All India Central Excise Inspectors' Association

Representing the Inspectors of Central Excise throughout

India. (RECOGNISED BY THE GOVERNMENT OF INDIA,

MINISTRY OF FINANCE, VIDE CBEC F.NO.B.12017/1/2004-

Ad.IV A dated 27.05.2013)

Date:-30/01/2015

TO,

The Secretary General,

AICEIA

Respected Comrade,

Sub:- Goods and Service Tax and its impact on the cadre

At the very outset , I express my sincere gratitude that our National

Body vide its resolution taken in the Co-Ordination Meeting held on 06.09.2014 at

New Delhi , had entrusted me to perform this task . It is not exaggerating to state that the

Indirect Taxation is heading towards a new regime in the form of GST(Goods and Service tax).

In this endeavor , I have tried to be lucid and comprehensive without compromising

the rigour and at the same time not too pedantic so that the fraternity members will find in it

much that is essential to understand at least the basics of GST.

I will be amply rewarded if this work is of any use to the members of

our AICEIA fraternity.

Thanking you,

Comradely Yours

Rajasish Dutta

Joint Secretary

Implementing GST: CBEC working on massive restructuring

of administrative setup and its possible impacts on our cadre

WHILE the implementation of GST and the modalities of the

requisite administrative and legal roadmaps are being drawn

for the purpose, there were recently some actions within the

CBEC, which is the designated authority for overall

administration of GST, to provide the Administrative

Roadmap for an effective implementation of GST. Towards

this objective, CBEC constituted a Committee or rather a

‘Group on Implementation of GST' (‘Implementation Group'

for short). The Implementation Group which consisted of

several Chief Commissioners and a few Commissioners,

discussed and deliberated on various aspects of GST

administration and the requisite administrative framework for

its effective implementation. After intense deliberations, the

Implementation Group came out with a comprehensive

report on this subject, which was submitted to the Board and

the CBEC has circulated it to all the CCs and DGs for their

views. The CBEC wants the CCs to constitute small group of

technically proficient officers which should include technically

sound Superintendents and Inspectors, to study the

recommendations.

As per the Implementation Group, the estimated tax base

would be in the range of 50 lakh assessees (which is four

times the existing number of 13 lakhs). Since the new

regime would entail concurrent tax administration by the

Centre and States on the same supply chain of goods and

services, the Implementation Group is of the view that there

is a strong need for harmonization of business processes and

procedures between the Central and State Governments to

take advantage of the synergy between the two tax

administrations and also to avoid duplication of compliance

requirements for taxpayers.

Probable impact:- With the manifold increase of tax

base/numbers of assessees , more numbers of Officers are

required for the purpose of assessment of tax liabilities of the

tax payers. Kelkar Committee also stressed on recruitments

to cope up with the task. Moreover, our Officers should also

get the opportunity of being provided with proper trainings

on technical aspects of GST and also on Computer skills

required for interacting with State Government Agencies for

checking GST credits as there should be harmonization

between the two tax administrators.

Re-engineering of business processes:

Based on study of various practices, the Implementation

Group has identified the following core business

processes/changes as vital to the new tax administration:

(i) Registration process; (ii) Filing of return and processing

and payment of tax; (iii) Minimum information to be

contained in a GST invoice and books of account of all

taxpayers; (iv) Tax compliance issues – Audit & Anti-evasion;

(v) Dispute Resolution System; (vi) A robust IT system to

streamline the operations of the tax administration; and (vii)

Establishing an organization to handle a large number of

taxpayers.

The highlights of the proposed business processes in the new

GST regime would be:

(i) The registration processes for all the three taxes viz.,

CGST, SGST & IGST should be common and online, with

physical verification of a small percentage of taxpayers based

on risk assessment parameters.

(ii) A taxpayer would be given a single PAN-based

registration for all the business premises in a State.

(iii) There should be a single return for all the three taxes

and the same should be filed online through a common

portal.

(iv) The frequency of filing of returns for small taxpayers

may be made half-yearly or on an annual basis. For medium

and large taxpayers, the frequency can be quarterly and

monthly respectively. Option to be given to all taxpayers to

file monthly returns, if they so desire.

(v) Common Facilitation Centres to be set up in each State

for all the three taxes, on an outsourced model.

(vi) The refund amount to be credited to the claimant's bank

account.

(vii) For procedural and minor technical irregularities a fixed

percentage as penalty may be prescribed in the law, which

can be paid by taxpayers on their own assessment, without

the requirement of issue of show cause notice and follow up

adjudication.

(viii) Submission of Annual Audit Reports by the taxpayer

above a specified threshold to be prescribed. Audit may be

done by the professionals like CA/CWA, format of the audit

report to be finalised by the Board in consultation with

ICAI/ICWAI.

