The report of the Comptroller and Auditor General of India (CAG) has recommended that in order to deal with the high-risk taxpayers under the GST, the Comptroller and Auditor General of India (CAG) have to address the issue of shortage of staff in the audit Commissionerates
As per the report, it was pointed out that regarding low recovery in internal audit, the Ministry stated that many taxpayers, especially large units, legally contested the internal audit findings through appeal/litigation resulting in low recovery. Ministry further stated that due to Covid-19 pandemic, many business units faced liquidity crunch, resulting in lack or shortage of funds for tax compliance during internal audit.
“In the era of self-assessed tax regime, internal audit is one of the main tools for ensuring compliance by the taxpayers. Further, departmental action against non-compliant taxpayers is a time bound activity under section 73 of CGST Act, 2017. Audit, therefore, recommends that suitable administrative measures should be taken to address the shortage of staff in Audit Commissionerates. Till the time man-power shortage is addressed, the Department may take into account the available staff strength for planning the number of units for internal audit with focus on high-risk taxpayers,” the report said.
The report further stated that in the absence of an effective risk-based system of scrutiny of returns with statutory backing based on detailed instructions/standard operating procedure, the Department is relying on DGARM inputs to discharge its compliance verification functions.
“Thus, in order to give assurance on Department’s performance, Audit needs access to data analysis methodology/parameters in respect of the DGARM reports along with the detailed reports, in particular in respect of cases where feedback is already provided. Audit recommends that such access to the records and information pertaining to DGARM reports may be provided without delay so that CAG’s constitutional and statutory duties could be discharged,” the report said.
“Though the DGARM reports and the action taken by the field formations on these reports are being uploaded on the DDM portal, detailed action taken by the field formations on these reports like correspondence with the taxpayer to explain the nature of discrepancy noted and to take taxpayers’ response on the same is still being done manually/offline. Audit recommends that the entire set of activities should be end-to-end automated as part of the CBIC-GST platform to facilitate transparency and effective real-time monitoring,” the report added.
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