Eight years on, GST regime is okay, but GST officers are not efficient

In pre-GST regime, importers of goods were paying additional duties of Customs & taking Cenvat Credit of the same. Now, they are paying Integrated GST and taking input tax credit (ITC) of the same

Last Monday, the Goods and Services Tax (GST) regime completed eight years. Here is a brief on how importers and exporters have managed during this period. 

In the pre-GST regime, importers of goods were paying additional duties of Customs and taking Cenvat Credit of the same. Now, they are paying Integrated GST (IGST) and taking input tax credit (ITC) of the same. So, there is not much difference but the nuisance of the special additional duty in lieu of value added tax is gone. Any cess, ITC of which cannot be taken, is always an irritant and there are a few in the new regime including the Social Welfare Surcharge (SWS). It took a while for the government to not levy GST on high seas sales, in-bond sales and merchanting trade. It took a Supreme Court decision [Mohit Minerals 2022 (61) GSTL 257 (SC)] for it to forgo its demand for IGST on ocean freight even where goods are imported on CIF basis. Importers of services used to pay service tax on reverse charge basis in the pre-GST regime and take Cenvat Credit of the same and now they have to pay IGST on reverse charge basis and take ITC of the same. So, not much has changed there.

 

­Exporters faced great difficulties in the pre-GST regime getting rebate of the excise duty paid on the export goods and refund of the unutilised Cenvat Credit on account of exports without payment of excise duty under bond or legal undertaking (LUT). 

Now, the rebate of IGST paid on export goods is automatic and timely. For refund of IGST paid on export of services or supplies to SEZ or for refund of unutilised ITC on account of export or supplies to SEZ without IGST payment under bond/LUT, the exporters have to approach the jurisdictional authorities. They get the refund much more quickly, although at some cost. The processes for getting refunds against zero-rated exports are much simpler and have enabled the exporters to improve their cash flow. There are still some heart burns but the exporters have learnt to live with them. 

The government imposed pre-import condition on import of goods without ­IGST payment under advance authorisations in October 2017, and later withdrew it in January 2019. In 2017, the government introduced Rules 96(10), 89(4) and 89(4B) in the Central GST (CGST) Rules, 2017 imposing certain restrictions on refunds on zero-rated exports and later withdrew them in October 2024. Exporters incurred massive costs due to these provisions during the interim period. 

Now, an avoidable issue is payment of differential IGST on imports, after clearance of the goods. Rule 36 of the CGST Rules, 2017 does not prescribe TR-6 challan as a document on the basis on which ITC can be taken. The Customs do not allow reassessment of bills of entry and so, the importers have no option but to pay the differential duty through TR-6 challan and take ITC through the GSTR-3B return in the hope that the GST officers will not object. 

Other issues common to all taxpayers include absence of appellate tribunals, farcical advance rulings, inadequate knowledge of the GST officers, corruption and unbridled issue of show cause notices alleging willful default and so on. The overall perception is that the GST regime is okay but the GST officers are not.