ISSUES IN GSTN THAT NEED A REDRESSAL WITH A SPECIAL FOCUS ON EXPORTERS

The objective behind the introduction of the Goods and Services Tax was to eliminate multiple taxes and to ease compliance for taxpayers. In order to achieve this dual objective, it was essential to integrate the Goods and Services Tax law with the robust digital platform. This was a pre-condition for the smooth administration of taxpayers, processing of returns, facilitating quick refunds, etc. For successful integration of GST law with information technology, GSTN (Goods and Services Tax Network) has been entrusted with the responsibility to develop and maintain a common GST portal. GSTN has played a bigger role in reforming the indirect tax system in India by providing a common and shared IT Infrastructure. With GST, several issues were pointed out with the robustness and volume handling capacity of the GST Portal.

With the introduction of GST, the Government has come up with “N” no. of changes, which GSTN has failed to capture them timely. For instance, Government notified single credit/debit note against multiple invoices. However, the validations based on the changes are yet to be incorporated on the GST Portal. Many exporters having a certain degree of domestic transactions would have mis-utilized the input tax credit inviting unnecessary departmental harassment without any fault of tax authorities.

It’s been almost more than two years still the GSTN website breaks down during peak hours leading to issues like data loading and data leakage. Exporters are sitting on a pile of GST refund on account of input tax credit and any small error in tax return filings leads to rejection of tax refunds by GSTN itself, even if such errors originated due to GSTN technical glitches.

GSTR-3B, which is used for reporting supplies and input tax credit for every tax period does not accept negative values. Hence in case, a taxpayer has sales return/ discount represented by credit notes more than outward supplies for the said period, then GSTN restricts the reporting of such credit notes. In many a case, this would result in an excess payment of taxes, which needs to be rolled over to next tax period and would also lead to a mismatch in GSTR-3B and GSTR-1 for both the tax periods. Exporters are issued notices from tax officers, for submission of a reconciliation and detailed explanations for all such differences.

One of the main reasons behind the withholding of tax refunds for the exporter is due to the glitches in the GSTN and errors /mismatches in the returns filed. It has been reported that refund claims are not being processed even if there is a minor clerical error in the filing of any tax returns by taxpayer or filing of shipping bills by shipping lines. Thereby even for a small mistake by shipping line exporter would be penalized, thereby it always advised to doubly check all micro details in a shipping bill. In this connection, it may be noted that the facility of filing of Table 9 in FORM GSTR-1, an amendment table that allows for amendments of invoices/ shipping bills details furnished in FORM GSTR-1 is already available.

In case of a refund of export of services, one of the essential requirements is the receipt of currency in convertible foreign exchange. As per the general practice prevalent in the industry, net payments are received in order to avoid two-way traffic i.e. to avoid formal remittance to the foreign buyer first and thereafter to receive the proceeds of exports. Now, ambiguities have been raised whether the amount of foreign currency not received physically on account of adjustment shall be treated as receipt of income in convertible foreign exchange? The absence of any provision in this regard has resulted in the outright rejection of legally admissible refund claims.

The Government spent billions on building the digital infrastructure for the smooth function of transactional tax in India and the refund module was the most crucial one to build a US$ 125 Billion Exports sector in India. In response, to reduce the difficulty faced by exporters and to reduce the manual intervention, IGST refund module has been designed to have an in-built mechanism to automatically process and grant a refund after validating the shipping bill data available in ICES against the GST return data transmitted by GSTN. Manual intervention would be limited to only exceptional cases where automatic validation becomes impossible due to some technical errors.

Export of goods is checked by Customs authority at the port which is later reflected at ICEGATE, a refund for the same are processed in a swift manner as filings in GST are inter-linked with ICEGATE. However export of services has no physical component, thereby GST law linked it to receipt of money. Till date, there have been no efforts in liking the GTSN with servers of RBI/Banks to ensure auto-check of refunds in case of export of services. Real-time linking of GSTN with RBI would be a win-win situation for exporters and exchequer both.

Discrepancies in GSTN has led to the rise in concerns over the Government's claim of a digital economy. In light of the above discussions and further added issue due to pandemic of covid-19 exporters will suffer a great deal. Working capital will be more of an issue then ever. The world is still figuring out how to deal with the pandemic but it is necessary the government further streamlines this process of refund processing. The GST law provides a detailed mechanism for electronic filing of returns, assessments, appeal and revision, refunds, etc.. GSTN is focusing on all the discrepancies and trying to eliminate them but still it seems that GSTN has a lot of homework pending price of which had to be paid by the entire country especially exporters.