Centre begins review of legal issues in GST

The center has begun a comprehensive review of the goods and services tax (GST) legislation, as well as various rules related to taxation, to provide clarity on issues that have arisen since it was implemented in July 2017. The review aims to clear the air. on issues such as whether services provided by the back offices of multinational companies in India qualify as exports, are valued at zero and therefore do not face taxes .

Similarly, there is confusion about whether the discount, as FMCG and consumer goods companies reimburse their dealers for selling products at a special discount, are subject to GST. The review is expected to simplify the law and reduce disputes.


These issues, along with many others, will then be brought to the GST Council official committee for discussion, a government official said. Then, based on the responses, a detailed proposal will be presented to the board for a final decision. “The idea is to remove any legal issue to make the regime simpler, as intended,” the official said.

To clarify

The official added that central and state governments have received many representatives from the industry on these issues.

States and field organizations have also flagged issues that need clarification — either through changing the rules or the law itself. “We feel that some of the issues that have been flagged should be examined and that clarifications or changes to the law are needed to address them to reduce litigation,” the official said.

The government has sought to ease direct and indirect tax litigation, but GST has seen an increase in disputes at many forums. Conflicting views on a number of issues, including from the Pre-Approval Authority, have also added to the conundrum.

For example, more than 200 companies are involved in disputes over the definition of an “intermediate” service. This is even though the back office services of multinationals are considered exports and not taxed on them in the pre-GST period. Similarly, there are many disputes over GST on returns provided by FMCG companies to dealers for selling products at a particular price. | Centre begins review of legal issues in GST


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