C and AG raps DGST for poor internal control at Apex Level.
The C and AG and the DGST may agree on the non availability of 75% exemption to the manufacturers who pay service tax on GTA as receiver of the service, but when it comes to internal control at the apex level, the C & AG certainly is not happy with the DGST. In its report No 6 Customs, Central Excise & Service Tax - Performance Audit for the year 2004-05, the C&AG observed that:
“The post of DGST was created in December 1997 mainly to strengthen monitoring of collection and assessment of service tax; study staff requirement; suggest measures to increase revenue collection and to inspect service tax cells in commissionerates. Review of functioning of DGST revealed that their recommendations for immediate creation of six independent service tax commissionerates in the budget proposals for the year 1999- 2000 were implemented only in September 2004. One of the functions of DGST was to study and create database and update the same from time to time. DG had instructed commissionerates on 26 May 2003 for creation of complete and upto date database in respect of potential service tax assessees. No database was, however, found created either by cells incommissionerates or at DGST. There was also requirement of fortnightly report on creation of database from division to commissioner and then to chief commissioner which was not being followed by commissionerates. Though DGST had been regularly issuing circulars to all commissioners regarding ‘modus operandi’ for taking remedial action since January 2003, no feedback was received from zones/commissionerates in the absence of any prescribed return”.
The Audit cannot fault with the DGST at least in revenue mobilization. After all it was the DGST who issued the circular denying the 75% exemption for GTA and issued another circular to levy service tax on estate builders who subsequently sell or let out the flats.