New Delhi, January 29, 2017

IRS officers to observe 'black day' due to Centre-state compromise on GST turf

A body representing Indian Revenue Service (IRS) officers decided to stick to its earlier stand to observe Monday as a ‘black day’.

This is against the Goods and Services Tax (GST) Council's decision to divide administrative turf between the Centre and states, despite an assurance by Finance Minister Arun Jaitley that the new indirect tax regime would create ample job opportunities.

The officers would wear black bands on Monday, the IRS Association (Customs and Central Excise) said, in reply to whether they were relenting after the minister’s assurance.

Former (Central Board of Excise and Customs) CBEC chairman Sumit Dutt Majumder echoed the officers’ stand, of feeling let down by the Centre's compromise with states for the proposed GST regime.

Observers say that as the Council had worked out a broad political compromise, after extensive discussion, it should not be reversed. However, a lot of detailing is still required and could be so done as to assure the central officials that they would be engaged appropriately under the GST regime.

The GST Council had decided states would have the power to assess and administer 90 per cent of payers of the new tax, with annual turnover of less than Rs 1.5 crore. Over this threshold, states and the Centre would have administrative control over assessees in a ratio of 50:50.


Majumder said the concerns were mostly related to services tax, on which central officials have expertise over 20 years and their state counterparts were "novices". "GST is a joint venture between Centre and states. No one should feel let down. But, central officials have expertise of over 20 years on services and now will control only 10 per cent of assessees up to Rs 1.5 crore of turnover," he complained.

Unlike goods, you need deft handling in taxing of services, he said, particularly when there is inter-state sale and purchase.  "You need expertise to determine the place of supply in intangibles."

There will be fights between states whenever services move inter-state every now and then under GST, he added. And, quoted data from the directorate general of commercial intelligence that the highest incidence of tax evasion was in services below Rs 1.5 crore.

‘Soothe them’

However, M S Mani of consultancy Deloitte Haskins & Sells says the apprehensions of central officials seem to be exaggerated. GST would increase the powers of both Centre and states , he said.

Pratik Jain of consultancy said the same thing; various types of new work would emerge under GST where central tax officials could be employed.

"Both, central and state officials, are going to become more powerful. I don't think anyone is going to become less powerful," Mani said.

The Council had decided the broad issue of administrative turf. It should now work out specifics about who is going to do what and how will that be divided, he added.

And, it should communicate more with both the Centre and state officials, reassuring them. "Nobody's role is going to be undermined. If GST is successful, it is going to significantly increase revenues, scope of work, role and powers of both central and state officials. However, the roles are going to be different from the present roles," Mani said.

Jain said the central officials’ worry was on how well they’d be engaged. Of the 10 per cent of assessees up to Rs 1.5 crore of turnover (and the 50 per cent above that), it isunderstood that only up to five per cent could be taken up for scrutiny, he said.  "So, their concerns are over how the officials will be engaged," he said.

“Since the decision has been taken, a solution has to be found out within that,” Jain said.

Adding: "A huge data will be generated under the GST regime. Somebody has to analyse it and make use of it. There would be enforcement issues, where lots of officials would be needed. Also, there would be an anti-profiteering body under the GST regime, where officials could be employed."


The IRS Association had on January 25 decided to not celebrate Customs Day on January 27 and observe January 30 as a ‘black day’. They had also said that giving powers to states for taxing economic activities within 12 nautical miles of the coast was a national security issue.

States are only getting power to levy and collect taxes, not other controls, is Jain’s comment on this.

CBEC Chairman Najib Shah had on Friday raised these issues on the same dais shared by the finance minister. Jaitley had then said GST would create ample opportunities for all staffers.

[The Business Stadnard]