GST loopholes highlighted by Central excise officials

By | October 10, 2016

The senior officials of the central excise department have prepared a report on some major loopholes in the Goods and Services Tax (GST) as sought by the Union government to fine tune and improve the law. The report would be submitted to the concerned ministry in a week.

“We have raised some key points and specific areas of concerns which need to be looked into,” said a senior tax official of the central excise department.

In its draft report, tax officials have expressed apprehension on the definition of ‘supply’ which is believed to be extremely wide and intends to cover almost all kind of transactions. “In the current draft, there is no clarity on such transactions and about its administration which could lead to a dispute and lot of litigations,” said the official cited above.

He further explained that Section 3 of model GST Law (model law) specifies the meaning and scope of term ‘supply’ which includes all forms of supply of goods/services such as sale, transfer, barter, exchange, license, rental, lease etc. This means anything an assessee changes whether it’s ownership, custody of any kind of goods and services would attract GST.

Another troubling provision relates to ‘valuation’ of taxablesupply of goods and services, which may again create room for confusion and disputes, said another tax official. Under the GST regime, specific additions have been made to the price charged. Such additions include value of goods/services supplied free or at concessional rates by the recipient to the supplier. For instance, if a doctor or a lawyer offers services free of cost or a company offers a ‘buy one-get one free’ kind schemes would be under the tax net.

If the values of these supplies are to be included in the taxable supplies by the service provider, an amount that is already taxed would once again attract taxation, added official.

The report also highlighted the lacuna on the part of ‘input tax credit’, another important area which needs to be revisited, noted the official. The GST law provides for credit of GST paid on all the inputs, except on some items. The exceptions or ineligible credit criteria is quite subjective in nature. For example, services in relation to food/drink, outdoor catering and membership of clubs are restricted when used mainly for personal use of employees. The officials fears that if the loophole remains it could lead to massive tax evasion.

According to tax experts, the administration of GST has to be sorted out, and if it is not resolved, it may significantly dent the ease of doing business. “It is giving dual responsibility to both central and state as far as adjudication and assessment are concerned. The GST Council was unable to reach a consensus on who would administer and who would assess the transactions as it is going to be dual control. Now if each of the authorities comes up with its own assessment then it is going to be lots of harassment on the assessee,” said Prajakta Menezes, principal associate (indirect tax), Khaitan & Co. source

Free Education Guide on Goods & Service Tax (GST)


Topic -GST



Model GST Law

Model GST Law


GST Overview

Goods and Services Tax (GST): An Overview

Integrated Goods & Service Tax (IGST) Act Overview

Meaning and Scope of Supply

Time of Supply

Place of Supply of Goods and Service under GST

Valuation in GST

Levy of GST & Exemption from Tax

Job Work under Goods & Service Tax (GST)

Electronic Commerce under Goods & Service Tax (GST)


Transition to GST

Transitional Provisions in Goods & Service Tax (GST)



GST Registration FAQ’s

GST Registration Process -Video

GST -Draft Registration Rules

GST -Draft Registration Formats



GST Draft Invoice Rules released by CBEC

GST Draft Invoice formats Released by CBEC


Input Tax Credit

Input Tax Credit under Goods & Service Tax (GST)

Concept of Input Service Distributor in Goods & Service Tax (GST)



GST Payment of Tax

GST Draft Payment Rules Released by CBEC

GST Draft Payment formats Released by CBEC



Refund under GST

Draft GST Refund Forms released by CBEC

Draft GST Refund Rules released by Govt



Returns Process and matching of Input Tax Credit under GST

Draft GST Return Rules Released by Govt

Draft GST Return Formats released by Govt


Assessment and Audit

Assessment and Audit under GST


Inspection, Search, Seizure and Arrest

Inspection, Search, Seizure and Arrest under GST


Offences, Penalty, Prosecution & Compounding

Offences, Penalty, Prosecution & Compounding in GST


Demands and Recovery

Demands and Recovery under GST


Appeals and Review

Appeals, Review and Revision in GST


Advance Ruling

Advance Ruling in Goods and Service Tax (GST)


Settlement Commission

Settlement Commission in Goods and Service Tax (GST)


GST Portal

Frontend Business Process on GST Portal

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