GST data an­a­lyt­ics makes it hard to es­cape mis­match in re­turns

The Sunday Guardian - - & Comment Analysis -

The data an­a­lyt­ics used by the Goods and Ser­vices Tax Net­work (GSTN) has made it vir­tu­ally im­pos­si­ble to es­cape any mis­match in fil­ing GST re­turn. Of­fi­cials han­dling the GST net­work have de­tected mis­match in 34% of the to­tal GST re­turns filed last year. The GST of­fi­cials have slapped no­tices on all such busi­ness en­ti­ties, ask­ing them to ex­plain the rea­son of un­der­pay­ment of GST made by them.

As per data an­a­lyt­ics of the rev­enue depart­ment last month, 34% of busi­nesses en­ti­ties paid Rs 34,400 crore less tax be­tween July-De­cem­ber last year while fil­ing initial sum­mary re­turn (GSTR- 3B). These 34% of busi­nesses en­ti­ties have paid Rs 8.16 lakh crore to the ex­che­quer by fil­ing their initial sum­mery re­turn, whereas the data anal­y­sis of their GSTR-1 shows that their tax li­a­bil­ity should have been Rs 8.50 lakh crore.

A se­nior GST of­fi­cial told The Sun­day Guardian: “The prom­ise of the Goods and Ser­vices Tax (GST) net­work to bring trans­parency has fi­nally started show­ing re­sults as we have de­tected even small mis­matches in GST re­turn. There is no chance to es­cape the scru­tiny of our data an­a­lyt­ics.”

“We have is­sued sys­tem gen­er­ated no­tices to all the 34,000 busi­ness en­ti­ties, ask­ing them to ex­plain the rea­son for the mis­match in their re­turns. To an­swer this no­tice, the trader has been given a 30-day pe­riod that ends on 14 May 2018,” the same of­fi­cial cited above said.

The no­tice clearly states that if the re­spon­dent does not file a re­ply by 14 May, then the GST of­fice would as­sume that the re­spon­dent has noth­ing to say and fur­ther le­gal pro­ceed­ings can be ini­ti­ated.

How­ever, while GST of­fi­cials say 30 days are enough to file a re­ply, traders are find­ing it very dif­fi­cult to file their replies within 30 days.

Amit Ku­mar, a Delhi-based char­tered ac­coun­tant told The Sun­day Guardian: “The data an­a­lyt­ics of GST is so ro­bust that it can de­tect even a small mis­match. One of my clients, a Delhi-based en­gi­neer­ing com­pany, has re­ceived a no­tice from the tax de­part- ment, stat­ing that there was mis­match of Rs 300 in the re­turn filed by my client and he was asked for an ex­pla­na­tion.”

“While data an­a­lyt­ics is help­ing GST of­fi­cials in check­ing any mis­match in GST re­turns, the sys­tem can in­crease the chances of more lit­i­ga­tion, as even in cases of small mis­match,” Ku­mar said.

The GST, a new tax regime, was in­tro­duced last year which sub­sumed a host of in­di­rect taxes like Cen­tral ex­cise duty, state VAT, ser­vice tax, lux­ury tax, be­sides oth­ers.

Ac­cord­ing to the rev­enue depart­ment, dur­ing the fis­cal year 2017-18, the to­tal rev­enue col­lec­tions un­der GST in the pe­riod be­tween August 2017 and March 2018 have been Rs 7.19 lakh crore. The last fi­nan­cial year has been a par­tic­u­larly dif­fi­cult one for the In­dian spir­its in­dus­try. Apart from the in­crease in du­ties and taxes, higher raw ma­te­rial costs with­out cor­re­spond­ing price in­creases, the In­dian spir­its in­dus­try faced many other chal­lenges like de­mon­eti­sa­tion, state level pro­hi­bi­tions and na­tional high­way liquor ban. These un­con­trol­lable events in suc­ces­sion led to a slow­down in in­dus­try growth, but it has set­tled down in the last few months. Though GST will be pos­i­tive for the devel­op­ment of the econ­omy, it has medium term chal­lenges for this par­tic­u­lar in­dus­try. Even though al­co­hol has been kept out of GST purview, other in­put raw ma­te­rial costs are ac­tu­ally cov­ered un­der GST and this may lead to slight pres­sures in op­er­at­ing mar­gins. But this could be off­set by grow­ing vol­umes in spirit sales on the back of higher pro­por­tion of younger pop­u­la­tion en­ter­ing the drink­ing age, greater ac­cep­tance to so­cial drink­ing, higher dis­pos­able in­come and global spirit manufacturing com­pa­nies iden­ti­fy­ing In­dia as one of their top con­sumer mar­kets. A rapidly grow­ing In­dian econ­omy is pro­vid­ing a fresh stim­u­lus to the con­sumer sec­tor and the coun­try is ex­pected to be­come the third largest con­sumer mar­ket in the world. Rapid ur­ban­i­sa­tion, ris­ing af­flu­ence and chang­ing con­sumer pat­terns to­wards bet­ter qual­ity and life­style prod­ucts are sup­posed to be the key growth driv­ers. Tech­nol­ogy has been a key en­abler across the com­plete sup­ply chain, up to the de­liv­ery of the fi­nal prod­uct at the cus­tomer’s doorstep. Radico Khai­tan is one of the old­est and largest man­u­fac­tur­ers of “In­dian Made For­eign Liquor” in the coun­try, hav­ing com­menced op­er­a­tions in 1943. The com­pany has been a pioneer in set­ting in­dus­try trends with blue-chip large sell­ing brands like 8PM Whisky, Magic Mo­ments Vodka, Contessa Rum and Old Ad­mi­ral Brandy, among many oth­ers. 8PM was their first brand launched in 1999, which man­aged to cre­ate a record of sort with a mil­lion cases in sales within a year of its launch. Apart from the flam­boy­ant suc­cess of 8PM and Old Ad­mi­ral Brandy, an­other of their suc­cess­ful hot sell­ing brands is Magic Mo­ments Vodka. The pack­ag­ing is quite unique with a frosted bot­tle and a gui­tar shaped glass win­dow and is a big hit with con­sumers. On the other hand, Contessa Rum with a prom­i­nent mar­ket share in its cat­e­gory sells largely to the In­dian Army’s Can­teen Store Depart­ment (CSD). Radico Khai­tan is ex­pected to show ex­cel­lent fi­nan­cial re­sults over the next few years, with the earn­ings per share ex­pected to be over Rs 11.60 and Rs 14 for FY19 and FY20, re­spec­tively. Even the net sales and PAT are ex­pected to grow at a CAGR of 20% to 25% over the next few years. The Radico Khai­tan stock, cur­rently quot­ing at Rs 395 on the In­dian bourses, is an ex­cel­lent fun­da­men­tal buy for the medium term, with a 25% price ap­pre­ci­a­tion. Ra­jiv Kapoor is a share bro­ker, cer­ti­fied mu­tual fund ex­pert and MDRT in­surance agent.

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