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2020 ] NEWS DESK J73
tee recommended to CJI S.A. Bobde that limited physical hearing, in three Court-
rooms, could resume only for old matters requiring long hearing. However, only
a limited number of lawyers at a time would be permitted due to social distanc-
ing norms. The Committee said the CJI could fix a date for resumption of physi-
cal hearing after two weeks on trial basis after the rooms were ready for the pur-
pose.
[Source : The Times of India, New Delhi, dated 13-8-2020]

The disjunct between the promise and reality of GST
It has not led to the expected boost in growth. States often receive compensation
late. And shortfall is common
The Goods and Services Tax regime completed three years on July 1. The
concept of GST came in 2005 when the Vijay Kelkar-led task force submitted its
report and recommended the replacement of all Indirect Taxes with GST. Even
earlier, then Finance Minister Yashwant Sinha constituted a seven-member Ex-
pert Group on Taxation of Services as per his Budget Speech for FY2000-01. The
expert group led by M. Govinda Rao submitted its report in March, 2001. The
group made the first recommendation on GST. The dream became a reality when
the new tax was introduced at the midnight of June 30 and July 1, 2017.
It was introduced as the biggest tax reform for Indirect Taxes. But unfor-
tunately, it has failed to live up to people’s expectations. To remove glitches, the
Government has made 697 changes in GST since its inception by issuing notifica-
tions related to rates, the amendment of rules and waiver of penalty. Besides this,
146 circulars and 19 orders have been issued so far on various issues.
It was expected that the introduction of GST would increase the Gross
Domestic Product (GDP) of the country because a simplified tax structure will
eliminate the cascading effect of taxes and increase Government’s revenue. While
there may be a set of complex factors that have led to a dip in growth, the fact is
that the expected boost has not happened. The growth rate of GDP of Q4 of FY20
has declined to 3.1%. The growth rate of GDP for FY20 has fallen to 4.2% - the
lowest in the last 11 years.
The coding of goods under various Harmonised System of Nomencla-
ture (HSN) brackets has always been a challenge for the GST Council. Take this
example. In the recent past, the Authority for Advanced Rulings (AAR)-
Karnataka Bench has said that 18% GST will be levied on parathas and roti will be
taxed at 5% of GST slabs rate. The AAR has ruled that a paratha is different from
a roti. The same problem arose with the rate of tax on hand sanitiser. The AAR-
Goa Bench established that alcohol-based hand sanitisers will be taxed at 18%.
Hand sanitisers are essential in the COVID-19 battle. While the GST Council has
made efforts to resolve such issues, the fact that they keep recurring is a sign of
the weakness of the system.
Various States were ready to hop on to the same boat on the condition
that the Central Government would compensate their revenue loss for the first
five years. Accordingly, a provision was made under Section 7 of GST (Compen-
sation to State)Act, 2017. As per the provision, the loss of revenue will be com-
pensated at the end of every two months for five years. When States were
fighting against the pandemic and struggling for revenue in the middle of the
lockdown, the Centre did not release compensation money, which had not been
paid since November, 2019. The Centre only released ` 36,400 crore on June 4,
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