There is no doubt that so far as possible, the taxable person (earlier termed as dealer or assessee) should face only one authority. It will be difficult for him/her to face two masters, as it is very much possible that two authorities may take entirely different views on same issue.
At the same time, it is obvious that the revenue of both central and state governments should be protected. Both the Centre and states have their sovereign powers. Hence, some golden mean is required to be found.
It is envisaged that rates of CGST and SGST will be same. Thus, broadly 50 per cent of revenue will go to the central government and 50 per cent will go to the state government.
Though IGST will be collected by the central government, it is an intermediate tax. It is a pass-through transaction. The final tax will be in form of CGST and SGST only.
However, it has to be noted that central government has taken the responsibility of compensating states for any revenue loss for five years. Thus, the central government needs to be more diligent than states to ensure proper tax collection.
Considering these factors, it is suggested that broadly, 55 per cent of tax revenue should be under control of central government and 45 per cent of tax revenue should be under the control of state government.
To start with, as a rule of thumb, a taxable person having business activities predominantly in one state should be under control of the state government. Taxable persons having multi-state businesses and those predominantly in the export field should be under the control of central government.
Industries and businesses peculiar to one state should be under control of the state government, i.e., jute in West Bengal, sugar in Maharashtra and UP, etc. The reason is that state officers already have deep knowledge of these businesses.
Businesses having national-level activities like banking, insurance, national couriers, telecommunication should be under control of central government.
Once such bifurcation is made, further refinement can be made on other reasonable criteria to achieve broadly the ratio of 55:45.
Once a bifurcation of the taxable person is made, it should be reviewed every three years. Frequent changes should be avoided.
However, that does not mean that there should be watertight compartments. It is obvious that officers of central government will be biased towards IGST and CGST while state government officers will be biased towards SGST.
To ensure that interest of both central and states are protected, the following measures should be taken:
Model GST Law provides for audits of assessee. If the audit team is led by central government authorities, one officer of state should be part of the audit team. Similarly, if audit is conducted by state government authorities, one officer of Centre should be part of the audit team.
Same principle should be followed while carrying out inspection, searches and seizures. This will ensure that in every audit, inspection, search and seizure, a one-sided view is not taken. A balanced view will be ensured.
There should be a coordination committee at state level of senior central and state authorities. Such committees may also be formed at zonal levels, even at district levels, wherever possible.
There should be a mechanism to refer the issue to GST Council through state-level committees if there is disagreement among members of the committee.
If these steps are taken and implemented in proper spirit, interest of all stakeholders – i.e. taxable persons, central government and state governments – will be protected. Source – http://profit.ndtv.co [28-12-2016]