CBIC Cheif: Council Decides on Extension of Compensation Cess Beyond June 2022

The Central Board of Indirect Taxes and Customs (CBIC) chairman Mr Vivek Johri said that the Council will decide on the demand of small states regarding compensation cess. He stated that during the last couple of years COVID pandemic impacted the collections adversely, due to which all states suffered, especially the smaller ones.

He stated that Goa may have suffered more because it was highly reliant on the tourism and travel industries. Goa being a consuming state with a high footfall of tourists will lead to more inflow of goods and services from other states in the country. GST being the destination-based tax regime helps Goa with relatively high consumption and will gain more in terms of revenues. 

Also, the CBIC chief has mentioned the below points:

1. The department can not take any decision regarding the demand from small states to continue compensation cess and the GST council is the proper authority to make a decision.
2. The tax evaders operate for a short time and then they are out of the system and become dormant. They reappear either with the same name or with a different name. So, initially, they operate for a quite long time.
3. The Council has introduced two things to curb fake invoicing.
4. The first one is sequential return filing for all GST returns, where the taxpayer can not file the current month’s return unless they filed the previous month’s return.
5. Also, Council decided to interlink GSTR-1 with GSTR-3B. So, the taxpayers can not file GSTR-1 for the current month unless they filed GSTR-3B for the previous month. Taxpayers must utilise the ITC and pay off the liability while filing GSTR-3B. With this move, the time available to such evaders is minimised.
6. The second one is that the department is using data analytics to outsmart tax evaders who are entering the system intending to issue fake invoices and pass on fake input credit.
7. Also, the department tightened the provisions for registration for new businesses with mandatory aadhaar authentication.
8. The department is cross-checking with the income tax portal to check whether they are genuine taxpayers or not. Based on that, they decide whether to register new businesses or what type of checks to be applied before registering them.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@clear.in