India has seen the implementation of GST from 1st July 2017 with the legislative mechanism firmly in place. The press is divided on the pains and gains of GST. One vendor has no clue of GST while another vendor uses GST to increase his price. The organized sector is busy trying to grapple with the changes and simultaneously delivering sermons to their vendors to register. The professional community is busy in spreading all kinds of information through the social media platforms. Basic economic principles have been forgotten and tax has been assumed to be the only factor in pricing by the anti-profiteering exponents.
The Government has hyper activated its communication channels and there are hundreds of tweets clarifying various legal aspects of GST. E-fliers on every topic and one-page FAQs in the newspaper can be regularly seen. In addition to all these, a number of Press Releases have been issued on the subject clarifying the legal position. While Press Releases do indicate that the Government is active and responding to the ground realities, it is sad to note that legal concepts and due process of law have all been given a go by.
Firstly, let us look at the tweets. Twitter is a social platform available to the few of the elitist members in the society or people who are tech savvy and involved in public social platforms. The ordinary trader or the manufacturer or the contractor or the caterer or the jeweler or the transport agency or broker or a developer or a professional is not necessarily an active player in twitter. These tweets get shared in WhatsApp and other chat platforms and there is total confusion.
The irony is that the first tweet itself was to the effect that the tweets are not binding. If they are not binding clarifications why even issue them in the first place? Not long ago, when the Negative List based Service Tax regime was introduced from 01.07.2012, a number of issues were addressed through the Education Guide but the preamble to the Guide stated that it is not legally binding. Tonnes of paper were wasted in printing these and hours of quality time was spent reading and interpreting the same.
The CBEC vide Instruction F. No. 354/311/2015-TRU dated 20.01.2016 clarified that
As regards the Education Guide, it has been clearly stated in the Education Guide, 2012 that it is merely an educational aid based on a broad understanding of a team of officers on the issues. It is neither a “Departmental Circular” nor a manual of instructions issued by the Central Board of Excise and Customs. To that extent it does not command the required legal backing to be binding on either side in any manner. The guide was released purely as a measure of facilitation so that all stakeholders could obtain some preliminary understanding of the new issues for smooth transition to the new regime. Hence, Circulars such as the present one would prevail over the Education Guide, 2012.
If this was the fate of the carefully documented elaborate Education Guide, the fate of tweets / FAQs could only be worse.
Secondly, let us look at the Press Releases that have been issued by the Press Information Bureau, Government of India, Ministry of Finance. A Press Release dated 18th June 2017 refers to new dates for filing of GSTR-1; GSTR-2; due dates for GSTR-3B and states that there is a relaxation in the return filing procedure for the first two months of GST implementation.
On one side, the change in due dates indicates that the portal is just not ready and the Government wants to help the business community. But it is also equally important that one does not forget that the Act is supreme and has to be followed explicitly. In my humble view, the Press Releases including the one that relaxed the due dates do not exist in the eyes of law for the following reasons:-
(i) Section 37 of the CGST Act, 2017 provides that a registered person other than certain categories shall furnish electronically in such form and manner as may be prescribed, the details of outward supply during a tax period by the 10th day of the month succeeding the tax period.
(ii) The second proviso to Section 37 provides that the Commissioner may for reasons to be recorded in writing by Notification extend the time limit for furnishing such details for such class of taxable persons as may be specified therein.
(iii) Section 2(24) of the CGST Act, 2017 defines Commissioner to mean Commissioner of Central Tax and includes Principal Commissioner of Central Tax and the Commissioner of Integrated Tax.
(iv) Similar provisions exist for inward supply and Section 39 has similar provisions for the monthly return.
In the instant case, there is no Notification by the Commissioner in exercise of the powers conferred by the Act with reference to extension. The Press Release has no legal sanction whatsoever.
In so far as the CGST Rules are concerned, Rule 59 refers to filing of GSTR-1 electronically; Rule 60 refers to filing of GSTR-2 electronically; and Rule 61 refers to filing of GSTR-3 electronically. Rule 61(5) provides that where the time limit for furnishing the details in Form-GSTR-1 under Section 37 and Form GSTR-2 under Section 38 has been extended and the circumstances so warrant, return in Form-GSTR-3B in lieu of Form GSTR-3 may be furnished in such manner and subject to such conditions as may be notified by the Commissioner.
