GST: Govt casts net wide to check tax evasion

Kochi: The state government is coming out with steps to stop large-scale tax evasion suspected under the cover of goods import from other states. With the introduction of Goods & Services Tax (GST), check posts were abolished, and vehicle inspections got reduced to nominal. The plan now is to boost vehicle inspection, and for this the finance ministry has initiated measures to substantially increase the number of squads.

The assessment is that abolition of check posts and weakening of vehicle inspections became a boon for tax evaders which resulted in a huge dent in government revenue. In fact, one of the benefits of GST cited by many including Kerala was that tax evasion would come down.

The tax revenue during financial 2016-17 was Rs 34,038 crore and it was expected to rise to 41,000 crore post-GST. But as GST has crossed one year, it has reached oly Rs 38,407 crore. But as it turned out. May 2018 registered a fall in tax revenue by Rs 221.77 crore, compared to May 2017.

The items where tax evasion increased with the abolition of check posts are marble, granite, iron-steel products, timber, furniture, gold, silver and construction materials. Earlier with thorough inspection at check-posts, evasion could be plugged, whereas at present goods from other states could be shipped in with copies of invoice and declaration. Fraud is mostly committed in the form of forging and manipulating those documents.

The machinery for monitoring goods movement through electronic means, namely E-way bill, has not been effective so far. It is in this background that enforcement squads are being strengthened. To this end, the finance minister called a meeting of tax department officials the other day.

Although it was said that those who worked at check-posts would be redeployed in the intelligence wing of the department and inspections tightened, there was no follow up action on that. Currently, the department has only that many squads as there were during VAT era. The service of those squads were confined to hotels and restaurants. Even the GST Commissionerate is not keen on increasing the number of squads either.

The current drive of the government comes in the light of the decrease in tax revenue to such an extent as to affect the financial stability of the state.