GST to bring back 'Inspector Raj': Mamata Banerjee on arrest clause

Provision may lead to major harassment of small and medium businesses

West Bengal chief minister, Mamata Banerjee, whose government has been protesting against the July 1 rollout of the Goods and Services Tax (GST) regime, on Friday, upped her concern, alleging that the GST has paved the way for the dreaded 'Inspector Raj' to be back in business.
 

"I am shocked to find that the GST rules contain a rather draconian arrest clause which can lead to major harassment of business, particularly the small and medium, with some sections even being non-bailable too", she said.

As per the GST rules, inspectors will have the right to arrest business owners on four types of offences which can lead to a jail term of up to 5 years. Such a clause was absent under the Value Added Tax (VAT) regime where the field officials of the state's tax department did not have the power to arrest anybody. In case the inspector spotted any serious tax offence, then they had to file a First Information Report with the police and then follow the due process of law.

Banerjee said her government had opposed this clause when the GST was being given the final shape in the GST Council but the Centre did not pay any heed.

"Given the atmosphere in the country of vindictively targeting anyone who dares to disagree with the central government, I am deeply concerned that the arrest clause in GST may well be used to target business leaders who raise their voice of dissent on any policy matter or any practices", she said.

The Bharatiya Udyog Vyapar Mandal (BUVM), a national industry body of traders and micro-small business,  has called for a nationwide traders' strike opposing the July 1 rollout, had also raised concern over this clause.

"Inspectors, under the GST regime, have the power to arrest on account of non-compliance. Traders and small businesses, most of who don't even have a computer will be required to be compliant now failing to which there is the risk of being arrested. The Centre should have given the traders time to understand compliance and get updated about the requirements under GST", Mahesh Kumar Singhania, chairman of BUVM told Business Standard.

However, union minister of state for finance and corporate affairs, Arjun Ram Meghwal, claimed that the danger of 'Inspector Raj' has been minimised by adopting digitisation of the tax filing and collections process.

"Since the entire process will be on the GST Network and digitised, human interference and interface in the tax filing system will come down dramatically. I don't see any increase or return of the Inspector Raj", he said.

Quoting Jawarhal Nehru's famous tryst with destiny address on the night on August 14, 1947, Banerjee said: "At the stroke of midnight hour on August 14, 1947, India won her freedom. Now, at the midnight of June 30, 2017, freedom and democracy stand to face grave danger".

According to Banerjee, at least six more months are needed to notify all rules and procedures that would give enough time to the stakeholders for the GST implementation.

The TMC has been one of the first political parties to support the GST when the proposal was placed in 2011 by the UPA government. Although the tables turned in the Parliament in support of the BJP, the TMC (in opposition) had supported GST and voted in favour in both the Houses.

As a mark of protest, Banerjee has decided not to attend the GST rollout celebration party, scheduled to take place on June 30, in the Parliament House in New Delhi.