GST divides all goods and services into four brackets which levy 5, 12, 18, or 28 per cent taxes (Representative Image) (Image source: Flickr) Photograph: (Others)
If true, a great deal of pressure may befall India's Judicial service, which was already choking with over 100,000 indirect tax appeals at March end, 2015
The Goods and Services Tax, to come into effect on July 1, is bound to create a burdensome increase in legal proceedings, some of India's top lawyers can foresee, Blooomberg reports.
The GST bill divides all goods and services into four brackets which will varyingly levy either 5, 12, 18, or 28 per cent taxes. It combines more than a dozen taxes levied on various products and facilities in the market, although most staples and fresh vegetables are spared.
Many lawyers believe that this move will have multiple (if not all) industries knocking on the doors of the courts to try and get their goods or services into a lower tax bracket.
"I absolutely expect more litigation, so we are increasing our team," Bloomberg reported Sandeep Chilana, a partner at Shardul Amarchand Mangaldas & Co, as saying. "The most impacted industry by GST is my industry. And we are obviously impacted positively."
"When there are different tax rates, there is always a possibility that someone will want to be in the lower slab," Chilana added.
An example of such a case, Bloomberg reported, was McDonald's 12-year conflict with the Indian tax authorities.
McDonald's was trying to get its soft-serve ice cream cones exempted from taxes, with the corporation saying the cones were a dairy product and hence should not be charged the 16 per cent duty they were being. The case went up to the Supreme Court, which ruled in favour of the tax authorities.
The prediction, if true, suggests a great deal of pressure will fall on India's judicial services, which was already choking with over 100,000 indirect tax appeals at end of March, 2015. The cases had locked away $23 billion in potential government revenue, according to a government report, Bloomberg reported.