The Haryana Government has urged the Centre to continue with the present tax incentives and exemptions given to attract and promote industry and business in the GST regime as their discontinuation would retard investment and adversely affect the ‘Make in India’ programme of the Government of India.
Making this pitch at the second meeting of the GST Council in New Delhi on Friday, the Haryana Excise and Taxation Minister, Capt Abhimanyu, also suggested that for seeking refunds under GST, ‘SEZ’ should be added along with ‘developer’ to remove any ambiguity.
And time-limit of 15 days should be provided for issuance of deficiency notice, if any, by officer concerned under the refund rules, said he.
Referring to the draft rules for payment under GST, Capt Abhimanyu proposed changes in the restriction for deposits up to Rs 10,000 per challan per tax period only in cash payment, and not by cheque or demand draft, in OTC through authorized banks.
He proposed that payment through cheque and demand draft may not be accepted in OTC payment to encourage electronic payments. Otherwise, the rules related to payment of taxes, including payment, from ITC under the GST law pertain to procedures for maintaining electronic tax liability register, electronic credit ledger and electronic cash ledger fairly protect the interest of all stakeholders, he added.
Referring to the treatment of existing tax incentives/ exemptions under the GST regime, Capt Abhimanyu pointed out that since the GST regime contemplated a common market providing for seamless flow of input tax credits (ITC) across the value chain, any tax incentives and/ or exemption would create distortions in the GST tax structure.
The present VAT exemptions and tax incentives do not provide for exemption from Excise Duty and Service Tax which shall now be available as input credit on account of being subsumed in GST, and vice-versa. But GST being a new tax, the Centre and the State Governments can decide to end exemptions/tax incentives given for VAT and Central Excise, he said.
And, if the Union and/ or states decided to continue with the tax incentives and exemptions under the GST, provision should be made for direct transfer of the equivalent taxes paid through the budgetary route, said he.
Explaining this route, Capt Abhimanyu said industry would pay normal taxes under the GST. Since taxes thus paid will form part of the CGST and SGST revenue, the Centre or states may directly transfer an equivalent amount to the industry concerned taking the budgetary route.
He also pointed out that withdrawal of the tax, excise duty incentives and exemptions before their expiry could lead to litigations as their withdrawal, in all likelihood, might be challenged on grounds of promissory estoppels. But there are several judgments of the Hon’ble Supreme Court in favour of the government on the issue of promissory estoppels on grounds of public interest, he added.
Pointing out an ambiguity regarding eligibility criteria for enrolment as TRP of a person, Capt Abhimanyu suggested modification in rules to satisfy any one of the conditions laid down for the eligibility criteria of TRP. He also suggested addition of ‘Board’ along with ‘Commissioner’ in sub rule 5 of rule 24 under which appeal against the disqualifying order passed by the authorized officer is to be heard.
Capt Abhimanyu further said that the draft GST rules for registration were in sync with the provisions of Sections 19 to 22 of the draft Model GST law and called for no modification.
He also hailed the formats related to application for registration, amendment of registration, cancellation of registration, revocation of registration etc as designed to capture all kinds of information of taxable persons and would safeguard the revenue of the Centre and the States.