Letters: Correct GST flaws

Business Standard October 11, 2016. 21:06 IST

Apropos Shrimi Choudhary's article, "Central excise officials flag GST loopholes" (October 11), its findings are surprising, given that several officials of the Central Board of Excise and Customs (CBEC) had worked for months along with state government officials to design the legal text.

Several chambers of industry have grave concerns about the issues mentioned in the article. The goods and services tax (GST) would be payable on the supply of goods or of services or both. What constitutes "supply", particularly in the context of services, is crucial for determining GST liability. Article 366 of the Constitution defines "goods" in clause (12) and "services" in clause (26A); but "supply" is not defined.

"Supply" is sought to be defined in the GST tax law. Concerns regarding the interpretation of "supply" emanate mostly from the egregious history of disputes and litigation surrounding the interpretation of "manufacture" in relation to central excise duty.

All concerns need to be addressed, though some of them may owe their origin to fear of the unknown. Otherwise, all-pervasive definitions of "supply" exist in GST/value-added tax laws of several countries. For example, in the Singapore GST Act, a supply of services is defined as "anything which is not a supply of goods but is done for a consideration (including, if so done, the granting, assignment or surrender of any right)".

There is strong criticism of provisions relating to the "value" of services in the model GST law: they are too complex and unintelligibly crafted from the provisions in excise, customs and service tax laws. Suitable corrections missed at this stage would be disastrous.

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