(ix) A very small percentage of small taxpayers to be

selected for audit, based on the risk parameters.

(x) The present practice of mandatory annual audit of the

large taxpayers to be dispensed with and replaced by an

audit regime based on stringent risk parameters.

Probable impacts:-As the registration and many

other process will be common and online and scope of

interface with the taxpayer is minimum, proper scrutiny of

available records will be of paramount importance and our

Officers will have to be well equipped with Rules and

Procedures .Audit will be the major tool to unearth the

evasion of taxes and our Officers will require extensive

knowledge on technical aspects of GST with particular

emphasis on Financial Accounting as the CBEC is

contemplating that large taxpayers will be audited by

professionals like CA/ICWA. This move of the CBEC may ruin

our career .All Associations should fight unitedly against this

design of the Government as we are also capable in the task

of Auditing. While we need to fight unitedly against this

decision of the CBEC, we should also upgrade our skill of

Auditing Financial Records for the evaluation of tax liabilities

and unearth revenue evasion by the Offenders.

Revamp of Organizational Structure:

For effective implementation of these business processes, the

Implementation Group has proposed a complete revamp of

the existing organizational structure. It proposes that one

common centralized portal for online registration, e-payment,

and return filing etc should be there with a recommendation

to augment human resources in the Directorate of Systems

working under CBEC. In the field formations, the new regime

would consist of GST Commissionerates to be organized

mostly on functional basis and there is a proposal for

separate Audit and Anti-Evasion Commissionerates in each

State, except in smaller states. The multi-locational and large

tax paying units in complex business sectors would be

audited by the Audit Commissionerates and the rest by the

jurisdictional GST Commissionerates.

With respect to GST Commissionerates, there is a proposal to

form four types of Commissionerates with each

Commissionerate having a specified territorial jurisdiction.

The four types are: i) One-tier (exclusively for big cities

where entire functional work will be handled by the

Commissionerate itself); (ii) Two-tier (consisting of divisions

working on functional basis - where taxpayers are spread

over a relatively large area); (iii) Three-tier (consisting of

divisions, ranges - where taxpayers are spread over a very

large area) and (iv) A combination of all the above (for areas

where there is uneven spread of taxpayers). The proposal is

to have 150 GST Commissionerates, 45 Audit

Commissionerates and 20 Anti-Evasion Commissionerates

across the country In addition to these there is a proposal to

establish State level LTUs in major States for providing better

taxpayer services and co-ordination in matters relating to

CGST, SGST and IGST.

Probable impact:-With the workload increasing manifold, the

requirement of more and more Officers are a must. The

Association should move the Board for more recruitment in

tandem with the anticipated workload. The Officers careers

should also be looked into account by the Board. There

should be promotions in time bound manner say after

every 5/8 years so that the Officers are also motivated to

enhance their skills and work devotedly.

Investigation/Arrest/Search/Seizure:

In addition to the above changes in the business processes

and the requisite supporting administrative and functional

mechanism to oversee these processes, the Implementation

Group also proposed certain changes in the Dispute

Resolution Mechanism. To begin with, the Implementation

Group suggests that there should be an institutional

mechanism for periodic or real-time sharing of information or

intelligence between the Central and State Governments, like

the existing REIC model.

Authorities for searches/seizures would be devolved

separately on Central and State Governments for issuing

warrants under CGST/IGST and SGST laws. Towards this

end, the legal provisions under CrPC may be replicated with

suitable modifications in the proposed legislations. Search

warrants under CGST/IGST would be issued by officers of the

rank of Jt./Addl. Commissioner or the Commissioner. One

authority undertaking search/seizure operations should

inform the other authority (CGST to SGST and vice-versa) for

better coordination and conducting of joint operations. Goods

and documents would be seized by the authority which

actually issues search warrants.

The Implementation Group further recommends that

investigations may be carried out independently by the

‘concerned' authority. The proposed legislations would

provide for mechanism to hand over incriminating documents

to the other authority for further investigation within the

ambit of their jurisdiction. Both Central and State

Government officials may be given powers under CGST/IGST

and SGST laws to arrest and prosecute persons for

serious/repeated offences and officers not below the rank of

Commissioners may be vested with the powers to authorize

arrest.

Dispute Resolution Mechanisms:

The Implementation Group recommends two alternate

models of dispute resolution under GST after analyzing the

pros and cons of both models. In the first model there will be

separate adjudication processes by CGST and SGST

authorities and integration of the two processes only at the

stage of appeals to the Tribunals at the State and National

level. In this model there would be four stages. In the first

and second stage, the adjudication and the appeal processes

will be separately carried out by the authorities under the

Central and State governments; in the third and fourth

stages, appeals in the State and National level GST appellate

tribunals will be heard jointly by members selected by both

the Governments – Central and States.

