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Draft model GST law: Taxing e-biz firms at point of supply, 5-year jail term for evasion proposed Courtesy : The Indian Express

Taxation of e-commerce transactions at the point of supply, search and arrest powers to senior tax officials, provision for five years of jail for tax evasion, setting up of dispute settlement tribunal and rating to GST taxpayers — these are some of the provisions in the model Goods and Services Tax (GST) law released by the finance ministry. With the Empowered Committee of Finance Ministers granting its in-principle nod to the draft model GST law for states and Centre, the government has sought suggestions and comments from stakeholders on it.
The draft model law seeks to tax e-commerce operators “at the time of credit of any amount to the account of the supplier of goods and/or services or at the time of payment of any amount in cash or by any other mode, whichever is earlier”, bringing clarity regarding levy of GST in cases where goods are sold in one state and brought in another.

The GST collected by the e-commerce operators shall be paid to the government within 10 days after the end of the month in which the collection is made.

The model law calls for registration of supplier in the state from where the supplier makes a taxable supply of goods and/or services with an annual turnover of above Rs 9 lakh, except for supply of goods or services from Northeastern states, where the threshold has been set at Rs 4 lakh.

The draft model law also provides for constitution of a National Goods and Services Tax Appellate Tribunal by Centre on the recommendation of the GST Council. The Tribunal shall be headed by a national president, with a branch in each state. The state GST tribunal will be headed by a state President and consist of Members (Judicial), Members (Technical – CGST) and Members (Technical – SGST). Every appeal has to be filed within three months from the date on which the order sought to be appealed against is communicated to the person.

The model law also proposes to empower senior tax officials with the powers of search, seize, summons and arrest. A person can be imprisoned for up to five years for evasion of tax, the model law said.

A National GST Settlement Commission to be set up by the Centre has also been proposed in the draft law for settlement of cases under the proposed GST Act. The National Commission chairman will be a High Court judge and the commission will have one bench for one or more states. The authority for advance ruling in GST will be established in each state for taxpayers seeking advance rulings, the draft law said.

The draft law also seeks to establish a Consumer Welfare Fund, which shall be utilised by the Centre/state government for the welfare of the consumers in accordance with such rules as that government may make in this behalf. A GST compliance rating has also been proposed for every taxable person. The score will be based on his/her record of compliance with the provisions of the Act.

“The GST compliance rating score shall be determined on the basis of parameters to be prescribed in this behalf. The GST compliance rating score shall be updated at periodic intervals and intimated to the taxable person and also placed in the public domain in the manner prescribed,” the draft law said.

The empowered committee on GST is holding a two-day meeting in Kolkata to discuss the final draft of GST. After Tuesday’s meeting, finance minister Arun Jaitleysaid “virtually” every state has supported the idea of the proposed GST, except Tamil Nadu, which still had some reservations.

The Constitution Amendment for GST Bill is awaiting passage in Rajya Sabha, wherein the NDA government does not have a majority. The government hopes to get the Constitution Amendment Bill passed by Parliament in the upcoming Monsoon Session, which will enable them to roll out the indirect tax regime by April 1, 2017.

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During my 37-year-old career with Income Tax department, I moved from place to place, post to post. For me, every posting was a challenge, and at the same time an opportunity to deliver.

After my retirement as Chairman of Central Board of Direct Taxes, I was invited by various institutions and NGOs to deliver talks on tax matters. While advising taxpayers across sectors, I noticed, our vast salaried class including armed and paramilitary forces, pensioners or senior citizens, NRIs, professionals and small business establishments need the right guidance. Most taxpayers do comply with their tax obligations fully. Yet, they are not somehow relaxed and are burdened with anxieties. A large number of taxpayers are not even aware that getting tax refund on time is a basic right.

In one such meeting, a middle-aged man quizzed me why could not I give tax advice 24X7. For a moment, I had no answer. He then added that I should give tax solutions online so that he does not need to come from a remote place to attend my lecture. I thanked him for his suggestion.

For a while I was restless. Already I had got myself enrolled as a Member of the Bar Council of Delhi and as an Advocate of Delhi High Court Bar Association, thanks to my law degree from the University of Allahabad. Yet, I was not sure how I could help the vast majority of taxpayers who somehow maintain a safe distance from the taxmen. I then tossed the idea of creating a tax think-tank with some of my former colleagues and highly spirited individuals. All of us immediately agreed on one count: millions of Indian taxpayers expect to access tailor-made tax research materials and seek guidance from those who have been parts of the tax machinery for decades.

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