Law of Taxation:

What is dual GST model? Explain its features?

Ans: Meaning of dual GST model in India

The dual GST model or the dual GST structure means levying tax with two different taxation
components. In India, both the Central Goods and Service Tax (or CGST) and the State Goods and
Service Tax (or SGST) are the components levied on a single transaction within a state due to its
federal nature
Notable features of dual GST model
GST has two components – one levied by the Centre (called the Central GST) and the other imposed
by states (called the State GST).
Central GST and the state GST would apply to all supplies of goods and services.
The amounts collected as the Central GST and State GST must be individually deposited to the
Centre and the state’s accounts.
Central GST and state GST must be treated independently. Further, the taxes paid against the
Central GST towards the intrastate transactions shall be allowed as Input Tax Credit (ITC) against the
Integrated GST charged on the interstate transactions.
The Constitution does not permit cross utilisation of ITC between the Central GST and the state GST,
except where there is an inter-state supply.
Any accumulation of ITC due to GST refund has to be avoided by both the Centre and states, except
exports, buying of capital goods, inverted tax structure, etc.
The legislation for the CGST and SGST shall prescribe a uniform procedure for collecting both these
tax components, respectively.
Both upper ceiling and floor tax rates concerning the annual aggregate turnover must be fixed for
composition or compounding schemes under GST.
The taxpayer must submit returns periodically, in a common format, to both the Central and the
concerned state GST authorities.
Every taxpayer is allotted a 15 digit PAN-based identification number under GST, popularly known as
the GSTIN.
Benefits of dual GST model
The following are the advantages of adopting a dual GST model-
The total number of taxes levied by the Centre and state governments reduces.
The effective tax rate for different goods gets reduced.
This model helps in eliminating the cascading effect of taxes.
The model proves to reduce the taxpayer’s transaction costs by way of simplified tax compliance.
Increase in the tax collections due to broadening the tax base and compliance improvement.
Impact and implications due to the dual GST model
GST allows efficiencies to improve in the economic system and therefore lowers the cost of supply of
goods and services. Due to the Indian background, there had been an expectation that the aggregate
impact of the dual GST will be lower than multiple taxes that got subsumed with GST.
Subsequently, the GST implementation has started to reduce the prices of goods and services.
Therefore, this benefit must be passed on to the buyer and the ultimate customer.
Under GST, there can be a possibility for disputes among states or between states and the central
government. In such cases, the responsibility of resolving such disputes is put before the GST
Council. The Council establishes ways to resolve arguments relating to GST.
To conclude, the dual GST model rationalises the way state and central governments can administer
taxes. The taxpayers benefit from GST rates that are easier to follow and involve a simpler GST
return filing process.

Refunds
“Refund” includes refund of tax on goods and/or services exported out of India or on
inputs or input services used in the goods and/or services which are exported out of
India, or refund of tax on the supply of goods regarded as deemed exports, or refund of
unutilized input tax credit as provided under section 38(2) of the Act. Unutilized Input
tax credit can also be allowed as refund in following cases as given in sub-section (2) of
section 38 of the Act:-
(i) Exports of goods on which export duty is not payable;
(ii) Exports of services;
(iii) Where credit has accumulated on account of rate of tax on inputs being higher than
the rate of taxes on Outputs.
Refund of Tax
As far as a refund of tax is concerned Section 54 of the Central Goods and Services Tax
provides provision regarding the refund of tax. According to Section 54, any person who
has paid off the tax or any interest shall apply for a refund through an application within
two years of the relevant date.
Section 54 also says that any agency of the United Nation Organisation or any consulate
of the embassy refund under inward supply of goods and services can claim a refund by
filing an application for refund within six months from the last day of the quarter from
which supply was received.
Section 54 also mentions the list of documents which are required to be furnished with
the application, the documents required are
Any documentary evidence that may show that refund is due to the applicant.
Any documentary evidence as the applicant may show that establishes that he is
claiming a refund under the tax already paid or any interest on that already paid, and
the incidence of such tax has not passed on to any other person.
Under Section 54 of the Central Goods and Services Act if any person claims refund, but
has himself defaulted in furnishing any return then in that case the proper officer has the
jurisdiction to either withhold the payment of such refund until the concerned person has
paid off his due or filed his defaulted return or the officer may deduct the amount from
refund to pay off any debt or penalty or return that was unpaid under this act or any
such law.
Under Section 54 if the grant of refund is under an appeal or trial, and the commissioner
thinks that granting the refund would affect the revenue in the said appeal or may cause
fraud then the commissioner can withhold such refund as he may seem fit.
According to Section 55, the Government on the advice of the council may notify
allowing any agency of the United Nations Organisation or any consulate of any embassy
to claim a refund on the supply of goods or services or both.
According to Section 56 of the Goods and Services Act, 2017 if any refund which is to be
refunded to any person is not given within 60 days then an interest not exceeding 6
percent shall be applicable on that interest from the date of the expiry of the refund
period.
Consumer Welfare Fund and Utilisation
According to Section 57 of the Central Government Goods and Services Act, 2017 the
Central Government is bound to establish a Welfare Fund that may include:
Any income from the investment of the amount credited to the fund
Any other money received by it.
Section 58 of the act the consumer welfare fund would be utilized for the welfare of the
consumers.
The welfare fund is required to maintain an annual account statement of its fund in
consultation with the Comptroller and Auditor General of India.
Return rules under Goods and Services Act
According to Section 37 of the Central Goods and Service Act, 2017 every supplier
except the input service distributor or non resident taxable person or any person who
has been exempted from paying the tax, shall have to furnish electronically returns of
the outward supply of goods and services affected during the tax period on or before
tenth of the month succeeding the said tax period, as per Section 37, no return filed
after the said date would be accepted as a valid return although the commissioner may
accept the return filed after the said period only circumstances as he may seem fit.
According to Section 38 any supplier apart from the exceptions have a chance to delete,
modify or verify the details pertaining to the outward supplies apart from that the
supplier also has to furnish the returns of the inward supplies electronically as may be
prescribed on tenth and not before 15 of the month succeeding the tax period of the said
period.
If any person has filed a return and some error has been discovered, then the person
concerned must rectify the error in time and then file the revised return and pay the
interest which may be applicable.
One thing to be noted here is that no error would be rectified for the month of
September after the end of the fiscal year to which such detail pertains or before
furnishing the annual return whichever is earlier.
According to Section 39, every registered person has to furnish the return for every
calendar month of every input and outward supply of goods and services by twenty of
the month succeeding the tax period.
Similarly, any person paying a return of inward supply of goods and services or both
quarterly has to pay the return electronically within ten of the end of such month.
Section 39 also permits the registered user to pay off the return of which he has not
paid.