Nearly seven months after the rollout of the goods and services tax (GST) regime, the tax department is of the view that the time for hand-holding is now over and it will now redouble efforts to identify deliberate tax evasion by going beyond proposed measures such as invoice matching and e-way bill.
Starting January, the government has commenced scrutiny of returns filings and tax payment history under GST as a step towards plugging revenue leakages and will finalise data of GST evasion cases by next month, Central Board of Excise and Customs (CBEC) Chairman Vanaja N Sarna said.
Sarna added that each commissionerate is scrutinising GST returns and looking into cases where tax evasion is suspected, adding that genuine mistakes can be sorted out by discussion, but there is no place for deliberate tax evasion. “Since it is the new law, there might be a valid mistake which can be sorted out by discussion for which they may have a valid explanation. But if not, then naturally I’ll issue the notice. Don’t want any major shakeup, people should not say that I was a genuine guy, but then you have made a case against me. Will soft peddle into this. But, it has to happen. Cannot allow truant and unscrupulous characters to go around and keep doing things as they want,” Sarna told The Indian Express.
She further said that a long time has been given to GST taxpayers to come forward and rectify their mistakes. “If there are unscrupulous traders, they need to be booked now because a long time has been given to them to come forward, get all their doubts cleared. Sewa Kendras have been there for their assistance. And after all that they are still breaking law. Naturally my officers have to get there,” she said.
Directorate General of GST Intelligence (DGGI) along with CBEC are expected to compile a list of tax evasion cases by next month. Evasion-prone sectors are being monitored closely under the new indirect tax regime, Sarna said.
“By next month, will have an idea of cases, an idea of what kind of evasion has happened, in what area and in what particular groups. For instance, in central excise, there used to be lot of evasion in iron and steel sectors because there were certain evasion-prone areas in types of goods. Similarly, now we will find evasion-prone services. What is escaping the (tax) net, needs to be brought in,” she said.
Government officials said that there are certain cases wherein the CBEC has found tax history for last three years, but the tax payment has suddenly disappeared and such instances need to be detected so that the government can find out why the taxpayer is not paying tax.
The government has earlier flagged the low compliance rate under both direct taxes and under GST, especially for dealers under the GST composition scheme. Only 7 lakh out of 10 lakh registered dealers had filed returns for the first quarter of the GST regime.
On February 5, Finance Secretary Hasmukh Adhia had said that using technology under GST, the government will be able to match the turnover details of a dealer under the composition scheme as well as the presumptive taxation scheme under the direct tax side. “In GST, if right now I take the turnover which the composite scheme dealers are showing is exactly matching with what they are showing in income tax in the presumptive taxation scheme. But once we have technology no trader will be able to suppress his purchase side, then how will he suppress his sales or turnover side. So then even the composition scheme dealers will have no option but to correct turnover in the GST return and the same return he will have to show in the income tax return,” Adhia had said.
Earlier this month, Finance Minister Arun Jaitley had also pointed towards the low compliance level in GST, saying that it will improve with two-three anti-evasion measures being put in place. “The two three anti evasion measure that are possible are put in place, the compliance level in GST will improve. That will probably improve upon the collection and therefore meeting the fiscal deficit target in coming year would be much easier than what it was in current year,” Jaitley had said.
With the slip in GST revenue in October, there were concerns among states as well as Centre about the revenue leakages in the indirect tax regime. The government had pushed for an early implementation of the e-way bill system as an anti-evasion measure from February 1 though it could not go through as the online system for it crashed on the first day of the rollout, forcing the government to continue only with the trial run for trade and transporters. The government is now set to implement e-way bill for inter-state movement of goods exceeding Rs 50,000 in value and 10 km in travel from its initially approved rollout date of April 1, subject to approval of the GST Council.
The government is also looking at invoice matching through simultaneous upload of invoices by sellers and buyers along with a broader focus on returns simplification that will also be discussed in the next meeting of the GST Council scheduled to meet next on March 10 via videoconferencing.