GST Reforms: Are We Treating The Symptoms Or The Disease?

The exercise of power to arrest has long raised concerns about the balance between revenue protection and individual liberty. The recommendation of the 57th GST Council Meeting to omit Section 69 of the CGST Act is, therefore, a welcome development.

Yet, there is a contradiction. While the Council has sought to moderate the consequences of alleged tax violations, it has deferred addressing some of their underlying causes. The question of input tax credit eligibility, particularly where a genuine recipient is penalised for the supplier's default, has been referred to a committee for examination. While this is a welcome acknowledgement of the problem, the issue has troubled taxpayers for years and deserved a more decisive response. Should the priority not be to prevent unjust demands in the first place, rather than merely reducing their consequences?

The Council has otherwise recommended several procedural reforms, including simplification of registration and cancellation, automation of refunds, improvements in return reconciliation, rationalisation of penalties and safeguards against indiscriminate interception of goods. These measures address genuine difficulties and deserve appreciation.

However, viewed collectively, they raise a larger question. Are we witnessing a coherent programme of GST reform, or merely an accumulation o