GST is helping Big Companies But Consumers Failed.

A host of problems have plagued the introduction of GST. Some of the key issues are: a) Despite the sharp reduction in the incidence of tax burden under the GST system, the Maximum Retail Prices (MRP) was not reduced but for a few commodities. The tax reduction contributed only to windfall profits for businesses and merchants at the expense of customers. The anti-profit clause (section 171 of the Act on CGST, 2017) has not been implemented in conjunction with GST, leaving the consumer who was used without a statutory forum by certain traders to express a complaint.   The state governments submitted representations to the Centre, but no successful action could be taken. The general perception was of a higher tax because the GST rates on the invoices were always higher than the previous VAT rates.

Table 5.1: GST collection during August 2017-May 2018 (Rs crore)

• Month	GST Collection
  August 2017	93, 590
  September 2017	92, 029
  October 2017	95,132
  November 2017	85,931
  December 2017	83,716
  January 2018	88,929
  February 2018	88,047
  March 2018	89,264
  April 2018	1,03,457
  May 2018	94,016

• Source: Press Information Bureau, Government of India.

The IGST Act of 2017 (section 18) stipulates that States will only earn their SGST portion if a supplier of interstate trade pays the sales tax, returns of file and claims of input tax credit. In other words, IGST (which is CGST + SGST) charged in intergovernmental trade continues to be with the Center which serves as a clearing-house for States that provide goods and services and then only subsequently trickles the States. That adds to the fact that the States continue with IGST for a significant period, causing liquidity problems for the States and requiring them to borrow money and pay interest while their dues are available as free interest and means. IGST Act 2017 includes an amendment to provide for the automatic redistribution of the share of States without delay.

The GSTN's work and the poor performance of the IT system were a major disappointment. For the year as a whole, tax collection was based on the taxpayers ' summary statement (GSTR 3B) from which the veracity of the input credit statements can not be checked, which is generally considered unreasonable. The GST Council has yet to decide on the final tax return format. This not only led to substantial income loss but also the pillage of export refunds.

The delay in execution of the e-Way bill and the immediate abolition of checkpoints have resulted in substantial tax avoidance, particularly for intergovernmental trading where no effective mechanism exists to control the flow of goods between the abolition of checkpoints and the e-Way bill system. The volatile fluctuations in GST rates in the first year of its service show this (table 5.1).

In the initial year of implementation, the GST rates have not been stabilized and changes have been frequent, creating expectations of future developments and hindering the implementation of a sustainable tax system. As mentioned, GST return filing has proven to be cumbersome for small traders and simplification measures have been taken. Some significant rules, along with GST, have not been enforced and are only now in effect. This led to a situation in which afterthought prevailed over careful planning prior to implementation.

The effectiveness of GST has reduced these statutory and implementation issues and also eroded the constitutional rights of States. If the current cost of loss of the taxation rights of the States originally envisaged under the Constitution outweighs the expected earnings and expanded investment potential in the medium term, the objectives of this tax reform would become unsustainable. In addition, the GST system and implementation mechanism would be requested.