The Comptroller and Auditor General (CAG) report on Karnataka’s revenues for the period ended March 2023 revealed lapses in tax administration, regulatory enforcement, and compliance monitoring across key revenue-generating departments in the state, resulting in revenue losses amounting to Rs 1,260.41 crore. The report was presented in the Assembly on Tuesday.
The lapses in Input Tax Credit (ITC) disbursal, under the commercial tax department, for GST alone caused a loss of Rs 1,143.58 crore, it pointed out, attributing the loss to the deviations from the provisions of the GST Act, such as mismatch of ITC, availing ITC in cases where the supplier has not paid tax or issued invoices after cancellation and incorrect discharge of tax liability in 208 cases.
None of the 10 selected Local Goods and Services Tax Offices (LGSTOs) had effective systems to monitor return filing or recover tax from non-filers/late filers. In 179 out of 200 test-checked cases across 10 LGSTOs, GSTR-10 (final return) was not filed. Thirty-two out of the 180 test-checked taxpayers had filed GSTR-1 for 146 tax periods, but did not file GSTR-3B, resulting in wrongful ITC claims without tax payment, it explained.
Under subject specific compliance audit on e-way bills system under GST, Rs 1.92 crore was not paid by taxpayers, who generated e-way bills, post cancellation of registration, and tax of Rs 4.42 crore was not paid by non-filers who generated e-way bills. Taxes and penalties amounting to Rs 21.42 crore were not debited from electronic cash ledgers, it added.
“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 strictly by the department at the time of auctioning of goods,” the CAG recommended.