There is no extension of date through Notification by the concerned authority which is the mode prescribed by the Parliament. There is no Notification under Rule 61(5) specifying that Form GSTR-3B can be furnished.
Thirdly, the only source for issue of clarification on any topic with reference to implementation of GST is Section 168. Section 168 of the CGST Act, 2017 provides that the Board may if it considers it necessary or expedient to do so for the purpose of uniformity in implementation of this Act issue such orders, instructions or directions to the Central Tax Officers as it may deem it and thereupon all such Officers and other persons employed in the implementation of this Act shall observe and follow such orders, instructions or directions. The term Board has been defined to mean the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963.
In so far as Press Releases are concerned, the Five Member Bench of the Supreme Court in the case of CIT Vs. Anjum M. H. Ghaswala (2001) 252 ITR 1 has held that a clarificatory note or press release issued by the Board does not have any statutory force. It is only those Circulars issued by the Board under the provisions of Section 119 of the Income Tax Act, 1961 which will have statutory force and will be binding on every Income Tax Authority.
As on date, only Circular No. 2 and No. 4 have been issued by the CBEC in exercise of powers under Section 168 of the CGST Act, 2017 and they are in the context of procedure pertaining to exports. All the tweets and the FAQs and the Press Releases have no legal sanction whatsoever. If the Government intends to provide clarity on implementation of GST or address specific issues or extend the due dates, it must use the appropriate vehicle specified by the Parliament for the said journey.
India has seen the implementation
of GST from 1st July 2017 with the legislative mechanism
firmly in place. The press is divided on the pains and
gains of GST. One vendor has no clue of GST while another
vendor uses GST to increase his price. The organized sector
is busy trying to grapple with the changes and simultaneously
delivering sermons to their vendors to register. The
professional community is busy in spreading all kinds of
information through the social media platforms. Basic economic
principles have been forgotten and tax has been assumed to be the
only factor in pricing by the anti-profiteering exponents.
The Government has hyper activated
its communication channels and there are hundreds of tweets
clarifying various legal aspects of GST. E-fliers on every
topic and one-page FAQs in the newspaper can be regularly
seen. In addition to all these, a number of Press Releases
have been issued on the subject clarifying the legal
position. While Press Releases do indicate that the
Government is active and responding to the ground realities, it is
sad to note that legal concepts and due process of law have all
been given a go by.
Firstly, let us look at the
tweets. Twitter is a social platform available to the few of
the elitist members in the society or people who are tech savvy and
involved in public social platforms. The ordinary trader or
the manufacturer or the contractor or the caterer or the jeweler or
the transport agency or broker or a developer or a professional is
not necessarily an active player in twitter. These tweets get
shared in WhatsApp and other chat platforms and there is total
confusion.
The irony is that the first tweet
itself was to the effect that the tweets are not
binding.
...
If they are not binding clarifications why even issue them
in the first place? Not long ago, when the Negative List
based Service Tax regime was introduced from 01.07.2012, a number
of issues were addressed through the Education Guide but the
preamble to the Guide stated that it is not legally binding. Tonnes
of paper were wasted in printing these and hours of quality time
was spent reading and interpreting the same.
The CBEC vide Instruction F. No.
354/311/2015-TRU dated 20.01.2016 clarified that
As regards the Education Guide,
it has been clearly stated in the Education Guide, 2012 that it is
merely an educational aid based on a broad understanding of a team
of officers on the issues. It is neither a “Departmental Circular”
nor a manual of instructions issued by the Central Board of Excise
and Customs. To that extent it does not command the required legal
backing to be binding on either side in any manner. The guide was
released purely as a measure of facilitation so that all
stakeholders could obtain some preliminary understanding of the new
issues for smooth transition to the new regime. Hence, Circulars
such as the present one would prevail over the Education Guide,
2012.
If this was the fate of the
carefully documented elaborate Education Guide, the fate of tweets
/ FAQs could only be worse.
Secondly, let us look at the Press
Releases that have been issued by the Press Information Bureau,
Government of India, Ministry of Finance. A Press Release
dated 18th June 2017 refers to new dates for filing of
GSTR-1; GSTR-2; due dates for GSTR-3B and states that there is a
relaxation in the return filing procedure for the first two months
of GST implementation.
