Srinagar, Apr 19: Irregular refund claims worth crores of rupees and ineligible transitional Input Tax Credit (ITC) amounting to further so many crores have been executed by J&K’s Taxes Department, the Comptroller and Auditor General of India (CAG) has said.
The apex audit institution of India while auditing the Commissioner State Taxes Department detected “the department considered ITC availed on input services in five refund cases (two ST circles). The mistake resulted in an irregular allowance of refund to the tune of ₹ 39.82 lakh”.
During the audit, it was noticed that out of 33 refund cases examined, the department considered ITC available on input services in five refund cases (two ST circles). The mistake resulted in an irregular allowance of refund to the tune of ₹ 39.82 lakh.
The cases where excess ITC, according to CAG, was granted included M/s GSP Power Ltd, M/s Apsara Plastic Pvt Ltd, M/s Accent Pharma, and Rahim Engineering Works.
The audit report revealed that for the year ended March 31, 2021, the department had issued a provisional refund of 90 percent in three cases of one taxpayer in Circle Anantnag-II on account of inverted duty structure which were other than the cases of zero-rated supply of goods or services.
The assessee has been identified as ‘Kafie and Kafie Enterprises’ who according to the CAG report, had been refunded an irregular excess amount of Rs 19,93,733 as IGST on a provisional basis.
The national auditor found that refunds had been sanctioned in respect of 26 cases despite the non-filing of returns (GSTR I) by the registered persons for prior periods between November 2018 and June 2020. The funds had been sanctioned even to five dealers whose registrations were cancelled with two from the Kashmir division and three dealers in the Jammu division.
The department has been asked to review the cases and fix the responsibility of the erring officials responsible for sanctioning of refunds despite the non-filing of returns.
The CAG said, “in respect of 15 refund claims exceeding ₹ two lakh in each case, a refund of ₹ 328.25 lakh was sanctioned without obtaining certificates from the Chartered Accountant/Cost Accountant in violation of the above rules.”
It found the refund of ₹ 144.67 lakh, in respect of sanction on exports, was sanctioned in favour of a dealer without documentary evidence such as shipping bills/export invoices/undertaking of no duty drawback claimed.
Audit scrutiny of refund records revealed to the CAG say that the refund of ₹ 144.67 lakh was sanctioned in favour of the dealer M/s Amar Singh & Sons in STO Circle-G, Jammu, for the periods (pre-automation period).
Prescribed documentary evidence to establish that the refund was due to the applicant were not found on record. In terms of Rules 12 and 13 of the Customs, Central Excise Duties and Service Tax Drawback Rules 1995, the shipping bill is treated as a claim for drawback in terms of declaration made on the shipping bill.
However, neither any shipping bills/export invoices nor any undertaking of no duty drawback claimed was found on record, the report said, adding the statement containing the number and date of shipping bill/bill of export containing the number and date of relevant export invoices has also not been filed by the dealer.
The auditor further found that the refund of ITC in respect of zero-rated supplies (two cases) and Inverted Duty Structure (eight cases) revealed that a refund had been claimed and admitted by the department despite the difference of ₹ 110.33 lakh between GSTR-3B and GSTR-2A, in support of which no invoices were found on record. Post-audit of refund cases has not been conducted, resulting in non-compliance with Board’s instructions.
In respect of 46 transitional credit cases, the front-end data shared by GSTN did not match with the data shared by GSTN at the back-end. There was a mismatch of data in these 46 cases with respect to transitional credit (TRAN-1) amounting to ₹ 282.56 lakh.
In four cases, transitional credit amounting to ₹ 11.25 lakh was claimed in excess of actual balance of Input Tax Credit available under the earlier VAT regime, it said.
The CAG noted that in four cases, the dealer(s) had not filed all the requisite returns but carried forward the input tax credit in the Electronic Credit Ledger resulting in ineligible transitional credit of ITC amounting to ₹ 10.75 lakh.
In 13 cases, the undue/excess transitional credit claims were reversed under the provisions of the J&K GST Act, 2017. However, the interest liability under section 50(3) of the J&K GST Act, 2017 was not charged.
