GST IS BENEFICIAL FOR THE GROWTH

OF INDIAN ECONOMY
(against)
GST seems rosy and it seems extremely beneficial on paper. But is it
viable? Is it suited for India? Of course on paper.!!
INTRODUCTION
What is gst ?
SO starting with
The GST is a tax reform that has been on the cards for more than
a decade. In principle, it is the same as the Value-added Tax (VAT)
already adopted by all Indian States but with a wider base.
While the VAT which replaced the sales tax was imposed only
on goods, the GST will be a VAT on goods and services
We safely assume several ideal and stable factors and also tend to think
that tax regime operate in a closed system, free from outside
interferences. But reality follows no laws. As soon as GST is introduced, I
can guarantee you that Murphys Law shall kick in, in all its glory. Just
because a system works well on paper, doesnt mean that it will work in
reality.
In India, a merger between two government agencies is next to
impossible, as long as appraisals and promotions are linked to seniority
and regretfully, not performance.And now you talk of integrating the
revenue collection services of 28 odd states and an extremely powerful
Central Service into one GST collection agent. This idea, I am sure, had
sent shivers down several spines in Secretariats across India.
The businessman shall again have to face two revenue collection
authorities. He shall to file returns before both, declare balance sheets
and invoices, maintain registers for both, make ledger entries for both,
receive show cause notices from both have raids and visits from both the
officers, and jump through all the hoops for them.
The rates for both, the CGST and the SGST, will be fixed by the GST
Council, whose members will be State finance/revenue ministers and
chairman will be the Union finance minister. Once the rates are set by the

GST Council, individual States will lose their right to tax whichever
commodities they want at the rates they want.

a GST regime where each State has a different tax rate for different goods
and services doesnt sit well with the industry demand for a single
national market with a uniform tax regime. Besides, if rates will be
different, the taxes will be dual, and the dual taxes will be administered
independently by the States and the Centre, why not just streamline the
existing tax architecture instead of erecting a new one?
This development needs to be viewed in the context of a steady erosion in
the states freedom to decide on taxes and tax rates. Moreover, the
restrictions imposed by a uniform tax regime could adversely impact
States that may be more committed to welfare expenditures.
Even today, the indirect tax administration faces several problems
regarding tax collection, record maintenance, document management,
logistics, recovery of arrears, litigation, an aging workforce, information
technology lacunae and a general apathy towards the population, with its
limited assessee base. This base is supposed to swell into an excess over
50 lakhs if GST becomes operational. Staff shortages have made life a
misery already in Central Excise. With GST, the department would
immediately implode.
Items are being thrown in and out of the GST basket at fancy. Petroleum
(which constitutes a major chunk of the import and manufacturing and
consequentially a large part of Customs, Central Excise and Sales Tax) was
very vehemently kept out of the ambit of GST until recently. Petroleum
and alcohol would have been the first to be taxed via GST if fiscal
prudence and economic common sense was the priority. But the attitude
of the establishment towards these key items indicates that GST is a mere
tax of convenience rather than being a tax of rationalization. No one
wants to share their pie.
The GST would result in another un-understandable and much abused
formula of sharing between the Centre and the states And the possibility
of richer states, which are contributing a larger chunk to indirect taxation
(which previously would have gone into their state kitties), opposing doles
and special payments out of the GST collections to specific states is
distinct and would also be a valid objection.
A new tax is always accompanied by divergent interpretation of the
statute which leads to prolonged and repetitive litigation. The number of
cases pending in front of the Bombay bench of the Indirect Tax Tribunal

(CESTAT) is almost 18,000. Imagine the extent of litigation once GST

replaces previous taxation statutes. The precedent nature of the existing
judicial case laws may also be challenged under the new legislation which
will lead to even more litigation.

CONCLUSION
A minor degree of cascading of taxes is inevitable in a federal structure
like ours. We clamor for a unified market, but is it possible in India? I agree
that a unified market will help the nation a lot, but so will single official
languages or a single practicing religion. But India needs to reconcile itself
to the fact that a unified market isnt possible, just like we have embraced
our multitude of religions and languages.
Instead of pursuing an unachievable ideal of seamless flow of taxation
from producer to consumer, the government should concentrate of
rationalizing tax rates, removing harmful exemptions and incentives,
propelling healthy competition by further lowering customs duties,
expanding the existing tax base by strengthening anti-evasion, audit and
intelligence wings of taxation and work towards promoting a stable and
integrated market which is driven by the states rather than imposed by
the Centre.