...
On one side, the change in due
dates indicates that the portal is just not ready and the
Government wants to help the business community. But it is
also equally important that one does not forget that the Act is
supreme and has to be followed explicitly. In my humble
view, the Press Releases including the one that relaxed the due
dates do not exist in the eyes of law for the following
reasons:-
(i)
Section 37 of the CGST Act, 2017 provides that a registered person
other than certain categories shall furnish electronically in
such form and manner as may be prescribed, the details of outward
supply during a tax period by the 10th day of the month
succeeding the tax period.
(ii) The
second proviso to Section 37 provides that the Commissioner may for
reasons to be recorded in writing by Notification extend
the time limit for furnishing such details for such class of
taxable persons as may be specified therein.
(iii) Section
2(24) of the CGST Act, 2017 defines Commissioner to mean
Commissioner of Central Tax and includes Principal Commissioner of
Central Tax and the Commissioner of Integrated Tax.
(iv) Similar
provisions exist for inward supply and Section 39 has similar
provisions for the monthly return.
In the instant case, there is
no Notification by the Commissioner in exercise of the powers
conferred by the Act with reference to extension. The Press
Release has no legal sanction whatsoever.
In so far as the CGST Rules are
concerned, Rule 59 refers to filing of GSTR-1 electronically; Rule
60 refers to filing of GSTR-2 electronically; and Rule 61 refers to
filing of GSTR-3 electronically.
...
Rule 61(5) provides that where the time limit for furnishing
the details in Form-GSTR-1 under
Section 37 and Form
GSTR-2 under
Section 38 has been extended and the
circumstances so warrant, return in Form-GSTR-3B in lieu of Form
GSTR-3 may be furnished in such manner and subject to such
conditions as may be notified by the
Commissioner.
There is no extension of date
through Notification by the concerned authority which is the mode
prescribed by the Parliament. There is no Notification under
Rule 61(5) specifying that Form GSTR-3B can be furnished.
Thirdly, the only source for issue
of clarification on any topic with reference to implementation of
GST is Section 168. Section 168 of the CGST Act, 2017
provides that the Board may if it considers it necessary
or expedient to do so for the purpose of uniformity in
implementation of this Act issue such orders, instructions or
directions to the Central Tax Officers as it may deem it and
thereupon all such Officers and other persons employed in the
implementation of this Act shall observe and follow such orders,
instructions or directions. The term Board has been
defined to mean the Central Board of Excise and Customs constituted
under the Central Boards of Revenue Act, 1963.
In so far as Press Releases are
concerned, the Five Member Bench of the Supreme Court in the case
of CIT Vs. Anjum M. H. Ghaswala (2001) 252 ITR
1 has held that a clarificatory note or press release
issued by the Board does not have any statutory force. It is
only those Circulars issued by the Board under the provisions of
Section 119 of the Income Tax Act, 1961 which will have statutory
force and will be binding on every Income Tax Authority.
...
As on date, only Circular No. 2 and
No. 4 have been issued by the CBEC in exercise of powers under
Section 168 of the CGST Act, 2017 and they are in the context of
procedure pertaining to exports. All the tweets and the FAQs
and the Press Releases have no legal sanction whatsoever. If the
Government intends to provide clarity on implementation of GST or
address specific issues or extend the due dates, it must use the
appropriate vehicle specified by the Parliament for the said
journey.
Comments
I ask a question and give an answer. This seems to be case with the curious tweet syndrome. in the days to come, we may have show cause notices issued as tweets or on the assessee facebook page. Perhaps the government feels that taxmen and consultants and etc. etc. are not at all warranted. What is needed is only the taxpayer and his hard earned money. Actually, an RTI application needs to be filed to know the amount of money spent on carrying these adverts in the prominent newspapers. As rightly said, when they have no legal validity why issue them in the first place. And are tweets legally admissible as pieces of evidence?
It would not be far when the CERA audit sharpens their pens and analyses these tweets and conclude that all the benefits which are presumably extended by these tweets is all rubbish and has caused immense loss of revenue - half margin reports, here we come!
Thank you very much for highlighting the issue created by tweets and press releases. nice article.