The recent report from the Comptroller and Auditor General (CAG) about Karnataka’s finances reveals some important issues. It showed that there were problems with how taxes were managed and enforced in various government departments. These issues led to a significant loss of revenue, totalling ₹1,260.41 crore. The findings of the report were shared in the Legislative Assembly.
Under the commercial tax department, lapses in Input Tax Credit (ITC) disbursal, for GST alone, generated a loss of Rs 1,143.58 crore, which attributes towards the loss to the deviations from the provisions of the GST Act, the same mismatch of ITC, taking ITC in the cases where the supplier has not filed the tax or issued invoices post cancellation and wrong release of tax obligation in 208 cases.
To track return filing or recover tax from non-filers/late filers, the 10 selected Local Goods and Services Tax Offices (LGSTOs) do not have perfect systems. In 179 out of 200 test-checked cases across 10 LGSTOs, GSTR-10 (final return) was not filed. 32 out of the 180 test-checked taxpayers had filed GSTR-1 for 146 tax periods, but did not submit GSTR-3B, resulting in incorrect ITC claims without tax payment, it described.
Under subject-specific compliance audit on the e-way bills system under GST, Rs 1.92 crore was not paid by taxpayers, who generated e-way bills, after cancellation of registration, and tax of Rs 4.42 crore was not paid by non-filers who generated e-way bills. Taxes and penalties of Rs 21.42 crore were not debited from electronic cash ledgers.
The CAG suggested that “The department should strictly follow GST rules by ensuring that tax payments and penalties are linked to the date of debiting from the electronic cash ledger, following the proper e-challan generation process, and rectifying situations where funds from the ledger were incorrectly used for other GST liabilities to comply with regulations. GST provisions should be complied with strictly by the department at the time of auctioning of goods.”
