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120 GOODS & SERVICES TAX - MAGAZINE [Vol. 1 � In case of supplies of services, e.g., consulting services, sport and entertainment events. A foreign non-resident trader is required to appoint a Japanese resident tax agent. The agent is responsible for all communications between the company and the Japanese tax authorities. Once a company becomes a taxable business, it is required to file periodic CT returns. The frequency of these depends on the trader’s turnover. The tax filing lists all of the company’s transactions related to the supply of the relevant goods or services. Any CT due should be paid simultaneously with the filing of the tax return. The tax authorities will require payments of CT liabilities to be made in Japan at an authorized bank or post office. In the case of a tax credit (where the CT incurred by the company exceeds the CT charged on its sales in the reporting period), documentary proof related to the transactions is often requested by the tax office. Summing up 3. The foregoing account regarding the functioning of GST in six countries shows that the conceptual framework of the tax is the same as is being thought of in India. It would facilitate a streamlined law for India, if the New Zealand’s practice of studying the other countries laws is adopted and based on their experience, a robust well drafted GST legislation is introduced leaving little room for ambiguities and misinterpretations which generate litigation. However, multiple legislations, one for the Central Government and others for the States seems to have become fate accompli for India in view of the recommendations of the Empowered Group of State Finance Ministers (EG) and Task Force for GST of the Finance Commission. Even Finance Minister in his budget speech for the year 2009-10, in para 85 has said :— “. . . The broad contour of the GST model is that it will be a dual GST comprising of the Central GST and the State GST. The Centre and the States will each legislate, levy and administer the Central GST and State GST respectively. . . .” Duality in GST is bound to bring complexities in designing such a tax and in its implementation. Most countries have unified GST regime. But some countries like Brazil and Canada follow the dual system of taxation. Because of the system being dual, Canada had to face many problems in implementing such a system. India need to benefit from the Canadian experience so that similar problems may not crop up here. Even after the report of the EG, there is no clarity in certain matters. For example, it is found that it is a common practice to have single composite contracts for various works, jobs, services, etc., such as in case of engineering projects, construction contracts, EPC projects, installation and erection projects, software and information technology, etc. The issue that can GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 30
2010] GST - THE SCENARIO IN SOME OTHER COUNTRIES 121 arise in GST regime is whether such works contracts be treated as goods or services or as a special class of goods or services arrangements for the purpose of levy of GST as these comprise of both the elements of goods and services. The practice followed in other countries can be studied to find solution for such a problem. Due to the dual structure of the GST, the assessees will be required to maintain separate accounts for Central GST and State GST. This could be cumbersome for the taxpayers. The EG’s report leaves many issues unresolved. For example, there is no mention/clarity in the report in regard to :— � What constitutional amendments would be needed to usher in dual regime of GST. � What would be the rate of tax for the CGST and SGST and for services. � The Taskforce of the Finance Commission has suggested 5 per cent and 7 per cent rates for the Centre and State. Media reports show that these could be 14 per cent and 16 per cent, respectively. Obviously, such rates would be too high. � The EG has yet to take a decision whether purchase tax levied by some States would be subsumed in SGST. � Decision have to be taken concerning administrative set up and assessment procedures for two categories of taxes. � Work for CGST and SGST integrated GST model has yet to start. Considering the fact that many issues concerning GST are yet to be resolved, the proposed date for its commencement i.e., April 1, 2010 seems to be impossible. There should be no hurry to implement this tax without full preparations. Hence, the Government should fix April 1, 2011 as the date for introducing the GST regime in the country and start working from now to achieve this target. There seems to be no need for a hurried approach. 9-GST GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 31
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