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Tourism largest sector, lowest in paying GST in Sikkim

Friday, Jan 24, 2020 14:45 [IST]

Last Update: Friday, Jan 24, 2020 08:55 [IST]

Tourism largest sector, lowest in paying GST in Sikkim

PANKAJDHUNGEL

GANGTOK: Perceived as the highest revenue generator and taxpayer in the State, the tourism industry in Sikkim is surprisingly at the bottom of filing Goods and Services Tax (GST) returns with only handful hotels in the State paying GST while others have been evasive of the taxes.
Ahead of the enforcement against tax evasion of GST in the State, theCommercial Taxes Division (CTD) of the State Finance department has detected an evasion of GSTby prominent hotels and restaurants in the State.
Addressing a press conference at a local hotel here today, the CTD officials shared that the practice of leasing hotels to those from outside the State is one of the main reasons for failure in tax returns.
“It has been unlawful and unethical practice as only 50 percent of the hotels and restaurants are registered for GST. It is a wilful disobedience, ignorance and childish attitude on the part of hotel owners and lessee to evade taxes. We have sent notices, our field staffs have visited such hotels, conducted an elaborate research which has led us to this finding and yet our sensitization efforts are falling on deaf ears,” stated CTD commissioner JigmeDorjee Bhutia.
Revenue figures for hotels under State GST for 2017-18 was Rs. 8.05 crore matching share credited to the Central GST. In 2018-19, the State GST collected was to the tune of Rs.12.38 crore.
The press conference was held ahead of an awareness drive on GST followed by an enforcement drive to ensure timely payment of GST and other taxes by the CTD in association with Sikkim Hotels and Restaurants Association (SHRA). An enforcement drive would commence from February 17, next month to address the GST evasion issue among others, it was informed.
Gangtok mayor Shakti Singh Choudhary, Tourism department director (Accounts) TsetenDorjee Bhutia, Superintendent of Police East HariChettri, and SHRA president Roshan Raj Shrestha were present on the occasion.
A collective decision was also taken wherein the tax filing help desk will be set up in the Finance Department of the State along with all the District Adminstrative Centres in the four districts with Tourist Information Centres also being finalized as the places for such enquiries and filing of taxes.The help desks will be set up in the days to come with the deadline for filing the GST to be done by February 17. Following which, the CTD will conduct enforcement drive from the day to collect the taxes.
“The enforcement action from February 17 against the defaulting hoteliers may even include arrest of the defaulters under Section 69 of Sikkim Goods and Services Tax Act of 2017. It is noted that most of the property owners and license holders have leased out the business to third party. In such case it is the duty of the Lessor (the property owner or licensee) to register himself as taxpayer providing leasing service. When the Lessor is registered, it will automatically compel the lessee also to obtain registration as taxpayer providing service of supply of food and service of accommodation. The lessee can take credit of the tax paid on the lease amount, so there is no extra tax burden on him,” stated commissioner Bhutia.
Penalties for fraud or wilful suppression of turnover for non-registration fraud cases (wilful suppression) is 100 percent of tax due or Rs. 10,000 whichever is higher. For non-fraud cases (ignorance) is 10 percent of tax due or Rs. 10,000 whichever is earlier, the same penalty will be levied for submission of false information or submission of false returns and fake financial records to evade taxes. While, penalty for helping a person commit fraud is Rs. 25,000, it was informed.
Gangtok mayor Shakti Singh Chaudhary emphasized on educating the hotel owners to register themselves with GST. “GST has been rolled out to improve the ease of doing business and to generate more employment. But with 20 percent being evasive, the whole tourism sector is suffering. Any government needs revenue and for a State like Sikkim whichis so heavily dependent on tourism, the need for filing GST is even more important. The major part of the problem is when the hoteliers lease out the property to those outside of the State. They are not filing returns, while they take lease for a year and hop on to another property before filing the GST putting the pressure of payment upon the hotel owners. When the penalty is at the rate of Rs. 100 per day, the amount is bound to shoot up. They are not even paying electricity bills, license not renewed for over 2 years. We know the number of rooms also now with GST. Genuine tax payers are being losers.”
SHRApresident Roshan Raj Shrestha, who was joined by 15 other members from the association, highlighted only those hoteliers who had paid the GST were present today as against those who evaded the tax returns and didn’t attend the press meet. Shresthaexpressed that the hoteliers can be segmented as ignorant and pretentious, as despite being the most employing sector in the State, they evade taxes. “Tourism is at the bottom of tax payment largely due to ignorance. Sikkim is the easiest place to get a lease, to get and excise license and also being the easiest to be misused. We admit that there are unfriendly practices from those within the fraternity and SHRA will set up a task force who will inform of such misdeeds and even file an RTI on the GST collected, if necessary,” said Shrestha.
He also raised concerns on those hotels which provide the venue for marriages but the taxes for the same are not levied while placing a request to the CTD to include them in the GST council meetings of the centre.
Suggestions were placed for inclusion of input credit on construction material to Sikkim for property construction while also placing demand for incentives to the local unemployed youths who own a property while working in tandem with lessee from outside the State, similar to how it has been done in Mizoram where a local and an outsider are in partnership for of the property and running the hotel. Issues like more rigorous scrutiny of Bangladeshi tourists visiting the State while also an alarming situation of those foreign nationals taking up hotels and properties in the State were also raised.

Sikkim at a Glance

  • Area: 7096 Sq Kms
  • Capital: Gangtok
  • Altitude: 5,840 ft
  • Population: 6.10 Lakhs
  • Topography: Hilly terrain elevation from 600 to over 28,509 ft above sea level
  • Climate:
  • Summer: Min- 13°C - Max 21°C
  • Winter: Min- 0.48°C - Max 13°C
  • Rainfall: 325 cms per annum
  • Language Spoken: Nepali, Bhutia, Lepcha, Tibetan, English, Hindi