations and issuance of e-invoices have evolved over the last five plus years.
Throughout this journey, both the Government and the industry have grappled with a host of these changes involving interpretational and compliance issues. For example, the implementation of adequate technology solutions by taxpayers for ensuring the issuance of appropriate documentation (e-invoice, credit note etc.) and reporting thereof has been challenging. Furthermore, timely compliance by stakeholders throughout the supply chain became important for ensuring a seamless flow of input tax credits. All this together meant a lot of groundwork to be done by the taxpayers. On the other hand, the GST portal did suffer from various technical glitches in the initial couple of years and the Government had to undertake significant efforts to stabilise the system.
Needless to say, the GST regime has had its own set of gestational issues. In the initial years, people struggled in understanding the impact of the new regime on their businesses, getting their internal systems revamped and training personnel to undertake the requisite compliances. This period witnessed numerous errors by genuine taxpayers like payment of taxes under the wrong heads (between IGST, CGST and SGST), mismatch of input tax credits, non-issuance of self-invoices and missed transitional credits amongst others. While several of these errors were rectified at the time of filing of GSTR 9 and 9C (annual returns), many issues remained unresolved or went unnoticed. These issues are now being picked up during departmental audits and there is a flurry of tax demands, interest and penalties. Unfortunately, many bona fide taxpayers are facing these demands due to initial technological hiccups, limited time frame for staff to align with the amendments in the initial years and nebulous provisions/ clarifications by the Government.
It is therefore an opportune time for the Government to consider and introduce an amnesty scheme to provide relief to such bona fide taxpayers. As per the details available in the public domain, the Government is planning to introduce such a scheme and it would only cover matters where the disputes are due to bona fide mistakes. Matters arising out of wilful tax evasion or omissions by repeat offenders would not be covered under the scheme.
This scheme is expected to be similar to the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS), 2019, which was introduced under the erstwhile indirect tax regime for the closure of past litigation matters. SVLDRS helped in the closure of numerous matters and helped the Government in augmenting revenue in a short span of time. Under the GST laws, such a scheme would help in ensuring that the pendency of matters is reduced which would be a good starting point for the upcoming GST Appellate Tribunals as well. However, the Government should make sure that adequate clarifications with respect to eligibility criteria, nature of matters covered, clubbing of recurrent matters, etc, are issued upfront as these aspects were a concern when the SVLDRS was launched. The officers should also be adequately trained on the scheme, especially on the procedure and coverage of issues. As a consequence, they can gather a better response from the industry and enhance the impact of such a scheme. To begin with, the Government could initiate stakeholder consultation for ensuring adequate coverage of industry expectations in the scheme.
Relaxation and waivers on delayed filings of returns in some cases were provided as part of interim measures during the pandemic. While the GST Council has been active in considering measures for mitigating possible avenues of litigation, a full-fledged amnesty scheme could be instrumental in reducing the litigation burden of genuine taxpayers, augmenting revenue for the Government and helping in effective administration.
(Smita Roy is Partner & Leader (North) – Indirect Tax and Siddharth Tandon, Partner – Indirect Tax, BDO India)