Describing the GST Council as the only institution in the country that is totally federalist, former West Bengal Finance Minister Amit Mitra said there has been steady erosion in both federalism as well as consensus-making in the GST Council.
Mr. Mitra, Principal Chief Advisor to the West Bengal Chief Minister and Finance Department, said that for the first three years, the GST Council was run on the basis of consensus and was a professionally run body, but he rued that that era has gone.
Citing a Supreme Court judgment, Mr. Mitra said GST was a “product of collaborative dialogue”, which means drawing up a consensus on a federalist polity. “If the GST is to move forward, in the manner it has started, then we have to maintain this … If majoritarianism becomes a rule, it will lose its entire value,” Mr. Mitra said.
GST frauds
Speaking at an event organised by the West Bengal National University of Juridical Sciences in collaboration with the All India Federation of Tax Practitioner, Eastern Zone on Friday evening, Mr. Mitra also raised the issue of frauds under the GST tax regime and said that the estimated value of frauds is close to ₹1,25,593 crore.
Referring to a presentation made by Nandan Nilekani before the GST Council in March 2020, Mr. Mitra said that the value of fraudulent transactions was estimated to be close to ₹70,018 crore. Of this, frauds worth ₹38,771 crore came under the head of “excess input tax credit” and ₹31,247 crore came from “under declaration”. The former West Bengal Finance Minister, citing a Ministry of Finance data tabled in the Rajya Sabha, said that frauds post 2020 to till recently would total to around ₹55,575 crore, therefore estimating the total value of frauds under the GST tax regime to be close to ₹1,25,593 crore.
“GST is riddled with potential fraud and this needs to be addressed but nobody is addressing it in the manner in which collectively the GST council should address,” Mr. Mitra said.
‘Complete simplification’
He has called for complete simplification of systems under the GST tax regime to prevent Micro Small and Medium Enterprises (MSME) from de-registering themselves from the GST network. Referring to the GST tax regime as complex, Mr. Mitra said that the number of notifications issued to date stands at 741, of which Central tax notifications are 395 and Central tax rate notifications number 148. The total number of prescribed forms under GST is 178.
“Ease of doing business is a myth as far as GST is concerned. MSMEs today are de-registering as they cannot cope with it. What worries me most is that the one of the largest employers of India, the MSMEs, will leave and de-register and go back to being informal with these kinds of numbers,” Mr. Mitra added.
