From Markets to Maharaja: Indian Economy Finally Takes Off After Pandemic Turbulence
After 18 months of pandemic-caused turbulence, the Indian economy is showing signs of bouncing back ahead of the festive season, the revival reflecting in upbeat projections by global financial institutions, increased factory output, a bullish stock market, blockbuster IPOs, decline in unemployment rate, increasing foreign investment and easing inflation.
The Finance Ministry’s Monthly Economic Review credits the revival to strategic reforms and the pace of Covid-19 vaccination drive in the country. “India is well-placed on the path to swift recovery with growth impulses visibly transmitted to all sectors of the economy… Strategic reforms undertaken so far along with new milestones in vaccination drive have enabled the economy to navigate the ravaging waves of the Covid-19 pandemic,” it said.
As per global projections, India will retain the tag of the fastest-growing economy in 2022.
Recent GST Revenue Collection Data Indicates Uptick In Economic Activity
Gross GST collections came in at Rs 1,12,020 crore in August, 29.6 per cent higher than Rs 86,449 crore collected in the same period last year. The pickup in economic activity was visible in the improvement in e-way bills — which are mandatory for the inter-state transportation of goods valued over Rs 50,000 — in July. They have remained steady in August as well. In July, e-way bill generation had picked up to 6.41 crore from 5.46 crore in June and 4 crores in May. The e-way bill generation has remained steady at 6.33 crore in August.
Daily average e-way bills stood at around 21.1 lakh, about 2 per cent higher than July.
India has not only faced the Covid-19 crisis with great resilience and fortitude but has also played a major role and “walked the talk” on the global fight against it.
Said rule was inserted by Notification No 75/2019 dt 26/12/2021 which was introduced with the intention to block the ITC of taxpayers where there is reason to believe that it has been fraudulently availed or is ineligible in the circumstances as mentioned in rule. However, it has been noticed that in several cases Revenue has misused the power & have blocked the ITC in credit ledger of taxpayers. Recent RTI application revealed that Rs 6.14 lakhs crores are blocked by using power under rule 86A. Out of this Rs 2.96 lakh crores are more than one year old. Apparently, it looks that revenue has high- handedly blocked such credit of taxpayers without following the due process of law. This high handedness needs to be strongly objected by one & all taxpayers. Recently BHC in case of M/s. Agis Polymers [WP (LODG) no 128 of 2021 dt 12/07/2021, held that blockage of credit cease to have effect after one year as per rule. Further in case of HEC India LLP’s [W.A. No. 2341 of 2021 dt 16/09/2021] Madras HC held that revenue has first to communicate reasons for blocking ITC as per rule 86A. They can’t block the ITC as per their sweet will. For the benefit of readers latest Madras HC decision is reported in current GST Review. Looking to the amount blocked & the decisions given by the courts I am of the firm view that the power to revoke provisions of this rule should be used sparingly & only in those cases where revenue has firm reasons to believe that taxpayer has fraudulently availed or is ineligible to use ITC by following the legal process of law.
Advisory issued by GSTN
An advisory is issued by GSTN on availability of ITC for FY 20-21 dt 17-10-2021. The said advisory is issued taking into consideration provisions of sec 16(4) & its compliance. It is made very clear that ITC for 20-21 will not get auto populated if the supplier files their GSTR 1 after due date of GSTR-3B of September 21, in GSTR-2B of the claimant taxpayer. Why, should taxpayer suffer for the negligence on the part of supplier? This issue has been in discussion since inception of section 16(4) but has come in limelight when the technology is upgraded on portal & such amount is flagged as ‘ITC Not Available’ in 2B. This will give harassment tool in the hands of officers. I am surprised why no writs are filed on this count when innocent taxpayer has to depend upon compliance by their suppliers in spite of holding valid tax invoice. This area needs immediate attention of the GST council & some amicable solution has to be worked out where both taxpayer’s & the revenue’s interest are protected.
I am thankful to CA Rishabh Singhvi, Bengaluru for accepting our invitation & contributing an article on important topic of “GST Input Tax Credit on ‘Capital Assets’”. I am sure, readers will be immensely benefited by the inputs shared by the author. As promised, we could not print article on Schedule III by CA Aditya Kshatriya in earlier issue due to unavoidable circumstances, which is now printed in this issue.
“As the age-old phrase goes, there is always light at the end of the tunnel” but some tunnels just happen to be longer than others. The covid era seem to be a long dark tunnel in the recent history but now we can see rays of light. The festive season has set in & Diwali is approaching fast. Legend has it that lord Krishna slew the demon Narkasur on this day. The demon is symbolic of all the negativity & fear that we are carrying within us due to all the agonising events in our recent past. Diwali symbolically represents the tradition of lighting lamps. We thus dispel all the darkness due to fear around us & make celebration a way of life. Once the dark aspects are destroyed, joy, happiness & light are a natural outpouring from within us.
Wish you all a very happy & joyous Diwali.