Nexus of Good: A giant leap
A series of revenue-augmentation initiatives over the last two years has helped the Department of Commercial Taxes, Jharkhand, break all records of revenue collection
The Department of Commercial Taxes, Jharkhand, has created history by achieving an all-time high record in revenue collection of nearly Rs 21,000 crore. This milestone has been achieved because of the several innovative revenue-augmentation measures taken up by the department, like establishing Intelligence and Revenue Analysis Unit (IRAU) and Special Task Unit (STU), along with close monitoring of tax compliance.
If we go a little back, in the financial year 2017-18, when the GST was implemented, the total revenue collection by the Department of Commercial Taxes, Jharkhand, was Rs 11,369 crore, and there were several issues to start with, like technical GSTN glitches, frequent changes in rules and circulars, transition from VAT to GST, introduction of services tax for state officers and many others. In the financial year 2020-21, the COVID-19 pandemic hit the economy, however, because of the protected revenue from the Government of India, the total collection of the Department of Commercial Taxes, Jharkhand, was Rs 16,147 crore. The assured protected revenue came to an end from July 2022, and the states were told to develop their own revenue-augmentation measures.
In light of the prevailing precarious economic condition then, the department has taken a series of revenue-augmentation measures over the last two years, resulting in an additional revenue collection of Rs 5,000 crore. In terms of revenue collection, the department has taken a giant leap from Rs 16,147 crore in 2020-21 to Rs 20,938 crore in 2022-23 (till March 27, 2023), and is expected to cross Rs 21,000 crore mark.
The series of initiatives taken up by the department during the last two years includes the creation of a specific intelligence unit called Intelligence and Revenue Analysis Unit (IRAU). IRAU has proven to be the cynosure of all the revenue-augmentation measures. It has been created in headquarters with a team of officers who are adept in computer knowledge and tech-savvy with domain knowledge in GST Tax laws and data analytics.
The primary function of IRAU is to do sector-wise analysis through AI-based techniques and in-house data analytics tools, and gather information for enforcement action on several key areas like ITC mismatch, fake invoicing etc. It has resulted in a record-breaking revenue collection for the department. The team at IRAU has made significant recoveries through sectoral analysis and enforcement action on the evasion-prone commodities like iron & steel and cement, and services sectors including telecom, transportation, mining and construction among others.
E-way bill/RFID analysis is another area on which IRAU works, wherein the intelligence-based tracking and interception of evasion prone-vehicles are done. The movement of vehicles is tracked as per RFID details of toll plazas, mParivahan portal and the e-way bill details provided by the transporter or supplier of goods. Thumping success has been achieved in this field. The genuine taxpayers are not disturbed in road-checking, and only those covered under risk parameters are considered for verification by the road-check party. This method has done away with the old method of manual checking of each and every vehicle, and has, thus, significantly improved the productivity of the department without compromising on the revenue collection.
IRAU has also been involved in the analysis of IGST settlement received from the Government of India, as it identifies those taxpayers whose IGST credit reversal is not made in respect of the ineligible IGST credits. This has led to a massive increase in the collection of additional IGST settlements by about Rs 500 crore in the last three months, and will have a recurring effect for all time to come.
Another new initiative by the department has been the creation of five new Special Task Units (STUs) in the circles located in major industrial clusters. STU focuses on all the big taxpayers with turnover of more than Rs 10 crore, as they contribute to 95 per cent of the total tax revenue of the department. In STUs, the officers work in close coordination with taxpayers and deal with all the activities relating to return filing, refund claims, input tax credit availing, correctness of return etc. This not only creates trade facilitation, but also ensures better tax compliance and revenue collection.
Close monitoring of tax compliances has been pivotal in revenue augmentation. The taxpayers with turnover of more than Rs five crore are monitored at the highest level on a daily basis. A targeted approach has been adopted by the department for maximising the return compliances, which has resulted in 100 per cent return filing by taxpayers having annual turnover of over Rs five crores.
In January 2023, the department also launched One Time Settlement (OTS) scheme in order to grant relief to tax-arrears holders. It is expected to reduce the litigations before various judicial forums and also help the government to realise additional Rs 500 crore in revenue.
The Department of Commercial Taxes, Jharkhand, has created a dedicated GST audit wing and a targeted enforcement mechanism, using in-house resource pool of manpower, and has also created an online VAT assessment module to curtail human interface.
Besides this, the department has also focused on effective human resource management. To bring parity in the organisational structure with the Central GST department, the restructuring of the department has been done, which led to quick promotions, filling all vacant posts and thereby fulfilling aspirations of the officers and keeping them highly motivated. Officers in the grade of JCST, DCST, ACST and STO got their long overdue promotions. 102 new officers at the STO level underwent a rigorous training programme, and were then posted into the headquarter & various divisions, circles, IB, audit, IRAU etc.
Last but not the least, the department also organised several trade facilitation and outreach programmes, along with interactive sessions with the large taxpayers, in order to address their grievances and generate awareness regarding the new initiatives of the government and the changes in tax rules/acts. All these initiatives have collectively resulted in the spectacular performance of the department in terms of revenue collection and growth, and in achieving its target.
The department has strived hard to achieve the mission they have set-up for themselves, with a vision to provide non-adversarial tax administration and to ensure sustainable and equitable economic development through enhanced revenue realisation and unambiguous, effective and efficient implementation of tax policies while facilitating ease of doing business for trade and industries.
What has happened in Jharkhand holds a lesson for other states. The approach adopted by Aradhana Patnaik, Principal Secretary, Commercial Tax, along with her committed team, is replicable and scalable in the true spirit of Nexus of Good.
Views expressed are personal
