Section 159 of the Central Goods and Services Tax (CGST) Act, 2017 provides for the power of the Commissioner to extend the time limit for any return or application for refund. This section also allows the Commissioner to condone the delay in filing the returns or the refund application, subject to certain conditions.
However, the language of Section 159 is vague and does not provide clear guidelines or objective criteria for the exercise of the power by the Commissioner. This vagueness and lack of clarity can lead to arbitrary exercise of power, which can have a significant impact on corporate governance.
The arbitrary exercise of power by the Commissioner under Section 159 can lead to a situation where the returns or the refund applications of certain taxpayers are accepted even if they are filed after the due date, while the returns or the refund applications of other taxpayers are rejected, even if they are filed within the due date.
This can create a sense of unfairness and injustice among taxpayers and can impact their confidence in the tax system. It can also lead to a situation where certain taxpayers are given preferential treatment by the tax authorities, which can have an adverse impact on corporate governance.
The arbitrary exercise of power under Section 159 can also lead to a situation where the tax authorities can use it as a tool for harassment of taxpayers. In such a situation, the tax authorities can demand arbitrary and unreasonable conditions for the acceptance of the returns or the refund applications, which can lead to delays and unnecessary litigation.
To avoid the arbitrary exercise of power by the Commissioner under Section 159, it is important to provide clear guidelines and objective criteria for the exercise of power. The guidelines and criteria should be transparent and should be made available to the taxpayers. This can help in ensuring fairness and justice in the tax system and can promote good corporate governance.
The vague language of Section 159 of the CGST Act, 2017 is a cause for concern for taxpayers as it leaves room for arbitrary exercise of power by the Commissioner. This can lead to a situation where taxpayers are treated unfairly and can negatively impact their confidence in the tax system.
The arbitrary exercise of power can occur in situations where the Commissioner accepts the returns or the refund applications of certain taxpayers even if they are filed after the due date, while rejecting those of other taxpayers who filed their returns or refund applications within the due date. This can create a sense of unfairness and injustice among taxpayers and can have an adverse impact on corporate governance.
Moreover, the arbitrary exercise of power can also lead to the misuse of Section 159 as a tool for harassment of taxpayers. The tax authorities can demand arbitrary and unreasonable conditions for the acceptance of the returns or the refund applications, which can lead to delays and unnecessary litigation.
To prevent the arbitrary exercise of power by the Commissioner, it is crucial to provide clear guidelines and objective criteria for the exercise of power. The guidelines and criteria should be transparent and should be made available to taxpayers. This can help ensure fairness and justice in the tax system and promote good corporate governance.
In addition, it is also essential to provide a robust mechanism for redressal in case of any arbitrary action by the Commissioner. This can help in safeguarding the interests of the taxpayers and can help in promoting trust and confidence in the tax system.
Here are some frequently asked questions (FAQs) about the arbitrariness in Section 159 of the CGST Act, 2017 and its impact on corporate governance:
A: The concern with Section 159 is that it gives the government broad powers to remove or suspend any officer without providing clear guidelines or criteria for such action. This can lead to arbitrary exercise of power and lack of accountability.
A: Corporate governance is based on principles of transparency, accountability and fairness. If the government can remove or suspend officers arbitrarily, it can undermine these principles and erode investor confidence in the economy.
A: Yes, foreign investors may be deterred from investing in India if they perceive that the government has arbitrary powers to remove or suspend officers without clear guidelines or criteria. This can affect the overall investment climate and economic growth.
A: One way to address this concern is to provide clear guidelines and criteria for the exercise of power under Section 159. This can ensure that the power is used only in cases of corruption, misconduct or violation of service rules, and not for any other reason. Additionally, an independent oversight mechanism can be put in place to review the exercise of power and ensure that it is not arbitrary.
A: Yes, there have been legal challenges to Section 159 on the grounds that it is arbitrary and violates the principles of natural justice. However, the provision has not been struck down by the courts yet.
A: The government can address this concern by providing clear guidelines and criteria for the exercise of power under Section 159, and by putting in place an independent oversight mechanism to review the exercise of power. Additionally, the provision can be amended to ensure that it is not used arbitrarily and that officers are given a fair hearing before any action is taken against them.
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