GST is an unsolved puzzle to do business in India.

In the annals of 2017, when the advent of GST dawned upon the business milieu, optimism pervaded. It was widely believed that the tapestry of commerce in our land would be woven with the seamless threads of simplified indirect tax compliance. Alas, the reality unfolded in stark contrast. The enactment and the system proved neither facile nor smooth. A colossal ordeal awaited businesses during the transition.

Since that pivotal year, the GST council has convened a staggering 52 meetings. Each meeting has birthed a multitude of CBIC notifications, orders, circulars, and instructions, their cumulative volume now numbering in the thousands. The government's expectation is unequivocal - enterprises, regardless of their scale, must vigilantly stay abreast of these alterations and proficiently integrate them into their operations.

Enter the COVID era, an unforeseen hiatus halting business operations for over two years. Despite the challenging circumstances, GST compliances were exempt from any reprieve. Monthly and annual returns were obligatory, and the meticulous matching of 2A with 3B to assert input credit persisted.

Following these tribulations, the GST department has embarked on yet another endeavor, casting a shadow over businesses by issuing show cause notices with substantial tax demands for the period spanning 2017 to 2019. Remarkably, these compliance activities were conducted amidst the throes of the pandemic. The common perception upon hearing of such tax demands is one of assumed wrongdoing, yet the reality is far from it. A multitude of tax demands meet their demise at higher appellate forums, as their foundational premises are often based on fictional constructs.

Consider, for instance, a scenario where a tax demand is conceived by positing that overseas branches do not directly serve their international clientele. Instead, the services are purportedly rendered first by the branch to the Indian headquarters, which subsequently provides them to overseas customers. This narrative places the Indian headquarters in a dual predicament - firstly, for not accurately reporting export turnover in their GST returns, and secondly, for neglecting to remit GST under reverse charge for the import of services.

Had business been apprised beforehand, with lucid communication mandating the treatment of overseas branch transactions as imports of services to the Indian headquarters, this issue might have been averted. Input credit would be available for GST paid under reverse charge, and no GST would be levied on exports. The absence of such communication places businesses in a quandary, facing substantial tax demands today for assumptions not anticipated at the outset. For these companies, it feels akin to a penalty for merely conducting business in India.

It is incumbent upon the government to intervene and issue imperative guidelines, providing clarity for transactions henceforth. A stringent check is warranted to ensure that businesses are not unduly harassed for transactions that, from the government's perspective, have a neutral impact on tax revenue.