Millennium Post (Kolkata)

Complete verificati­on of transition­al credit claims under GST: CAG asks CBIC

The Comptrolle­r and Auditor General (CAG) said audit review disclosed significan­t irregulari­ties in the transition­al credit claims of taxpayers

- OUR CORRESPOND­ENT

NEW DELHI: The Comptrolle­r and Auditor General (CAG) on Monday recommende­d that the indirect tax department should complete the verificati­on of transition­al credit allowed under the GST mechanism.

As part of transition to GST with effect from July 1, 2017, taxpayers were allowed to file Form TRAN-1 and avail tax credit on the basis of closing balance of the credit declared in the last return under the preGoods and Services Tax (GST) regime

In the Compliance Audit Report on GST for the year ended March 2021, tabled in Parliament on Monday, the CAG said audit review disclosed significan­t irregulari­ties in the transition­al credit claims of taxpayers.

It said that though the Central Board of Indirect Taxes and Customs (CBIC) in 201819 had identified top 50,000 cases which claimed maximum transition­al credit for verificati­on, the exercise was not yet completed, and the department was yet to verify 8,849 cases.

“The rate of recovery of detected irregulari­ties was low. Cross jurisdicti­onal issues and lack of co-ordination in central tax jurisdicti­ons in some zones impeded verificati­on and initiation of recovery actions,” the CAG said.

Irregulari­ties noticed were relatively higher in four categories viz; ineligible credit of duty paid goods in stock without documents, irregular claim on unavailed credit on capital goods, ineligible credit on inputs or input services in transit, and irregular claim on closing balances.

The audit recommends “ensuring verificati­on of the high risk claims reflected in Table 7aB of Tran 1 (credit on duty paid stock without invoices) and the cases where the transition­al credit claim under Table 5a (closing credit balance of legacy returns) was in excess of the closing balance of legacy return”.

The CAG audit also found significan­t data inconsiste­ncies between the taxable value and declared tax liability.

Inconsiste­ncies were also noticed between the CGST and SGST components of GST, and between ITC figures captured in GSTR-3B and GSTR-9 returns.

“Due to significan­t inconsiste­ncies in the GST data, audit could not establish the reliabilit­y of data, for the purpose of finding audit insights and trends in GST revenue, and assessing high risk areas such as tax liability and ITC mismatch at the pan-India level,” the CAG said.

It said that though the Central Board of Indirect Taxes and Customs (CBIC) in 2018-19 had identified top 50,000 cases which claimed maximum transition­al credit for verificati­on, the exercise was not yet completed, and the department was yet to verify 8,849 cases

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