Some of the recommendations of the Goods and Services Tax (GST) Council with regard to administrative control over entities with annual turnover of up to Rs 1.5 crore has brought about a degree of clarity on jurisdiction. But the talk of a "cross empowerment" model based on risk evaluation for entities with turnover of above Rs 1.5 crore to ensure such categories of suppliers of goods and services deal either with the Centre or state, as rightly pointed out, may prove tricky. This would lead to uncertainties both among tax authorities at the Centre and states as well as the assessees in this category. This is certainly not the best way to usher in such radical tax reforms across the country.
Such bizarre thought, therefore, deserves to be discarded. By its very nature, dual control under the GST regime is unavoidable. Yet, both the Centre and the states can jointly evolve a workable mechanism to mitigate any possible hardship to the assessees emanating from dual control. Incidentally, Article 269A(1) of the Constitution specifically empowers only the government of India to levy and collect GST on supplies in the course of inter-state supplies. Any dilution to this would be liable to challenge.
In the euphoria over the GST becoming a reality, what has not received adequate attention is the adverse effects of pegging exemption limit at Rs 20/10 lakh for goods in particular for small manufacturing units with annual turnover above Rs 20/10 lakh but below 1.5 crore. At present, full exemption from excise duty without input credit is available to small-scale units with annual turnover below Rs 1.5 crore that gave them a certain degree of competitiveness vis-a-vis big enterprises. If such units are also kept out of the compounding scheme, as is being talked about, this would strike a severe blow to a sector whose contribution to the gross domestic product and employment generation potential has been quite substantial. Let the GST regime not appear custom-made for the organised sectors alone.
S K Choudhury Bengaluru
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