CAG asks Telangana Commercial Taxes dept to pursue show cause notices issued for short and non-payment of tax
Audit of select sample of 407 cases – which amount to ₹14,536.5 crore – reveals huge deviations/inconsistencies
Comptroller and Auditor General of India’s Revenue Sector report 2021-22 was tabled in the Telangana Assembly recently.
| Photo Credit: By Arrangement
The Comptroller and Auditor General of India has asked theTelanganaCommercial Taxes department to pursue the show cause notices issued for short/non-payment of tax and this should also include Integrated Goods and Services Tax(IGST) component along with State GST/ CentralGST components.
The department should urgently pursue the inconsistencies and deviations pointed out in the audit for which responses have not been provided and intimate the results to the audit. The department should consider introduction of validation controls in GST returns to curb data entry errors, enhance taxpayer compliance and facilitate better scrutiny, the CAG said in the Revenue Sector report 2021-22 tabled in the State Assembly recently.
The CAG selected a sample of 407 cases from among the top deviations/inconsistencies in each of the 14 parameters for the year 2017-18 amounting to ₹14,536.5 crore. The audit check in these cases was limited to verifying the department’s action on the identified deviations/mismatches. Initial responses were yet to be received as of April 2023 for 124 inconsistencies communicated to the Department, which represent a potential risk exposure of ₹1,568.81 crore.
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For instance, test check of the records of 40 offices of the Commercial Taxes department relating to VAT, CST and GST revealed under assessments of tax and other irregularities involving ₹149.41 crore in different categories. Considering that the overall rate of conversion of inconsistencies into compliance deviations is significant as brought out, the Department was required to expedite verification of these cases as a priority.
The CAG recommended that strict controls should be put in place to ensure timely filing of returns by taxpayers and effecting recoveries towards penalties/interest for belated payments. The department should initiate remedial action for all the compliance deviation cases brought out before the deviations get time barred and review all other cases to rule out similar deviations. Steps should be taken to strengthen the monitoring mechanism in field formations and ensure that due diligence was followed in procedures for cancellation, issue of Show Cause Notices and recovery.
The report quoted the department as saying that it did not have an Internal Audit wing and recommended that the Government set up an Internal Audit wing in the Commissionerate to evaluate and improve the functions of the Commercial Tax Department.
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