GST Council Meeting: Monetary Brackets For Appeals Draws Experts' Caution

The monetary brackets for appeals under the Goods and Service Tax Council regime has drawn caution from experts.

In its 53rd meeting chaired by Union Finance Minister Niramala Sitharaman, the GST Council recommended monetary limit for Rs 20 lakh for GST Appellate Tribunal, Rs 1 crore for High Court and Rs 2 crore for Supreme Court for filing of appeals by the tax department.

Though the monetary brackets may bring clarity in the monetary aspect, it may lead to some confusion in the aspect of policy and relief.

"The GST Council has suggested monetary limits for each level of appeal. The caveat is if there is a policy matter involved the government would still have right to appeal even if the amount is smaller than limit. If somebody is granted relief over classification issue, it can be treated as policy issue," Subhash Chandra Garg, former finance secretary, told NDTV Profit.

“The defined monetary limits to appeals on GST cases is a good start,” said Rajat Bose, partner at law firm Shardul Amarchand Mangaldas.

"A lot of litigation will come once GSTAT is set up. This move is good where government can limit litigations in the coming years. But revenue secretary saying the limit does not apply in policy matters, this needs to be looked at," he said.

While other experts also caution regarding the policies and reforms that have not yet been discussed. The monetary backets in place have not addressed policy-based changes. The GST Council decisions today have covered things like rate changes that are more individual taxpayer concern based.

"The waivers on penalties and interest on cases till FY20 clearly shows the intent is to resolve disputes. The key reforms were missing but it was not expected this time. We have to check the fine-print of the Council meeting," said Saurabh Agarwal, tax partner at EY India.

"The Council focused on easing the life of taxpayers by reducing burden of penalties and interest and some rationalisation on hostel rent taxation. Policy issues were not taken but matters dealing with basic taxpayer concerns were taken," Garg said.

The tax rate changes have also not addressed any reduction in the rates except the exemption of Railway Services and hostel accommodations.

Legal experts see the exemption that has been made on hostel accommodation outside educational institutions as big move for students from rural areas.  

“Up to Rs 20,000 per person per month will be a big concession, keeping in mind the interest of students coming from rural areas,” said Ved Jain, managing partner at VJA Legal.

The changes made have been spread across goods and services that individuals in the country avail. Despite the change in rate, rationalisation is still years away according to Rajat Bose, partner at law firm Shardul Amarchand Mangaldas.

"The problem behind GST rate rationalisation is the math around it. It’s a massive exercise on so many products and services. There are new ministers in the GST Council, so perspectives change. I think we are nowhere near to rate rationalisation. It is a work in progress, but it is years away," said Bose.