Srinagar: The union government on Wednesday said that it will cancel the registration of business entities that do not pass on gains from the Goods and Services Tax (GST) to consumers.
The government will levy penalty in addition to cancelling the registration that was prescribed in the law.
However, the J&K Government is yet to decide whether or not to extend the central GST law to state as PDP-BJP coalition is facing stiff resistance from the pro-India opposition parties and trade bodies of J&K while as the resistance leadership termed the law as a plan to “cripple the economy of J&K”.
This move will be taken to invoke anti-profiteering provisions to ensure that the gains of GST by way of lower taxes and input credits for taxes paid at all stages are passed on to the consumers.
At the same time, the government also wants to ensure that in cases where the levy is going up, firms do not take unfair advantages.
The three-stages process with the complaints being first verified by a standing committee of officers as approved by the GST Council and the Anti-Profiteering Authority will decide on the case.
After the complaints have been filed, the Council will have to complete the process in eight months according to the rules finalised by the council.
Given that the rules are open-ended, the tax practitioner said that cancelling of the registration is too harsh.
The provisions are subject to being misused by rivals, who can lodge a complaint against a company, which will have to answer queries, a consultant said in their form.
“The current mechanism is too broad-based and difficult to implement. Can you act against an eatery in Mahabalipuram that does not pass on the gains of input tax credit? The focus should be on sectors such as automobiles, cement, steel and real estate where malpractices are more common and some have a history of pocketing the gains,” said a tax consultant with a global firm.
A special event is planned at the parliament on June 30 midnight when the tax regime will be launched in the presence of Finance Minister Arun Jaitley, President Pranab Mukherjee along with the Prime Minister Narendra Modi on the dais.
Apart from the prime minister, former prime ministers Manmohan Singh and H D Gowda will also be there present at the event.
On Monday, the union government also notified several provisions of the Integrated GST Act to move towards a July 1 launch even as Jammu and Kashmir government is trying to push for a passage of the legislations to join other states in implementing the tax reform.