GST — A Framework Against the Taxpayer: "My Way or No Way"
1. Introduction
1.1 The Promise vs. The Reality of GST
When Goods and Services Tax (GST) was launched in India in 2017, it was presented as a transformative reform designed to unify indirect taxation, simplify compliance, and increase transparency. The conceptual promise of GST—replacing a fragmented tax system with a single, destination-based tax—was laudable. Yet the practical experience of many taxpayers, particularly small and medium enterprises, has diverged sharply from the ideal. Rather than easing compliance, GST’s implementation has often produced a compliance-intense, system-driven environment. Frequent rule changes, technical intricacies, and stringent reconciliation requirements have made taxpayers feel as if they operate within a framework of "my way or no way", where system rules and portal validations dominate over business realities and reasonable human judgment.
1.2 Why This Critique Arises
The critique of GST’s implementation arises not from a rejection of the model itself, but from its operational execution. The cumulative effect of procedural rigidity, technological dependence, strict credit denial mechanisms, and retrospective corrections has shifted compliance burdens onto taxpayers. The modern GST model expects businesses to police their supply chains, reconcile invoices proactively, and ensure digital conformity—even where supplier errors, system outages, or external logistical disruptions are the true causes of mismatch.
2. The System‑Driven GST Model
2.1 Control Through Digital Dependency
GST’s digital-first approach—centralised portals, e-invoicing, e-way bills, and auto-populated returns—was intended to streamline processes and reduce manual intervention. While these benefits are real, the flip side is stark: taxpayers are rendered vulnerable to portal outages, API failures, and prefill errors. When the system falters, the taxpayer bears the brunt of the consequences, including potential denial of credits, late fees, or even demand notices. Thus, the digital backbone that should facilitate compliance sometimes becomes the very instrument of taxpayer distress.
2.2 Input Tax Credit as a Compliance Weapon
Input Tax Credit (ITC) is a core pillar of GST’s anti-cascading objective; however, in practice, ITC has become a tool of enforcement. Credit entitlement is frequently withheld because of supplier non-compliance, incorrect invoices, or mismatches in returns. Recipients who have paid tax yet cannot access ITC suffer cash flow disruption and face increased compliance costs as they chase suppliers and reconcile records. The resultant situation unfairly transfers responsibility for supplier behaviour onto buyers, undermining the neutrality that VAT seeks to achieve.
3. Invoice‑Dependent System: Burden on Recipients
3.1 Supplier Compliance Dictates Recipient Rights
Under GST, the recipient’s right to claim ITC is heavily dependent on the supplier’s compliance with invoicing and return filing. This dependency creates a scenario where the buyer—despite acting in good faith—loses credit due to the supplier’s failures. Businesses therefore invest significant time and resources in supplier reconciliation, legal notices, and credit recovery processes, diverting focus from productive activities.
3.2 The One‑Sided Contractual Logic
The operational logic of GST tends toward unilateralism: the system assumes its data as final, and the taxpayer must conform. Disputes often require prolonged administrative action, where the burden of proof rests with the taxpayer. In effect, an implicit contract exists in which the state enforces compliance through system checks, while taxpayers must adapt to the system’s definitions and timelines, reinforcing the perception of "my way or no way."
4. Frequent Amendments & Compliance Overload
4.1 Rule Changes at a Relentless Pace
GST’s rulebook has been subject to frequent changes—rate notifications, procedural circulars, compliance timelines, reconciliations, and clarification orders—all introduced at a rapid tempo. Businesses must continuously update ERP systems, retrain staff, and reconfigure invoicing practices. This churn increases compliance costs and forces enterprises to rely on consultants and technology providers to remain compliant.
4.2 Penalties for Minor Mistakes
The regime is punitive in its treatment of even inadvertent errors. Small clerical mistakes, missing HSN codes, or delayed uploads can attract penalties that are disproportional to the mistake. This zero-tolerance perception exacerbates taxpayer anxiety and pushes enterprises toward a compliance-first mentality, reducing business agility.
