Implementation of the Goods & Services Tax (GST) regime was virtually a flop in Meghalaya taking into account the performance audit by the Comptroller and Auditor General (Revenue sector) in its report for the year ending March 2019 tabled in the Assembly today.
The focus on the GST roll out reveals inefficiency and mismanagement which led to loss of crores of rupees in much needed taxes in the State.
The State had only 17692 dealers under GST as on March 2019 which was only 34 per cent of the registered dealers under the VAT regime migrated to GST. This left a huge gap in the registration of potential tax payers which naturally led to a huge loss of revenue.
The GST application system developed by the NIC Meghalaya which was the backbone for successful implementation of the new law suffered from lack of planning in design and roll out of the backend application system. Of 11 modules to be developed, NIC developed on four modules i.e registration, payment, return and refunds and even in these the functionalities were not completed, said the CAG report .
Neither was it user friendly, the database was not being updated in real time and was unfriendly to dealers use and did not function properly to keep both the department or the dealers updated.
The result was that a lot of loopholes remained, which resulted in things like transitional credit claims not being verified which resulted in 19 cases of irregular allowance of transitional credits worth Rs.72.62 lakhs. The CAG said these need to be verified.
The taxation department failed to check tax credit claimed by dealers which resulted in excess claims of Rs.113 crore of input tax credit being availed by 56 dealers.
There were many other issues due to the inadequate application system such as dealers with whose turnover had crossed the limits for availing benefits of Composition Scheme (turnover of Rs.50 Lakhs) not being thrown up by the application and the department did nothing to deny the scheme to such beneficiaries who were not legally entitled to the scheme.
Contractors were encouraged to evade payment of GST by filing ‘Nil Returns’ because the taxation department officials failed to cross-check to ensure proper filling of tax returns by tax deduction at source and tax compliance by the former.
The CAG called for remedial measures to correct all these lacunae. At the initial stage there was no concerted effort to create awareness of the new tax law among all the stakeholders such as the dealers and the government departments, the CAG report said.
Heavy leakages of taxes were reported in other departments as well.
The CAG said that the State Forest Department failed to realize a fee of Rs.11.97 crore at the check gates under the Jaiñtia Hills Territorial Division, 2019 while issuing transit passes to 118682 trucks transporting limestone outside the state.
Three forest check gates-DFO territorial, Shillong and Jowai-under reported export of stone boulders and limestone to Bangladesh, which resulted in a loss of Rs.1.73 crore in March 2019.
The District Transport offices (DTO) Shillong, Mawkyrwat, Williamnagar, Khliehriat and Nongpoh in May 2018-June 2019 failed to recover road tax of Rs.1.24 crore from 3437 vehicles, which was a massive loss for the cash starved state. This is amazing as there is already the VAHAN computerized system in place.
The CAG called for action in similar incidences in the remaining six DTOs as well.
The transport department created more loss for the state exchequer by not collecting renewal fees from commercial vehicles and other levies.
The Excise department lost the state more than Rs. 41 crores due to non realization of fees and duties in 52 cases which included allowing 93 Indian made foreign Liquor barons to continue sale without renewing their licences in Jowai, Khliehriat, Williamnagar and Nongpoh during November 2017-2018, advance fees from 38 bonded warehouses for the year 2019-20 in Shillong, registered 39 brands of 8 distilleries/bonded warehouses without realizing registration fees and allowing bars and liquor shops to continue to function without security deposits in Williamnagar, Tura, Nongpoh and Khliehriat during July 2018-2019.
