GST Bill - Select Committee could have done better!

With a view to minimize the disputes in inter-State movement of goods and services, it is desirable that they are subject to IGST, which would be available as credit to the transferee, to be used for paying GST on eventual sale within the transferee State.

Under the present CST Act, 1956, in terms of Section 6A, the burden of proof to show that the inter-State movement is not on account of sale is on the sending dealer. Even when Form F is obtained from the inter-State transferee, the assessing authorities can reject them, and demand CST on the consignments at the highest rate of tax applicable in the State of origin. Worse, when the consignments are sold to the buyers whose identity is known before hand, such stock transfers are also construed as inter-State Sale and full rate of tax demanded, even though such sale would have suffered local VAT or sales tax in the destination State. A reference to any Sales Tax law journal would show that 80% of the reported cases revolve around these issues. Restrictive definition of "supplies" to "All forms of Supply made for a consideration.” would continue this litigious legacy of the CST Act.

Gururaj B N 13/08/2015