New Delhi: The Central Government has violated the law by wrongly withholding Rs 47,272 crore of GST compensation in the first two years of implementation of the GST regime. This disclosure has been made in the report of the Comptroller and Auditor General (CAG). The report said that the government used the GST compensation cess for other purposes, which is a violation of the GST Compensation Cess Act. This amount was to be used only to compensate the revenue loss to the states.
In its audit report released on government accounts, the CAG has said that this amount was to be deposited in the non-lapses GST compensation collection fund. After the implementation of GST from the year 2017, this fund was created to compensate the revenue loss to the states. The report said that the government did not do this, which is a violation of GST law. The CAG said that there is a provision to impose cess under the GST Compensation Cess Act, 2017, to compensate the states for the revenue loss from the implementation of GST. Under the law and accounting procedure, the amount raised as a cess during a year has to be deposited in the GST Compensation Cess Fund. It is part of the public account. The CAG said that in 2017-18, an amount of Rs 62,612 crore was raised as compensation cess. Of this, an amount of Rs 56,146 crore was transferred to Compensation Cess Fund.
Similarly, in 2018-19, an amount of Rs 95,081 crore was raised from the cess, while only Rs 54,275 crore was transferred to compensation cess. The report said that in 2017-18, Rs 6,466 crore was transferred less to the Compensation Cess Fund. Apart from this, an amount of Rs 40,806 crore was not deposited in the fund in 2018-19. The CAG has said that the Center used this amount for other purposes, which increased revenue receipts during the year, while reducing the fiscal deficit.
The report said that not depositing the entire amount of the cess in the fund is a violation of the GST Compensation Cess Act, 2017. In the GST Council, the issue of GST compensation of states during the current financial year remains a matter of dispute between the Center and the states.
