Gujarat: CAG Points Irregularities in GST Assessment & Collection

In its audit of the GST regime in Gujarat, the national auditor found “irregularities” in 537 cases out of 18,093.

The Comptroller and Auditor General of India (CAG) has detected several irregularities and lacunae in the processes followed by the Gujarat government in the assessment and collection of Goods and Services Tax (GST) in the state.

CAG's audit report on Revenue Sector for the year which ended on 31 March 2018 was tabled in the Gujarat Legislative Assembly on Wednesday, 11 December, the last day of the session.

In its audit of the GST regime in the state, the national auditor found "irregularities" in 537 cases, out of the total 18,093 test-checked assessments, which "resulted in under assessment of Rs 138.89 crore during the year 2017-18".

These irregularities include application of wrong tax rate, mistakes in computation, incorrect concession and exemption, irregular or excess grant of input tax credit and non/short levy of interest and penalty among others, the CAG noted.

In a piece of advice to the state government and the Finance Department, the CAG said, "The audit pointed out similar omissions in previous years also. There is a need for the government to improve the internal control system, including strengthening of internal audit, so that recurrence of such cases can be avoided."

On the status of migration from Value Added Tax (VAT) to GST in the state, the audit pointed out that over 10 percent of the existing dealers, who were covered under VAT net before GST came into force in 2017, had not registered under the GST regime.

"Out of the 5,15,948 dealers registered under the Gujarat VAT Act as on 30 June 2017, 4,61,156 dealers were finally granted registration certificates. The remaining 54,792 dealers, being 10.61 percent, of the existing dealers were not migrated to GST regime," the CAG noted.

It added that the government needs to ensure that all the eligible dealers are brought under the GST tax net.

Commenting on the process of transition from VAT to GST, the CAG noted that though the finance department was prompt in implementing GST in the state, "frequent changes in rules and regulations" resulted in non-implementation of "many procedures laid down in the Gujarat GST Act".

"The Gujarat government was hamstrung in the implementation of provisions of the GGST Act as it had limited role in the matters. Further, the department needs to sort out legacy issues like assessment of pre-GST cases, recovery of arrears and grant refund of the tax relating to pre-GST regime expeditiously," the CAG said.