Even after four years of implementation of GST, a proper system of review and post-audit of refunds had not been effectively institutionalised so that the department may rectify mistakes in time, a report by government auditor CAG said, noting that the audit noticed 410 instances of double payments, amounting to Rs 13.73 crore.
Moreover, the audit observed 1,686 compliance deviations in 1,438 cases, out of 7,560 cases were examined in detail, amounting to Rs 977.54 crore, constituting a deviation rate of 22 per cent.
Irregularities noticed were relatively higher in four categories like ineligible credit of duty paid goods in stock without documents, irregular claim on unavailed credit on capital goods, ineligible credit on inputs or input services in transit, and irregular claim on closing balances.
“Considering that the department had verified 79 per cent of these claims, the deviation rate suggested that the verification process carried out by the department suffered from inadequacies. Out of 1,438 cases, where audit noticed irregularities, 1,132 cases had been verified by the department, and the department did not point out irregularities amounting to Rs 735.69 crore,” the report said.
Audit analysed the data of Public Financial Management System (PFMS) relating to GST refunds pertaining to the period from July 2017 to September 2019 (Pre-automation) received from 34 Commissionerates and followed it up with substantive audit of the payment process.
It noticed 410 instances of double payments owing to lack of reconciliation and monitoring by the Department amounting to Rs 13.73 crore, said the report.
Audit also examined compliance to the provisions of the CGST Act, associated rules, procedures, etc. with respect to a risk-based sample of 12,283 refund cases processed by the Central tax authorities.
“Audit noticed 522 cases where excess or inadmissible refund of Rs 185.28 crore was sanctioned due to various reasons such as incorrect computation of Adjusted Total Turnover, consideration of ineligible accumulated ITC, claims which were time-barred etc,” said the report.
The CAG audit report observed that though the department had identified the top 50,000 cases for verification as a priority for 2018-19, the exercise was not yet completed, and the department was yet to verify 8,849 cases.
“The rate of recovery of detected irregularities was low. Cross jurisdictional issues and lack of co-ordination in Central Tax jurisdictions in some zones impeded verification and initiation of recovery actions,” said the audit report.