'Black day' for Central GST enforcers today

A body representing Indian Revenue Service officers has decided to stick to its earlier stand to observe Monday as a “black day”. 

This is against the Goods and Services Tax Council's decision to divide administrative turf between the Centre and states, despite an assurance by Finance Minister Arun Jaitley that the new indirect tax regime would create ample job opportunities. 

The officers would wear black bands on Monday, which is also Martyrs day, the IRS Association (Customs and Central Excise) said, in reply to whether they are relenting after the minister’s assurance. 

“As a mark of protest against Jaitley's reply to concerns of service, we shall wear black band/badge on 30 January,” the association tweeted in its reply.

CBEC Chairman Najib Shah had on Friday raised these issues on the same dais shared by the finance minister.

Jaitley replied GST would create ample opportunities for all staffers. “...  and therefore the kind of disquiet in service, the kind of personal pressure I see on you should reduce as there is no real occasion for a fear of this kind or a sense of insecurity for anyone in this service,” he had told Shah.

Former Central Board of Excise and Customs chairman Sumit Dutt Majumder echoed the officers’ stand, of feeling let down by the Centre's compromise with states for the proposed GST regime.

Observers say that as the Council had worked out a broad agreement after extensive discussion, it should not be reversed. However, a lot of detailing is still required and could be so done as to assure the central officials that they would be engaged appropriately under the GST regime.

The GST Council had decided states would have the power to assess and administer 90 per cent of payers of the new tax, with annual turnover of less than Rs1.5 crore. Over this threshold, states and the Centre would have administrative control over assessees in a ratio of 50:50. 

Grouse 

Majumder said the concerns were mostly related to services tax, on which central officials have expertise over 20 years and their state counterparts were “novices”.

“GST is a joint venture between Centre and states. No one should feel let down. But, central officials have expertise of over 20 years on services and now will control only 10 per cent of assessees up to Rs1.5 crore of turnover,” he complained. 

Unlike goods, you need deft handling in taxing of services, he said, particularly when there is inter-state sale and purchase.  “You need expertise to determine the place of supply in intangibles.” 

There will be fights between states whenever services move inter-state every now and then under GST, he added. And, quoted data from the directorate general of commercial intelligence that the highest incidence of tax evasion was in services below Rs1.5 crore. 

‘Soothe them’ 

However, M S Mani of consultancy Deloitte Haskins & Sells says the apprehensions of central officials seem to be exaggerated. GST would increase the powers of both Centre and states, he said.

“Both, central and state officials, are going to become more powerful. I don't think anyone is going to become less powerful.”

Pratik Jain of PwC said the same thing; various types of new work would emerge under GST where central tax officials could be employed. 

The Council had decided the broad issue of administrative turf. It should now work out specifics about who is going to do what and how will that be divided, he added. And, it should communicate more with both the Centre and state officials, reassuring them.

“Nobody's role is going to be undermined. If GST is successful, it is going to significantly increase revenues, scope of work, role and powers of both central and state officials. However, the roles are going to be different from the present roles,” Mani added. 

Jain said the central officials’ worry was on how well they’d be engaged. Of the 10 per cent of assessees up to Rs1.5 crore of turnover (and the 50 per cent above that), it is understood that only up to five per cent could be taken up for scrutiny, he said.

“So, their concerns are over how the officials will be engaged. Since the decision has been taken, a solution has to be found out within that. A huge data will be generated under the GST regime. Somebody has to analyse it and make use of it. There would be enforcement issues, where lots of officials would be needed. Also, there would be an anti-profiteering body under the GST regime, where officials could be employed.” 

Earlier

The IRS Association had on January 25 decided to not celebrate Customs Day on January 27 and observe January 30 as a black day. They had also said that giving powers to states for taxing economic activities within 12 nautical miles of the coast was a national security issue. 

States are only getting power to levy and collect taxes, not other controls, is Jain’s comment on this.

Image: A file photograph of a protest against Value Added Tax. Photograph: B Mathur/Reuters.