“The short-crediting was a violation of the GST Compensation Cess Act, 2017… It is recommended that the Ministry of Finance take immediate corrective action,” CAG said in a report tabled in Parliament earlier this week.
In 2017-18 and 2018-19, centre wrongly retained Rs 47,272 crore of goods and services tax (GST) compensation in the Consolidated Fund of India and used it for other purposes, the CAG (Comptroller Auditor General) said in its audit report of government accounts.
If flagged that as a part of public account, the amount was to be credited to the non-lapsable GST Compensation Cess collection fund for payment to states for loss of revenue due to implementation of GST since 2017, but the government did not do so, thus violating the GST Compensation Cess Act 2017, the Economic Times reported.
“Audit examination of information in Statements 8, 9 and 13 with regard to collection of the cess and its transfer to the GST Compensation Cess Fund, shows that there was short crediting to the Fund of the GST Compensation Cess collections totalling to Rs 47,272 crore during 2017-18 and 2018-19,” the National auditor noted.
“The short-crediting was a violation of the GST Compensation Cess Act, 2017… It is recommended that the Ministry of Finance take immediate corrective action,” CAG said in a report tabled in Parliament earlier this week.
Overstatement of revenue receipts and understatement of fiscal deficit was recorded for the year due to short crediting of cess collected during the year.
“The wrongful operation has implications on the reporting of Grants in aid, since the GST Compensation Cess is the right of the States and is not a Grant in aid,” CAG noted.
CAG, however, had also noted that February 2020 that the proceeds of cess collected and not transferred to Public Account would be transferred in subsequent year, accepting the audit observation.
Rs 95,081 crore was collected during the year 2018-19 as GST compensation cess but Rs 54,275 crore was transferred to the compensation fund as against budgeted provision of Rs 90,000 crore and an equal amount for release to states as compensation, the auditor said.
“From the Fund it (department of revenue) paid out Rs 69,275 crore (inclusive of an opening balance of Rs 15,000 crore in the Fund) as compensation to the States/ UT. This resulted in savings of Rs 35,725 crore on account of short transfer to the Fund and of Rs 20,725 crore on account of payment of compensation to the States/ UTs,” it added.
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