Satyagraha vs GST




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Vice Presidents: P. Parwani, L. L. Singhvi (Central); Anurag Chaudhary, Ravi Joshi (North); N. Raman, G. Srinath (South); B. K. Sinha, Ashwini Majhi (East); Rajesh Chaher, J. D. Patil (West) Joint Secretaries: Anand Kishore, J. S. Iyer (Central); R. K. Solanki, Ashish Vajpeyi (North); M. Nagaraju, Ajithkumar P. C. (South); P. K. Sen, S. Bhattachariya (East); Jasram Meena, M. K. Mishra (West)Office Secretary: C. S. Sharma Treasurer: N. R. Manda Liaison Secretary: A. S. Kundu Coordinator on Telangana: P. Shravan Kumar

(Recognised by G.O.I., Min. of Fin. vide letter F.No. B. 12017/10/2006-Ad.IV A Dt.21.01.08)

Ref. No. 115/A/16                                                                          Dt. 06.07.16


Sh. Arun Jaitley,

The Hon’ble Finance Minister,

Govt. of India, New Delhi.

Sub: Revival of Satyagraha by Central Excise Superintendents.


Kindly refer to the Ref. No. 106/A/16 Dt. 20.06.16 of the Association.

  1. It is submitted with due regards that the state government employees are being impressed to be given the units upto the turnover of Rs. 1.5 crore under their exclusive control alongwith audit & enforcement functions on implementation of the GST. This is being done under the presumption that there is no work to be looked after by the Central Excise officers because of these units being fallen under the category of SSI. No need to say that this will result into “only less than 10% of work” left with CBEC affecting the already worst career prospects of its employees including group ‘A’ to group ‘C’ in general and group ‘B’ Central Excise executive officers in particular in the worst manner.
  2. Under Central Excise tax administration, small tax payers are understood to be fallen under the category of the turnover of “upto Rs. 1.5 crore”. Whereas under Service Tax, this turnover is understood to be “upto Rs. 10 lac”. Thus, a bulk of the small and marginal tax payers will be covered under the category of the turnover “upto Rs. 1.5 crore”.
  3. Central Excise tax administration is already dealing with both small and large tax payers both for goods and services. In goods, more than 40% of SSI units don’t avail the benefit of exemption for the purpose of availing CENVAT credit facility and the work relating to tax administration starts from Rs. 1/- of turnover in such units. Like it, work of tax administration also starts from Rs. 1/- itself in the units doing job work for branded goods. Thus, presumption that there is no work relating to tax administration in the units upto the turnover of Rs. 1.5 crore is totally wrong. There is no bar also that only 40% SSI units would avail CENVAT credit facility. 100% SSI units may also avail this facility on the “same time”. Further, Central Excise tax administration is also dealing with the first and second stage dealers, which counters the argument that small dealers are more habitual of dealing with the state administration.
  4. Central Excise tax administration is spread throughout the country administering the Service Tax and Central Excise law since very beginning. Therefore, the tax administration model under GST without any control of central tax administration over a vast proportion of assessees is fraught with several administrative and fiscal implications. The demand of states must be seen and understood in the light of the following implications-
  5. i) Central indirect tax administration shall have no control over more than 90% of tax payers losing vast proportion of its tax base.
  6. ii) The assessees with the turnover upto Rs. 1.5 crore hold the maximum potential in terms of growth and tax buoyancy due to significant under-reporting. Actually, this is the category of tax assessees having huge possibility of widening of tax base resulting into huge tax administration work.

iii) The tax administration of large assessees can’t be held immune from the administration of small assessees because of convergence of business, large and small being the part of same supply chain.

  1. iv) Implications of administrative decisions on one category shall have precedent value and therefore, determine many judicial pronouncements in the case of other.
  1. The handing-over of the units upto the turnover of Rs. 1.5 crore to the states shall crop up the following issues-
  2. i) It shall lead to mushrooming of a large number of proprietorship concerns by the assessees in order to remain below the threshold turnover or under-report their turnover to escape the clutches of dual tax administration, thereby incentivizing the dishonest tax assessees.
  3. ii) The fate of the assessees at the cusp of the threshold limit shall always hang in uncertainty because of the turnover being a dynamic variable. The turnover may increase or decrease every year leading to a scenario where assessees continue to shuffle between the two tax administrations leading to uncertainty and compliance issues.

iii) The objective of bringing uniformity in law and procedure as envisaged under GST will be lost because of inter-state variations on interpretation of legal provisions and adoption of different practices.

  1. iv) The states will not be able to verify the credit availed by the assessees because of not having pan India jurisdiction. There will also be no verification by Central tax administration for the credit passed on by the small assessees to large assessees for payment of CGST and IGST.
  2. It is evident from the above submissions that the reasoning advanced by the states is flawed and will not only defeat the very purpose of GST but will also lead to a scenario whereby the fiscal destiny of the centre would be entirely in the hands of the states. No need to say that it would also spoil totally the already worst career prospects of the group ‘B’ executive officers working under CBEC. As far as the share of tax is concerned, it may be distributed in the manner convenient to the states but handing-over of the units upto the turnover of Rs. 1.5 crore would not only place the central tax administration in inconvenient position but would also jeopardise the career prospects of all executive officers under CBEC.
  3. In view of the above, it is requested that the states may kindly not be handed-over any unit under the GST regime or they may be handed-over the units only upto the turnover of Rs. 10 lac. Instead, the manpower and tax-net of central indirect tax administration may kindly be increased at every level sufficiently. Accordingly, one more demand may kindly be considered duly regarding the Satyahraha programme being observed by Central Excise Superintendents as below-
  4. Handing-over of no unit or handing-over of the units only upto the turnover of Rs. 10 lac to the states under GST.


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