CAG: Discrepancies in GST registrations

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In the latest report that has been tabled in the Gujarat assembly, the comptroller and auditor general (CAG) has highlighted discrepancies in approval of application for registration of taxpayers under the Goods and Services Tax (GST) regime. According to the report, discrepancies were noticed in the approval of 60% applications 678 of the 1,130 test cases. “Lack of validation of mandatory key fields in the GSTN system compounded by the general ignorance of the applicants resulted in incomplete applications being uploaded for GST registrations. However, the absence of due verification by the proper officer within the time frame prescribed in the act/ rules resulted in the registrations being issued without valid documents,” the report mentioned.

CAG clearly pointed out in the report that registrations under the GST regime were granted without due verification of the application and documents in support of the declarations made by applicants in their applications. “This may have enabled an applicant to obtain registration without proper verification and hence, to be considered as a legal supplier, entitling him to collect tax from customers, claim input tax credit and utilize the same,” mentions the report.

A slew of fake billing scams that have been reported in Gujarat, involving operation of various shell companies which exist based on illicitly obtaining GST registrations. The illicit claiming of input tax credit has led to a major tax evasion, thus denting revenues of the state exchequer.

The jurisdictional offices of the assistant commissioner of state tax (ACST) in Ahmedabad, Vadodara, Surat, Kalol and Jamnagar, have assured that since the matter pertains to technical issues, it will be taken up with higher authorities and the GSTN.

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