Comptroller and Auditor General (CAG) has recommended a full overhaul of the system of issuing show cause notices in Central Board of Indirect Taxes and Custom (CBIC) including GST regime.
In its report on Indirect Taxes – Goods and Services Tax, Central Excise and Service Tax for the years ended March 2019 and March 2020, the CAG noticed significant deviations from law/rules such as incorrect computation of demand, delayed issue of notices, and delay in adjudications .
“We identified lack of effective monitoring mechanism, inadequate coordination among CBIC field formations, delay in issuing clarifications by the Board, delay in investigation/ verification by CBIC field formations, delay in appointment of common adjudicating authority, non-availability of records in the case files etc. as the reasons for many irregularities noticed by Audit,” the report said. It mentioned that the department cited transition to GST, shortage of staff, heavy pendency of cases, frequent change in adjudicating authority, delay in transfer of records etc. as the reasons for delays in adjudication and other irregularities observed in Audit.
Accordingly, C&AG has recommended end-to-end computerisation of the showcause notice and adjudication process. This should be inbuilt controls to ensure correct computation of demand, timely issuance of SCN, valid invocation of extended period of time and correctness of the SCN issued. There should be effective monitoring, conducting of personal hearings and timely issuance of adjudication orders.
“Maintenance of Call Book may be computerized with inbuilt mechanism to ensure issuance of periodical SCNs,” the report suggested. Call Book cases are those SCNs, which cannot be adjudicated immediately due to certain specified reasons and adjudication is to be kept in abeyance.
Simplified GST Return
The CAG noted continuing extensions in the roll out of simplified return forms and delay in decision making. That is why system-verified flow of ITC through ‘invoice matching’ is yet to be implemented and a non-intrusive e-tax system still remains unimplemented.
“In the absence of a stable and simplified return mechanism, one of the main objectives of roll out of GST i.e. simplified tax compliance system is yet to be achieved,” the report said. Further it recommended that a definite time frame for roll out of simplified return forms may be fixed and implemented. “Frequent deferments are resulting in delay in stabilisation of return filing system and continued uncertainty in the GST eco-system,” it said.
On report on Custom Duty, C&AG recommended to the Finance Ministry to consider specific time limit in the law for issuance and adjudication of SCN. There should be express provision in the law regarding number of personal hearings to be granted. Officers should ensure timely and proper action in issuance and adjudication of SCN.