The government expects the industry to respond with “equal vigour” to the momentum it has kickstarted with the GST reforms, revenue joint secretary Balasubramanian Krishnamurthy said on October 22.
At its 57th meeting earlier this month, the GST council cleared a broad set of process reforms to make the levy easier to comply with, speeding up refunds and reducing physical intervention by officials.
“If there’s reciprocity (from the industry), it will help us to evolve and improve the GST structure as we move forward,” Krishnamurthy said at the ASSOCHAM National GST Conclave in New Delhi.
The government’s focus is on “faster and right” implementation of the process reforms, which were approved by the GST Council earlier this month, he said.
The council’s most crucial recommendation was the removal of arrest powers under the GST laws. Tax officials no longer have the authority to detain or take individuals into custody for suspected GST evasions or violations.
In instances where criminality is involved —such as fraudulent input tax credit (ITC) claims using fake invoices, identity theft or organised tax fraud — the individuals can be prosecuted under provisions of the Bharatiya Nyaya Sanhita.
The council also raised the threshold for prosecution from Rs 1 crore to Rs 5 crore. The general penalty, applicable where no specific penalty is prescribed, was reduced from Rs 25,000 to Rs 10,000.
The other key recommendation was on easing the refund process. The time limit for acknowledging a refund claim was reduced from 15 to 10 days. If neither an acknowledgement nor a deficiency memo is issued within that period, the claim will be treated as acknowledged. And the system, rather than an officer, will sanction 90 percent of the claim based on risk assessment.
“We did embark on GST 2.0 last year. The process reforms that we identified last year… we engaged with the states over the last 9-10 months and then came up with the recommendations,” Krishnamurthy said.
“These are far reaching decisions. Power of arrest is gone, and return system has been strengthened. If fraud continues to remain undetected in the system and the system proliferates it, the reforms won’t be easy to come in.”
The government’s objective is to have a tech-based system, which will detect fraud early enough, he added. “If the reforms are not implemented in right spirit, then it won’t make any difference,” he said.