5. The Reconciliation Nightmare
5.1 Multiple Layers of Matching
Businesses are required to match several data points monthly: books to GSTR-1 and GSTR-3B, GSTR-2A to GSTR-2B, e-invoices to GSTR-1, and e-way bills to transactional records. The volume and complexity of this matching exercise place a heavy administrative burden on both large enterprises and MSMEs. Even minor timing differences—for example, an invoice issued near month-end—can create persistent mismatches and cascading compliance actions.
5.2 Forced Matching Philosophy
The system’s philosophical stance is to force reconciliations rather than trust taxpayer records. Instead of triangulating contextually or enabling provisional acceptance with remedial windows, the portal often treats mismatch as definitive non-compliance, demanding remedial action from taxpayers who may have legitimate explanations for discrepancies.
6. The E‑Invoice & E‑Way Bill Regime
6.1 Over‑Centralization of Transaction Validation
E-invoicing mandates a government-issued IRN for B2B invoices above specified thresholds, while e-way bills regulate the movement of goods. These mechanisms increase traceability, but they also centralize transaction validation to a degree that disrupts normal commercial flexibilities—such as corrections, cancellations, or intra-day adjustments—unless system-specific remedies are used.
6.2 No Margin for Practical Errors
Human and logistical errors are inevitable in commerce. The GST regime, however, tends to enforce strict compliance even where tax dues are met—prioritizing formality over substantive fairness. This inflexibility can penalize honest taxpayers who make minor, recoverable mistakes.
7. Cash‑Flow Impact & Working Capital Pressure
7.1 ITC Blocking & Rule 86A
Rule 86A permits officers to block ITC claims when there is reason to believe malfeasance or non-compliance. While intended to curb fraud, this power can be exercised in ways that freeze legitimate credits, impairing working capital for firms—especially MSMEs that operate on tight cash cycles.
7.2 Refund Delays and Exporter Distress
Exporters deserving of refunds often face long waits because of portal validations, mismatches, or compliance checks. The delay in receiving legitimately owed refunds affects liquidity, pricing competitiveness, and the broader export ecosystem.
8. Litigation and Ambiguity
8.1 Contradictory Circulars and Rulings
Frequent circulars and occasional contradictory rulings across states and adjudicating forums create legal uncertainty. Identical factual situations sometimes invite divergent rulings in different jurisdictions, undermining predictability and increasing litigation costs.
8.2 The Taxpayer as Suspect
GST’s enforcement toolbox—attachment, provisional assessment, summons, and criminal prosecution in extreme cases—creates an environment where taxpayers often feel under suspicion. This adversarial tone runs counter to the idea of tax administration as a collaborative endeavor between the state and its citizens.
9. Is GST Fair or Fundamentally Impositional?
9.1 Policy Intent vs Practical Execution
The policy architecture behind GST is meant to be neutral and facilitative. Yet practical execution emphasizes control, monitoring, and enforcement. This discrepancy between intent and practice leads to the perception of GST as impositional—where compliance structures prioritize administrative convenience and revenue protection over facilitating trade.
9.2 "My Way or No Way" as Policy Behaviour
The system’s insistence on portal-defined truth, coupled with punitive remediation for deviations regardless of cause, cements the impression of a unidirectional policy approach. Taxpayers are expected to conform to system realities rather than having the system adapt to legitimate commercial variance.
10. Conclusion
10.1 Need for Human‑Centric Reforms
GST as a policy is not flawed in conception; rather, its implementation needs recalibration to be more taxpayer-centric. Reforms should focus on easing ITC dependency on supplier filings, rationalizing reconciliation frequency, simplifying procedural forms, and providing remedial windows for genuine mistakes. Administrative tools should empower taxpayers rather than incapacitate them.
10.2 A Future Path Forward
To evolve from an imposing system to a facilitative ecosystem, GST must incorporate better technological resilience, clear procedural fairness, and proportional enforcement. Strengthening communication, providing constructive dispute-resolution pathways, and restoring balance between system integrity and taxpayer rights will move GST closer to its founding ideals.