CAG Should Au­dit GSTN’s Work on Taxes

Leave GSTN’s in­ter­nal work­ing to its board, au­dit

The Economic Times - - The Edit Page -

Should the Comptroller and Au­di­tor Gen­eral au­dit the Goods and Ser­vices Tax Net­work (GSTN), which is the nodal body to which in­di­rect tax pay­ments (other than Cus­toms duty) by all pro­duc­ers and sup­pli­ers of goods and ser­vices will file their tax pay­ments, once GST kicks in, and will rec­on­cile in­put tax credit claims with tax re­ceipts? The govern­ment holds only a mi­nor­ity stake of 49% in GSTN, but the com­pany would process more than half the na­tion’s tax re­ceipts. GSTN op­poses the idea of a CAG au­dit, but the CAG and some other parts of the govern­ment feel oth­er­wise. The so­lu­tion to this bud­ding con­tro­versy is fairly straight­for­ward: GSTN’s own fi­nances should be au­dited like a pri­vate com­pany’s while the CAG must au­dit the tax col­lec­tion work.

The whole point of set­ting up GSTN as a pri­vate com­pany was to make it fleet of foot and ef­fi­cient, with the op­er­a­tional free­dom to keep func­tional an in­for­ma­tion net­work to which bil­lions of tax pay­ment re­ceipts and in­put tax credit claims would be up­loaded and which must process these fil­ings at top speed to find rec­on­cil­i­a­tion or spot tax li­a­bil­ity. To build mul­ti­ple rounds of re­dun­dancy, and main­tain and upgrade its server ca­pac­ity and speed, GSTN needs to be free from the time-con­sum­ing and sub­op­ti­mal rules and pro­ce­dures of govern­ment pro­cure­ment and re­cruit­ment. As the prin­ci­pal share­holder, the govern­ment has the op­por­tu­nity to ap­point the kind of di­rec­tors to the GSTN board who would en­sure good cor­po­rate gov­er­nance and ex­pen­di­ture con­trol, aided by the nor­mal au­dit process. There is no rea­son for the CAG to au­dit the in­ter­nal work­ing of GSTN and raise ob­jec­tions that might be pro­ce­dural rather than sub­stan­tive in na­ture but could still serve to raise need­less con­tro­versy over GSTN’s func­tional in­tegrity.

But when it comes to the work done by GSTN, there is ev­ery rea­son for the CAG to be in­volved. In fact, the scru­tiny and au­dit of tax fil­ings of a sam­ple from the to­tal fil­ings is an in­te­gral part of the GST process, mean­ing that this part of GSTN’s work is open to scru­tiny by rev­enue of­fi­cials, in any case.

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