Ahead of the Gujarat Assembly Election which is literally knocking at the door, the unhappiness of the state's trading community because of the much-touted GST has started giving top echelons of the BJP including Prime Minister Narendra Modi some nervous moments.
The tension was palpable as Modi had chosen to switch over to Gujarati from Hindi while trying to allay fears regarding GST among the business community while addressing a huge gathering at Gandhinagar on Monday. However, this attempt to connect closely with the community did not quite have the desired impact as traders found little solace in his assurances. Already struggling to come out of the impact of sudden demonetisation last year, GST has only ended up making things complex for the state's trading community instead of simplifying them.
Firstpost touched base with tax experts and traders to find out if the prime minister’s hard sell at a large party workers conclave on GST and demonetisation did make any difference to their already simmering anger.
Almost washing his hands of the issue, Modi had said that the GST was a collective decision of all the states and all political parties, with a stress on the words "including the Congress party", and that the Prime Minister's Office was only a 30th part of the entire process. Simultaneously, he also said he reviewed the new taxation regime after 90 days as promised and is getting his suggestions to the GST Council implemented.
"To say that the prime minister has a minimal role in the GST regime is factually not correct. The GST Council works on a vetted and voted mechanism and is part of the Constitution. The Centre has the veto power to say no," Monish Bhalla, a taxation expert, said. Bhalla has written three books, GST: The Gamechanger, released in 2015, which speaks of the issues facing the business class; GST Unplugged, which also came before the tax regime came into being, and GST Decoded.
Asked about the Centre or the PMO having only a 30th fraction of the GST Council, he said this again was not correct. "It is not one-each, the Centre has the maximum weight of 33 percent while the rest 67 percent is divided among the states, including those ruled by the BJP. Yes, the PMO can’t bulldoze a yes but it can certainly veto a no," Bhalla told Firstpost.
He, however, said, "It is a fact that correctives are coming at the behest of the prime minister, and whatever changes that have been brought about to simplify matters are because of the Prime Minister’s Office." Bhalla, simultaneously, added that "It is another matter if that is adequate."
Gujarat Sales Tax Bar Association president Vaaris Isani summed up on behalf of the entire trading community the biggest irritant: "The Goods and Services Tax Network (GSTN) is a total failure and a key reason for widespread anger."
When told that under Modi's guidance, correctives had been initiated following a review by the PMO, Isani said, "The changes have nothing to do with the GSTN and the problems continue."
He said, on the one hand, there was the cumbersome process of filing returns thrice a month and on the other the network to enable this was a disaster. "When you go to file returns, you have to spend three to four hours to complete it," Isani said, adding that this was "tiring".
Isani was furious when pointed out that the PMO, according to Modi, had a minimal role and the GST was a collective decision of all states and political parties.
"Who is above the GST Council?" he asked. "It is headed by the Union finance minister, who in effect, comes under the prime minister. The Council works under the guidance of the PMO. The prime minister is the superpower, how can he say this?" Isani asked.
Bharat Barai, who is an auto parts trader in Raj kit and member of Saurashtra Chambers of Commerce and Industry's GST Committee, is unhappy with the way this landmark step on taxation was implemented.
"The way small traders are being treated, as if all of them are thieves. Filing returns so many times, should we do our business or this paperwork? The Prime Minister says he has nothing to do with it, let us agree for a moment, but at least he has to agree now that there are problems. What was the need to push this in a hurry? This holds good even for demonetisation," said Barai.
"You can understand how much fed up everyone is with the fact that the Rajkot Commercial Bar Association has released an advertisement in today's paper to express their grievances. Not a press release but an advertisement to ensure nothing is edited out."
Arun Mashru, chairman of taxation committee of the Saurashtra Chamber of Commerce and Industry, and a sales tax consultant spoke about how the trading class is caught in the double whammy of demonetisation and GST.
"Demonetisation and GST have completely broken the back of small and medium traders as well as small-scale and medium scale industrial units in the Saurashtra region, like everywhere else. This is a fact, irrespective of whatever the prime minister says," he said.
When told that Modi called demonetisation a major initiative and about the limited role of PMO in GST, Mashru said, "He is saying all that because of the elections but that will not help, the people are angry." Mashru said, "The trading class was the biggest supporter of the BJP right from the eighties in Gujarat, but may not be so now unless they do something."
The famous Morbi tiles and the brass parts industry of Jamnagar, besides Rajkot's diesel engine and submersible centrifugal pumps industry, are in the doldrums, according to Mashru.
He said the changes coming in the tax regime after the PMO’s three-month review would not help the small traders. "Who listens to the voice of the small businessmen, only those who can influence decisions may be benefitting," he said.
"Now, there is a huge cottage industry of namkeens in Saurashtra where individuals or their families along with a couple of workers run the show. The GST on namkeens is 12 percent, while the tax used to be five percent earlier. Cattle-feed is five percent while earlier there was no tax," Mashru pointed out.
He said with a typical Saurashtra satire, "Four thousand intelligent people comprising bureaucrats, economists and politicians have brought GST. The small businessmen don’t have the intelligence to make sense of this. It is another matter that none of these guys has ever done business."
Mashru said besides the cumbersome of GSTN, the tax rates were not affordable to a large section of businesses.
"Aren’t BJP-ruled states part of the GST Council? How many of them, some 20-22?" asked Manoj Jain, president of Federation of Surat Textiles Traders Association (FOSTA). FOSTA has 65,000 traders under its ambit and the association created a huge uproar against GST. Jain was responding to the prime minister’s statement that he had little role in GST regime.
Jain agreed that some correctives have come after the 90-day review but they are too little too late. "Union minister Mansukh Mandavia was sent to discuss with us our issues. We had given a list of 12 demands and had also met Arun Jaitley and Piyush Goyal. Nothing much has happened for our textile industry," he said.
Jain conceded that there was some relaxation in the time period for filing of tax returns, but that does not help much. "The filing of returns has been made quarterly but the limit for turnover of Rs 1.5 crore," he said.
Updated Date: Nov 23, 2017 18:51 PM