Page 10 - Banking Finance August 2019

GST UPDATE

GST glitches still exist: Trial version of offline tool of new GST return released
Goods and Services Tax Network (GSTN) has recently released trial version of
CAG report offline tools of GST forms related to supply of goods and
Even after two years of the imple- services. An official statement says that the offline tools
mentation of GST, government’s have been released for Annexure of supplies (GST ANX-
much- 1) and Annexure of Inward Supplies (GST ANX-2), GSTN.
touted in-
These two forms would be part of the proposed GST
direct tax Return filing system under which a taxpayer would have to file FORM GST RET-
regime, 1 (Normal) or FORM GST RET-2 (Sahaj) or FORM GST RET-3 (Sugam) on either
the tech- monthly or quarterly basis.
nology-
driven tax The offline tools can be downloaded for filing GST returns. The outward sup-
code has failed to curb evasion, said plies will be detailed in GST ANX-1 while GST ANX-2 will contain details of in-
the Comptroller and Auditor General ward supplies auto-populated mainly from the suppliers' GST ANX-1. It will also
of India (CAG) in its report. CAG in its contain details auto-populated from Form GSTR-5 and Form GSTR-6.
report has pointed out that match- The release also stated, "The taxpayer will be required to take action on details
ing invoice of buyers and sellers was of inward supplies contained in Form GST ANX-2 by accepting or rejecting the
still not in place. It also mentioned entries. The taxpayer can also keep the invoice pending by marking the entry
that an online system validated input accordingly."
tax credit (ITC) through “invoice
matching" was not in place. Input Banana row: Charging 18% GST is legal, says FHRAI
tax credit is the deduction for tax The Federation of Hotel and Restaurant Associations of India (FHRAI), the apex
already paid by businesses. body of hotels and restaurants in the country, has
“One significant area where the full backed the Chandigarh five star hotel in the issue
of charging Rs 442 for two bananas from actor Rahul
potential of GST (Goods and Services
Bose. However, the Excise and Taxation Depart-
tax) has not been achieved is the roll
out of the simplified tax compliance ment of Chandigarh had levied a fine of Rs 25,000
regime," states the report presented on the hotel for being in violation of Section 11 of
by CAG on GST for fiscal 2018-19. The the CGST (illegal collection of tax on an exempted
return filing system was complex and item)
technical glitches in the Goods and The actor raised the issue on social media sharing a video clip in which he talked
Services Tax Network (GSTN) led to about his bizarre experience, and displayed the hotel's bill for the bananas. The
the elimination of the invoice match- video went viral. FHRAI has clarified in a report that there was nothing illegal
ing system that was seen as curbing as hotels are legally mandated to charge 18 % GST.
evasion. FHRAI founder Gurbaxish Singh Kohli said, “Hotels do not sell or buy fruits and
“The complexity of return mecha- vegetables, but provide service of accommodation along with restaurant ser-
nism and the technical glitches re- vice such as supplying food and beverages to its guests. So, what the hotel pro-
sulted in roll back of invoice-match- vides includes service, quality, plate, cutlery, accompaniment, sanitised prod-
ing, rendering the system prone to uct, ambience, luxury, etc. Therefore, it is not possible to charge for the com-
ITC frauds. Thus, on the whole, the modity alone at the market price.”
envisaged GST tax compliance sys- FHRAI also explained that as per GST laws, levying such charges is not optional.
tem is non-functional," the report The hotels are supposed to charge 9% CGST and 9% UT GST (as Chandigarh is a
said. While indicating a “serious lack union territory) and deposit this with the government.
of coordination between the execu- Sachin Menon, national head of indirect tax, KPMG India, had contended, “Since
tive and the developers", CAG also the bananas were ordered in the room, they should have been treated as inde-
said there were deficiencies in the pendent supplies subject to itemised billing. And since bananas are exempt from
GST system.
GST, it should not have been levied.”

10 | 2019 | AUGUST | BANKING FINANCE