Though the bitterness over demonetisation is a big factor in the Opposition reaction to GST and the fact that it had to be postponed from the original implementation date of April 1, the divide over dual control has been a contentious issue from the very beginning. Even before November 8, several rounds of discussions on it have yielded nothing. In an ideal situation, most will agree, no assessee should have to face more than one tax authority. Yet, that is hardly true in a very large number of cases. So, a firm faces one set of authorities while paying corporate taxes and another while paying excise/service/VAT taxes even though the sales and profits are the same. Even so, state governments have a point when they say it would be harassing small businesses if they have to be answerable to two sets of tax authorities, one at the level of the state and one at the level of the Centre.
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Fortunately, there could be a solution, provided the states and the Centre want to cooperate. Under GST, all returns will be filed electronically, through the GST portal, and this return will be assessed by both the central and state GST inspectors—it is not as if a trader or a manufacturer will prepare one set of accounts for the Centre and give an additional copy of this to the state GST inspectors, and then have to satisfy each one of them separately. Assume a
trader/manufacturer records its turnover for the year as R1 crore. Now, say, the state GST authorities feel the number should be R1.1 crore while the central GST authorities feel the number should be R1.2 crore—the same exercise can be done in terms of tax payable, it makes no difference. Instead of, at this point, the central and/or state GST inspectors descending upon the trader/manufacturer, the best solution is that they consult each other on why they have come to different conclusions on the same business’s turnover. If the matter is not resolved satisfactorily, one of them—the Centre or the state—can be assigned to direct questions to the trader/manufacturer and its assessment will ordinarily have to be accepted by both. All of this, and various variations of it, can be codified into the software and/or customary protocols on how to deal with assessees where there are differences in opinion on the tax payable. In any case, given just a very small proportion of tax declarations are picked up for verification/scrutiny, the chances of assessees actually having to deal with inspectors, either central or state-level, are quite low. Also, since the central GST authorities will be dealing with assessees all over the country, their database will throw up a smaller number of assessees that need to be quizzed in comparison to the state authorities whose universe is restricted to units in the state. This is something the Centre and states need to keep in mind over today and tomorrow’s deliberations on dual control.