GST's New Battlefront

As the basic law and rates settle down, authorities are bracing for the next round – legal challenges from businesses.

- Dipak Mondal

IN JUNE 2018, when the Goods and Services Tax (GST) was about to complete a year, BT had asked former revenue secretary Hasmukh Adhia if the government was worried about the more than 100 writ petitions filed in various high courts against many of the new tax system’s provisions. A confident Adhia had then said that “many writ petitions, 200-300, have been filed (against GST)” and the government was prepared to fight those petitions.

The number of writ petitions has gone up since then, and if the tax and legal fraternity is to be believed, it is beginning to worry the government as well. The revenue department, say experts, is not prepared to face these cases. “The department side was not well represented in high courts, so much so that the government had to issue a circular saying that (tax) commissioners should support (lawyers representing the revenue department) in these litigations,” says a GST consultant at a Big Four audit firm.

Even though the assessment of GST returns is yet to begin (the deadline for filing annual returns and GST audits has been extended from December 31, 2018, to June 30, 2019), tax and legal experts are expecting a flood of litigation as taxpayers begin to read the fine print of the law and take a close look at their tax liabilities, input tax claims, etc.

Initially, businesses were just filling forms, running to catch the bus, says Mekhla Anand, Partner, Tax Practice, Cyril Amarchand Mangaldas. Now, they have started reading the fine print, she adds. “There are a lot of concerns about transitional input (tax) credits, area-based exemptions, issues regarding inverted duty structure, conflicting laws, etc,” she says.