‘GST, a revolution’
Deputy Commissioner, Enforcement (Central Kashmir) Parvez Raina says the UT is doing phenomenally well on tax realisation under GST. Calling GST a revolution, he says its honest implementation and enforcement could change the game.
by Bisma Nazir
THE number of GSTINs in Jammu and Kashmir currently stands at around 1,30,000 since July 8, 2017 when the act was made applicable to the erstwhile state of Jammu and Kashmir. The above referred number comprises those who migrated from the VAT to the GST and the ones who registered as freshers.
In an exclusive interview with the Kashmir Central, Deputy Commissioner, Enforcement (Central Kashmir) Jammu and Kashmir, Excise and Taxation Department, Parvez Raina, KAS says that the Union Territory is doing phenomenally well on tax realisation under GST.
Parvez who has many feathers in his cap when it comes to realising taxes from tax evaders and streamlining the taxation system in central Kashmir districts of Srinagar, Budgam and Ganderbal, says that GST is not a mere tax regime, rather it is a revolution. Honest implementation and enforcement of the GST could change the scenario in Jammu and Kashmir. Known for his honesty and integrity, Parvez says that under the relevant section of the State Goods and Services Tax Act, many milestones were achieved in the last two years. He says his department has been successful in tightening the noose around the habitual tax evaders and millions who were indulging in tax theft, were realised from their businesses. Parvez has been working tirelessly and without fear or favour to inculcate the culture of taxpaying among those infamous for tax evasion.
While listing achievements in the last two fiscal years, Parvez says that huge taxes have been realised from customers who tried to dupe the department by evading taxes.
• A growing number of tax payers
Parvez Raina says the number of taxpayers is growing each year in Jammu and Kashmir because of which they witness remarkable growth in tax collection each year. Parvez attributes this growth to the growing awareness among the masses and says that more and more people who cross the threshold mark of the transaction of Rs. 40 lakh per annum come forward voluntarily to register under GST. Parvez, however, adds that there are three kinds of people who register under GST. Category I comprises people who genuinely want to pay the taxes to avoid any kind of legal reprimand. Category II is of those who want to neutralise the taxes they are liable to pay. That means they enroll for suppression of facts. Category III is of Input Tax Credit Fraud (ITCF). People of this category are tax crooks. They create fake companies to indulge in tax fraud. They presumably float companies or firms, register them with the Income Tax Department only to indulge in tax fraud. Relating an interesting anecdote, Parvez says he recently unearthed one such fraud. Giving details, the DC Enforcement (Central Kashmir) says a network of fake seller-buyer fraudsters was detected recently. A guy from Srinagar was presumably into the business of scrap dealing. He was purchasing scrap only on papers from his source in Pulwama. The Pulwama guy had registered a fictitious company with the Income Tax Department, had gotten a GSTIN number linked to his mobile number. He had printed a letterhead, bill book, challan book of his fictitious company and had handed them along with the mobile number linked with the GSTIN number to the Srinagar guy who would create fake GST bills and would presumably sell the scrap to another guy with a fake company in Amritsar, Punjab. The GST amount would automatically be generated in his ITC. This kind of fraud is only detected by inspection, search and seizure under Section 67 of the GST Act. The fraud was exposed when Commercial Taxes Department went in search of the ‘proprietors’. “A subsequent audit revealed that no such companies existed. The so-called proprietors turned out to be fraudsters,” says Parvez adding that a penalty of Rs 5 crore has been imposed on the said fraudsters.
Parvez makes some startling revelations about how high-end goods are imported through cargo. Gold, saffron and I-phones, cigarettes, stitched lady suits are the main items. “We have daily imports worth Rs. 10 crore approximately. We only analyse whether the GST has been paid. Mostly high-end phones come through cargo purchased from gray market, meaning that the item has been purchased without paying GST,” Parvez says, adding that the goods coming from the gray market usually are meant for the senior officials. He says they seize the goods after proper analysis and release them only after the due amount of taxes by the customer.
To a question, Parvez says the enforcement is concerned only about taxes on the goods being imported. He says it does not fall under the purview of the Enforcement Department to see whether the imported items are to be allowed or not.
Parvez informs that data analytics is used to ascertain if the entire supply chain in a particular sector is paying adequate GST or if there is a missing link. “We promptly detect GSTevasion through data analytics and have realised in millions from the erring businesses on this account. The GST Intelligence (DGGI) has stepped up efforts to catch evasion at the initial stage itself so that compliance improves”, he says. He further adds: “We are using ‘end-to-end’ analytics for a sector and ‘gap analysis’ of the taxes paid in a supply chain to ascertain if the entire value chain is paying adequate GST or if there is a missing link. The data analysis includes comparisons of the tax payment profile of a particular sector vis-a-vis the erstwhile excise and service tax regime. The effort is to further streamline GST. We want to ascertain if all the sectors which are covered under GST are paying their due share of taxes,” says the DC.
If a sub-part of any sector is not paying taxes in the value chain and there is a case of evasion, enforcement action could be taken, says he.
“Data analytics is a time-taking process, but this is required to check GST evasion at the manufacturing stage itself. It will help increase revenue collection while ensuring that compliance improves,” Parvez adds.
• GST, a revolution
Parvez argues that GST is not a tax regime rather it is a revolution. “Earlier there were multiple taxes such as Central Excise, Service Tax, State VAT, etc. The GST introduces just one tax with three components – CGST, SGST and IGST. When the supply of goods or services happens within a state called intra-state transactions, then both the CGST and SGST will be collected. Whereas, if the supply of goods or services happens between the states called inter-state transactions, then only IGST will be collected. The use of correct GSTIN becomes important to identify the applicability of taxes. Hence, validate with the help of the GST search tool before using the GST number in the sales invoice. It is to be noted that the GST is a destination-based tax, which is received by a state in which the goods are consumed but not by a state in which such goods are manufactured,” Parvez explains.
He says the government has fixed slabs, and various reliefs under various sections are available for eligible taxpayers only. It is also clear that, after an initial fixed income, different slabs of income tax have to be applied and the subsequent tax must be paid as per the calculations. To avoid tax evasion and follow-up with individuals, all governments as well as private entities are liable to deduct tax at the source and let the individuals claim legitimate refunds while filing their returns. “We are committed to refunds, and taxpayers are receiving their refunds promptly without any follow-up. Severe penalties and laws are there for refund fraud, and yet so many people fraudulently claim refunds,” informs Parvez.
• Prompt actions
Parvez says the Income Tax Department carries out search and seizure actions as and when it has inputs about tax evasion.
Answering a question, he informs that there are some business houses in manufacturing, real estate, handicrafts, carpet trading and hospitality who are habitual tax evaders. The department, he says, is keeping a close vigil and it is just a matter of time that they catch them by their necks. Parvez says people must understand that this is a digital age, and with Aadhaar, PAN, insurance, and other investments interlinked and traceable immediately, one cannot hide his/her income nowadays. He advises people should never try to under report their income to save tax. This is an offence liable to harsh penalties under relevant provisions of law.
Parvez, however adds that people do come forward voluntarily and in large numbers, to disclose their means of income and pay taxes. He signs off by attributing the phenomenal growth in tax paying to people’s cooperation.