Adhia asked the CBIC to review the performance of central government officers and to make sure that their performance is superior to those of state governments.
With the GST Network, the IT backbone for the goods and services tax (GST), turning out to be a repository of centralised data on taxpayer compliance, a facility that was not available in the previous regime, the performance of tax authorities has come into sharper focus. After reviewing the GSTN data, Union finance secretary Hasmukh Adhia has recently written to the Central Board of Indirect Taxes and Customs (CBIC), lamenting that “the performance of central government officers in all states except Arunachal Pradesh is lower than the state government officers in return filing %age for the tax period April (up to 26th May 2018)”. Adhia asked the CBIC to review the performance of central government officers and to make sure that their performance is superior to those of state governments.
The finance secretary’s directive is seen against the backdrop of lower-than-expected buoyancy in GST collections. The number of filers improved from 63% of the taxpayer base in February to 69% in March and 72% in April, but the revenue is not growing fast enough to meet the the Centre’s budget targets and most states still need compensation. The GST revenue for April (collected in May) came in at Rs 94,016 crore, 4.5% higher than the monthly average achieved in the last fiscal year. The central GST (CGST) collected for April was Rs 28,797 crore; assuming half the balance integrated GST collected for the month also goes to the Centre’s kitty, the CGST collection for the month may eventually go up to Rs 40,800 crore. However, even this figure is a fifth short of the budget estimate for CGST of Rs 50,325 core per month. As for state GST, Rs 34,020 crore was collected for April.
The Union finance ministry compared the performance of tax officials on four criteria: Percentage of return filing in April, revenue collection growth in April over average of January and February, refunds sanctioned as a percentage of claims and registrations as a percentage of applications. Last year, the GST Council arrived at a formula for sharing of GST jurisdiction between the Centre and the states. According to this, 90% of taxpayers with annual revenue below Rs 1.5 crore come under the state government’s jurisdiction while 10% of them are with the central government. The remaining taxpayers are equally divided between the Centre and states.
An Indian Revenue Service official, speaking on condition of anonymity, said that one of the reasons for the poor performance of the Centre’s staff could be that in several states, the state-level officials had divided the taxpayer pool in a manner that those which are conventionally more compliant are with them.
However, several state government officials refuted this while speaking with FE. One official said that state officials have traditionally been more hands-on with taxpayers even in the previous tax regime than their counterparts at the Centre. For instance, he said, even a senior state official would not hesitate to call a non-compliant taxpayer and offer assistance in resolving issues while a central official might be content with sending notices to such assessees. The latter approach doesn’t always yield the desired results in nudging dealers to be more compliant, another official added.
“Any transaction under GST has a central and state component. While the Centre is assured of central GST component, the state GST component could accrue to a different state if the dealer doesn’t report the transaction properly. This ensures that state officials are more vigilant and scrutinise invoices closely,” a third official said, explaining the performance gap.
In his letter to the CBIC, Adhia also wrote that it was a mystery that the rate of refunds sanctioned could be more than claims as shown in cases of Jammu and Kashmir, Meghalaya, Daman and Diu, Dadra and Nagar Haveli, and Tamil Nadu.