Skip to main content

Advance Authority for Rulings in Demand to Clear Doubts on GST

Advance Authority for Rulings in Demand to Clear Doubts on GST
Fight for Forum Cos, associations approaching courts in absence of advance ruling mechanism
A few senior tax officials and corporates have requested the government to start Advance Authority for Rulings as early as possible to clear doubts on goods and services tax (GST), as this will prevent companies and associations from approaching courts for clarity .

Advance Authority for Rulings (AAR) is a forum companies customarily approach to get clarity on certain tax issues to determine their future liability. Absence of such an authority is leading to many companies and associations dragging the GST Council and government to court, say industry trackers.

At the last count, about 10 writ petitions were filed, challenging some aspect of GST. About half a dozen more writs would be filed in the next fortnight alone. The trigger may have been some prominent companies, associations and multinational banks having either moved court or with plans to do so.

ET had, on Sept 29, reported that Singapore-based DBS Bank had dragged the Indian government and GST Council to the Delhi High Court after it was asked to pay integrated goods and services tax (IGST) on banking services provided to its head office in Singapore. Some other writ petitions include the one filed by Rajasthan consultants for modification of compliance requirements, not charging interest, penalty, retrospective effect to late fee waivers, composition window and incomplete utility forms under the GST framework.

“The need for GST AAR to start functioning at the earliest is paramount as several businesses would like to have clarity on matters of classification, place of supply and input tax credit, among others,“ said MS Mani, partner, Deloitte India. “Delays would lead to businesses taking a tax position which could be subsequently challenged by the tax authorities, leading to avoidable litigation. The need for AAR is more during the initial period of GST when businesses are grappling with the challenges posed by a new legislation,“ said Mani.

However, a senior tax official told ET, “The government is sensitive towards some issues companies are facing, but instead of filing cases in courts, representations to the government could be a better solu tion. No clarification could be issued in situations where companies and institutions have approached the court, unless it is directed to us by these courts.“ He also added that the government will approach the Supreme Court in cases where the position taken by some companies or associations goes against the “very fabric of GST“.

In fact, Delhi High Court had questioned the government after a writ petition filed by an individual questioned why the AAR was not yet set up. In its reply on September 15, the government said that an advance ruling would be made available on the GST portal by January 15, 2018.

According to people in the know, the government is taking time mainly due to two reasons. “Selecting people with the right profile to head the advance ruling body is very crucial. Also, the IT integration part is taking some time.“

However, Delhi High Court has asked the government to set up an offline AAR facility by October 20.
A lawyer advising a multinational to ET, “Most multinationals want to avoid litigation, but there are a lot of issues in GST, and there is no clarity. How can one have a clear tax strategy if they don't know what is the government's position.“ The government had also told its tax officers in September to defend GST. 3

The Economic Times, New Delhi, 04th October 2017

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

RBI rushes in to prop up falling rupee

RBI rushes in to prop up falling rupee India’s central bank reportedly intervened in the currency markets on Monday to prevent a further slide in the local unit, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. The rupee is the worst performing among a dozen Asian monetary units in the past three months. It lost 4.25 per cent to the dollar during the period, show data from Bloomberg. On Monday, the Reserve Bank of India (RBI) is said to have sold about Rs 800 million collectively on the spot and exchange traded futures markets, dealers said. An email sent to RBI remained unanswered until the publication of this report. The currency market has seen such a strong central bank interven…

GST Refund of Rs 20,000 Cr Pending: Exporters’ Body

GST Refund of Rs  20,000 Cr Pending: Exporters’ Body Refund of over Rs 20,000 crore on account of Goods and Services Tax (GST) is pending with the government with more than half the amount stuck as input tax credit, Federation of Indian Export Organisations said on Tuesday. While claims over Rs7,000 crore were cleared in March, the amount was Rs 1,000 crore in April.However, after exporters’ request, the GST council and tax department are organizing a second phase of Special Refund Fortnight starting May 31, which will enable exporters to draw their refunds at a speedy pace. Many exporters have been unable to file the refund of input tax credit due to technical glitches, exports and claim happened in different months. The major challenge lies on ITC refund especially because the process is partly electronic and partly manual which is cumbersome and add to the transaction cost, the exporters’ body said. On IGST, refunds are getting delayed due to airline and shipping companies not submitt…