Mahatma Gandhi said, “There are unjust laws as there are unjust men.”
A study would show that our country’s GST is not merely unjust but one that would generate immense problems. This has been ushered in through indoctrinating claims, screaming praise, as if it were a holy cow and a panacea for all ills (reminiscent of similar drama enacted when Modvat and VAT were introduced).
On the shocking claim that GST has been ‘adopted’ by more than 100 countries and that India should not be ‘left behind’, our GST creators may answer the following ten questions:
How many ‘GST countries’ have such huge tariffs as ours (1500 pages, with highly technical entries, ‘Section Notes’, ‘Chapter Notes’ and notifications)? This tariff is even more complex than HSN, which was evolved primarily for trade statistics, while our tariff is for classification.
Are the GST Act and Rules in other countries also as painful as ours (174 Sections and 161 Rules)? There are more than 150 formats and 37 monthly returns and as many as 1,332 yearly returns, as stated by two members of our own GST Council. Do other countries necessitate the herculean task of matching purchase invoice with supply invoice and executing bonds?
How many such countries have elaborate processes of Show Cause Notices / fruitless appellate ‘remedies’, where the department files an appeal even against the order of its own official?
Which countries have intimidating provisions, as in our GST, for seizure, arrest, prosecution, demanding tax, even after the normal time-limit, alleging ‘suppression of facts, fraud and collusion’, (highly arbitrary and discretionary), besides rejecting refunds, citing ‘unjust enrichment’.
Amusing ‘services’
Do other countries also list innumerable ‘services’, as our GST does, roping in almost all imaginable human activities? Amusingly shocking entries include — ‘gambling and betting services’, ‘slaughtering animals’, ‘animal husbandry’, ‘sperm banking’, ‘bicycle repairing’, ‘cremation, funeral’, ‘demolition’, ‘pension Services’, ‘lottery’, ‘pressing’, ‘ritual ceremonies’, ‘agreeing to do/refrain from/tolerate an act or service’, ‘sanitation’, ‘septic tank cleaning’, ‘chimney cleaning’, ‘bathrooms/lavatories/urinals’, ‘circus’, ‘birth certificate issue’ and many more.
Do others also have our complex concepts as ‘job-work’, TDS, ECO, TCS, Pure Services, EPZ, SEZ, Loan Licensee, Transitional/ Deemed Credit, ‘Advance Ruling’ and the ‘Common Portal’? Are there huge pendency of refund claims (including on exports) in other countries also?
What about our tortuous auditing processes — internal, ‘special’ and that of the C&AG, with objections (right or wrong), generating innumerable show-cause notices and endless uncertainty and harassment?
Do such concepts even exist elsewhere — ‘Reverse Charge’, ‘Composition Scheme’ (with its inevitable fragmentation of units), besides the draconian and impractical ‘anti-profiteering’?
Do such ‘GST countries’ have multiple taxes within GST itself (CGST, SGST/UTGST, IGST and Cess), besides also many other taxes of the Centre and States? Do not these and the multiple rates (from 0% to 28% and even higher) go against the very principle of VAT and GST? Do these also not demolish the claim of ‘One Nation, One Tax, One Market’?
Perhaps, the term ‘One Tax’ is only to convey that now there would be just one tax rate for the same goods in different States. In this regard, one may ask, “What is wrong if differences exist in our federal setup, given the varied nature of manufacture and trade from State to State”? As our Constitution itself provides for Central, State and Concurrent Lists, a healthy ‘tax-war’ can happily coexist with a healthy ‘price-war’ and competition. Regarding ‘One Market’, the very concept is utopian because prices vary even within a town, not to speak of a vast country. Not just tax rates, but various capricious market forces also determine the ultimate price.
Jargon, myths
Preposterous also is the proclamation that GST would bring down prices by obviating ‘duty on duty’ and ‘cascading effect’ — jargon and myths often used even during the Modvat and VAT days. After all, just tax credit accumulated is adjusted. At best, the assessee is left with a mere ‘intellectual’, though illusory ‘satisfaction’ that he has got some credit.
India is ranked 100 in the recent World Bank’s ease of doing business report. This sorry state is due to ill-conceived polices and legislation, such as GST. Enterprise in business is, consequently, nipped in the bud.
Indeed, there are unjust laws, as there are unjust men!
(The author was in the IRS as Deputy Collector, Customs & Central Excise. He can be reached at kvyoga@gmail.com)
