Page 47 - GSTL_ 28th May 2020_Vol 36_Part 4

2020 ] NEWS DESK J107
of reducing (not exempting) GST, so that consumers go ahead and buy - in the
present, during the period of reduced GST rather than keep waiting for some
other day to do so.”
The logic is that demand generation needs GST cuts, he said. “The aspect
of ITC can be dealt with so long as the suggestion is taken in the proper per-
spective.”
Experts counselled the Government to adopt a cautious approach.
“There does not appear to be any empirical evidence that any country has ex-
empted GST/VAT [Value Added Tax] across the board in order to drive up the
pandemic-impacted economies. There could be specific sectors/areas where
there may be a need to rationalise the GST rates for a temporary period to assist
the sector. This needs be done very cautiously ensuring that revenue losses are
minimised, leakages are avoided and the reductions do not lead to emergence of
inverted duty structure situations,” said M.S. Mani, Partner at Deloitte India.
Inverted duty structure is a situation in which inputs are taxed at a high-
er rate than finished goods.
Abhishek Jain, Tax Partner at Consulting firm EY, said a GST exemption
would entail breaking of the credit chain, higher input tax costs for businesses
and complexities in compliances with credit transitions during taxable and
exempt-tax periods.
“A specified percentage GST rate reduction could be explored vis-à-vis a
NIL rate/exemption by the Government specifically for the severely impacted
sectors. In a scenario, where the said rate reduction entails accumulation of cred-
its, the Government should ensure full refund of the credits so accumulated with
faster processing of such refunds, ” he said.
Pratik Jain, Partner and Leader of the Indirect Tax Practice at PwC India,
suggested making GST concessions an exception for industries such as airlines
and hospitality that have borne the brunt of the fallout of the COVID-19 crisis.
“In addition, the Government should consider providing working capital
cushion to industry by deferring the payment of GST collected by few months to
industry at large, without payment of any interest,” Jain said.
[Source : Hindustan Times, New Delhi, dated 20-5-2020]

Incomplete claim memos stall GST refunds
Businesses facing a cash-flow squeeze due to the lockdown are grappling
with deficiency memo’s that have stalled the release of Goods and Services Tax
refunds even as the Government announced measures to enhance liquidity amid
the COVID-19 crisis.
Tax Authorities have been issuing deficiency memos for some incom-
plete refund claims beyond the stipulated time of 15 days, forcing taxpayers to
refile applications, people familiar with the development said. However, the re-
filed applications are treated as new and in many cases, the refund amounts end
up getting blocked because the deadline has passed. The industry has represent-
ed the matter before the Central Board of Indirect Taxes and Customs.
“There are bona fide instances wherein the first refund applications were
GST LAW TIMES  28th May 2020  47