In the second model, adjudication and appeal processes will

be integrated under one single Tribunal viz., the National

GST Appellate Tribunal (NGSTAT) which may be headed by a

serving or retired judge of the Supreme Court. The officer

working as adjudicator as well as the Commissioner

(Appeals) would not be under the administrative control of

CGST or SGST authorities, but functions under the control of

the proposed NGSTAT. Officers from Central or State

Government as well as judicial service officers would be

eligible to work on deputation. The adjudication for the show

cause notices issued by both the CGST and SGST authorities

would be carried out by one adjudicator, and he would issue

a single / common order. Against the said order, an appeal

would lie to Commissioner (Appeals), who would again pass a

single order. Appeals against the order of Commissioner

(Appeals) would lie to State level Tribunal, and further to

National GST Appellate Tribunal ( probably the proposed

National Tax Tribunals which never saw the light of the day

will assume the avatar of NGSTATs ). Adjudicators will be

selected through a special process, ensuring appropriate

representation of the Central and the State governments and

with adequate experience in handling VAT/GST matters along

with members drawn from the judicial/legal fraternity.

Review and Appellate Mechanism:

And the Implementation Group recommends a common

review mechanism for both the above models. Officers of the

rank of Commissioners, under the Central and the State

Governments will review the orders passed by the

adjudicating authorities lower in rank. On their

recommendations, appeals can be filed with the

Commissioner (Appeals). Officers of the rank of Chief

Commissioners, under the Central or the State Governments

(there is in fact only one Commissioner of Commercial Taxes

for an entire State – usually a post which is donned by a not

so senior IAS officer and no such rank called Chief

Commissioners exists in the current VAT models of States)

will review the adjudication orders passed by officers of the

rank of Commissioners or the Orders-in-Appeal passed by

the Commissioners (Appeals). On their recommendations,

appeals can be filed with the State level GST Tribunals.

Officers of the rank of Chief Commissioners, under the

Central or the State Governments will review the orders

passed by the State level GST Tribunals. On their

recommendations, appeals can be filed before the NGSTAT.

Alternative Dispute Resolution mechanisms:

To minimize and reduce litigation, the Implementation Group

recommends setting up of an Authority for Advance Rulings

whose scope may be sufficiently enlarged to bring within its

ambit all categories of domestic and overseas tax-payers

including individuals, proprietary & partnership firms, public/

private limited companies, PSUs and other categories of

taxpayers. Its rulings shall be binding on all parties (in

States, the orders passed by such Advance Ruling Authorities

are generally discarded and not accorded much respect by

their Commissioners). Further, there is a recommendation to

continue with the present system of settling disputes through

the institution of Settlement Commission with suitable

modifications in its structure and powers to conform to GST

environment.

Also there is a recommendation to set up an office of

Ombudsman, with concurrent jurisdiction over CGST, IGST

and SGST, in each State (to be combined for smaller States)

to redress grievances of tax payers. There is also a proposal

to set up Common Trade Facilitation Centres for GST

taxpayers across the country.

Internal/External Awareness campaigns:

To achieve the above goals and objectives by April 1, 2016,

the proposed date of pan India GST roll out, the

Implementation Group has recommended setting up of Joint

Working Groups in each State with officers from both Central

Excise/Service Tax department and Commercial tax

departments to exchange complete database of taxpayers,

identify premises for setting up of new common-GST offices,

jointly organize taxpayer education programs, organize

seminars, workshops, road shows, publicity through print and

electronic media, create a website for dissemination of

information on GST including FAQs, brochures, leaflets/

pamphlets etc.

Internally within the CBEC and its field formations, the

Implementation Group has proposed vigorous pursuance of

cadre reviews to make available additional manpower at the

earliest to ensure a smooth transition to GST. In addition to

this, it recommends that the department should immediately

devise a program for familiarizing the staff with the broad

framework of GST regime with in-house training programs in

Commissionerates through workshops, seminars and also

training by NACEN and its Regional Training Institutes.

It appears that CBEC is getting ready for GST – April 1, 2016

Probable impact on Officers:- The quasi judicial process of

Adjudication will require more numbers of Officers with sound

knowledge of various indirect tax laws as it is evident that

there will be disputes of wrong credit availment on SGST for

paying final duty of CGST and vice-versa.To ascertain the

veracity of such cross credit utilization , knowledge on

various tax laws especially indirect ones is a must for proper

adjudication/appeal or even for booking of an evasion case.

Hence, it is re-iterated that our Officers must equip

themselves with proper knowledge. The Association can take

up with the administration that Officers are imparted

comprehensive trainings on the relevant Laws and

procedures.