GST without chains

The most significant decision taken by the Council meeting was to divest GST officials of the power to arrest under Section 69 of the GST Act

After having successfully overhauled slabs and rates last year, the GST Council has rightly turned its focus on process reforms. At its 57thmeeting, the Council announced changes in adjudication, registrations, return filing, availing tax credit and refunds. These reforms will not only help existing taxpayers but can also expand the taxpayer base, which is around 1.70 crore.

The most significant decision taken by the Council was to divest GST officials of the power to arrest under Section 69 of the GST Act, 2017. This will likely entail an amendment to the law. In practice, this provision was used to threaten arrest in cases of tax demands exceeding ₹5 crore. While few arrests have actually been made, the power opens up scope for misuse. The GST system allows for attachment of bank accounts and cancellation of registration, anyway, in the event of a tax demand not being met over an extended period, without its being challenged either. There is a process in place to invoke these provisions. For transgressions under Sections 73 and 74, which deal with small errors, penalties are set to be reduced from ₹25,000 to ₹10,000. The Council has sought to shield small taxpayers by raising the threshold for prosecution from ₹1 crore to ₹5 crore. With these proposed changes, the pursuit of 'revenue circle targets' will, hopefully, not lead to harassment.