GST compliance deviations in Jammu and Kashmir cost ₹439.36 crore, CAG finds

This audit examined the Union Territory of Jammu and Kashmir's revenue receipts, specifically focusing on the E-way Bill system under Goods and Service Tax (GST) and the department's oversight of GST payments and returns filing for the period ended March 2023.

Government of Union Territory of Jammu and Kashmir (Finance Department/State Taxes Department)

• Systemic lapses in the E-way Bill system, including ineligible taxpayers continuing under the Composition Levy Scheme and taxpayers filing nil returns despite generating E-way Bills, involving a tax implication of ₹2.29 crore.
• Three taxpayers generated 5,739 E-way Bills with a tax effect of ₹67.99 crore, but only ₹64.24 crore was discharged, leaving ₹3.75 crore unreported in GSTR-3B.
• Excess availment of Input Tax Credit (ITC) amounting to ₹22.29 crore detected between 2018-19 and 2021-22 due to mismatches between GSTR-2A and GSTR-3B.
• Significant staff shortages in enforcement wings during 2018-22, with deficiencies ranging from 29% to 92% depending on the cadre (e.g., 77-86% for Guards).
• Compliance deviations in GST payments and returns filing, including non-levy of late fees, interest, and undischarged tax liabilities, involving a total tax implication of ₹439.36 crore.
• Recommendations to introduce validation controls in the E-way Bill and GST return systems to prevent duplicate invoices, suspicious vehicle usage, and enhance taxpayer compliance.

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