KASARGOD: On Tuesday, the enforcement squad of the Commercial Tax Department caught a truck transporting timber. The trucker had no bill or declaration to legally transport the goods, but the officers let it pass.Ever since the Goods and Services Tax (GST) was rolled out on July 1, Commercial Tax officers are reduced to sitting ducks. “We have no new instructions from the commissioner,” a senior officer told Express. “Neither are we authorised to take any action in the wake of GST.”
Evasion right in front of the eyes
Seven days on, the check posts are no longer active and the department has not yet formed the enforcement squads. “We are sitting here on the assumption no trader or transporter is defrauding the state. I hope GST has made everyone honest or at least disincentivised being dishonest,” the officer said.
But inspectors at the check posts said the state government had been caught napping, and it did not put in place the rules and procedures to be followed from July 1. “Tax evasion is happening right in front of our eyes, but we cannot act,” said an inspector. If the uncertainty continues for one month, officers said, traders could resort to hoarding and the state government can forget about a tidy amount in tax.
The inspectors listed out several loopholes in the implementation of GST.
No checking, only declaration
The department has 14 check posts in Kasargod district - five are offices and nine are checking stations with barricades to stop evasion. There is no mention of check post in CGST Act. The idea is to ensure free movement of goods, they said. “So, we are not allowed to inspect the vehicles at check posts to verify if the goods are indeed what had been declared,” said another inspector. “They can transport anything and we have to trust them.”Officers recalled how the green channel facility at Walayar for transporting cement of government-owned Malabar Cements Limited was misused by the spirit mafia in 2007.
Multiple entries
Under the new regime, goods carriers are expected to carry a declaration called GST KER 1 form with details such as vehicle number, supplier, consignee, type of goods, quantity, tax rate and Goods and Service Tax Identification Number (GSTIN). “This is similar to the invoice in the previous tax regime,” he said. The difference is the inspectors can now only accept the declaration. They cannot stamp the declaration or make an entry in their registers.
A trucker transporting goods to Kasargod from Puttur, Bantwal or Mangaluru in Karnataka can make multiple entries into Kerala in a day with the same declaration. Top tax officers discounted that probability, but inspectors at the check posts said they know the truckers better.
No receipt book yet
Another glitch in the implementation of the GST is the unavailability of GST receipt books at the check posts. During the previous regime, many transporters were ‘willing’ to pay tax at the check posts. Such persons are taxed and slapped with a fine equivalent to the amount of tax.
According to officers, GST also has the same provision. If caught with untaxed goods on the road during random checking, a hefty fine starting from `50,000 can be slapped on the evader. “But, in the absence of check posts, truckers can always tell the squads they were willing to pay the tax and escape from the hefty fine,” said another inspector.
In any case, officers at the check posts are still stuck with the old VAT receipt books, and the department has not sent the new GST receipt books. “So, even if a person is willing to pay now, we have no choice but to let him go without levying the tax,” he said.
Chicken conundrum
The poultry business is making a killing under the cover of GST, according to tax officers. On June 30, on the eve of the GST rollout, chicken was priced at `110 at Perla, a border village. When the GST kicked in the following day, the 14 per cent tax on poultry was withdrawn, effectively making it tax-free. But, the price rose to `120 per kg. On July 3, it was `125 and on July 6, the price touched `130 per kg - a rise of 18 per cent.Officers said the government had no control over the prices and traders would always make a killing during such times. Though exempted from sales tax, poultry business will still need the declaration. “Else, their income, which is taxable, will go unreported,” one of the officers said.
Uncertainty over check posts
Officers said there was no clarity on the check posts either. Initially, the word was the check posts would be vacated by September, they said. Now, they have been asked to stay put till December and run the check posts as ‘facilitation centres’. Last month, Excise Commissioner Rishiraj Singh said in Kasargod the buildings used by the Commercial Tax Department at the check posts would be handed over to the Excise Department. As of now, the Excise Department has check posts only at Manjeshwaram, Perla, and Adhur compared to 14 of the Commercial Tax Department.