NAGPUR: In what is being attributed to a technical error in Goods and Services Tax Network (GSTN), the authorities have come across a case where the system recorded an excessively high amount of tax than what was actually paid by a manufacturing company.
The matter has come up before the directorate general of GST Intelligence (DGSTI), and the case has been taken up for further investigation. A Yavatmal-based manufacturing company had discharged its GST liability, which came to over Rs 45 lakh, and filed the returns accordingly. However, the GSTN also showed an amount of Rs 95 crore as compensation cess paid by the entity. This is over 10 times the company’s yearly turnover itself, leave aside the tax liability.
Compensation cess is applicable on select items like coal or cigarettes, on account of pollution or health hazards attached with such commodities. In this case, there was no compensation cess applicable on the products the Yavatmal company made. It deals in farm inputs.
Sources say that even as such entry can be due to human error, in the Yavatmal case it is appearing to be a system issue, and the matter has been referred to headquarters for further investigation.
In another case involving an e-way bill, a similar entry of cess paid was noted, but it was found to be on account of human error.
It was found that the assessee in Yavatmal had tried to rectify the entry in the system, but could not do it. Now the correction will have to done when the annual returns are filed in June, said a source.
The amount was shown as tax paid in the assessee’s account, which could have also been used as input credit for future transactions. Though in this case there was no intention of misuse, rather the assessee had made attempts to make a correction, which was however not possible in the system. The discrepancy was flagged following a reconciliation of the amount reflected in the GSTN and actual receipt.
Meanwhile, in an recent action, DGSTI office here has also unearthed a major racket by steel companies undertaking unaccounted production in Aurangabad. If the output is not accounted for, the GST payable on it can be evaded.
Acting on intelligence inputs, the sleuths had conducted searches on six units where unaccounted raw material was found. This indicated that the final output was removed from the unit without any record being maintained.
Source- Times of India.