Delhi LG asked to conduct detailed inquiry on GST Evasion

Delhi Lieutenant Governor V K Saxena wrote a letter to Chief Minister Arvind Kejriwal on Monday, “advising” him to ask the finance minister to conduct a thorough investigation into potential GST evasion in the city.

In a statement, the Delhi government condemned cases of tax fraud and stated that, despite efforts to build software to address the problem, a plan has been “languishing among bureaucratic offices for nearly a year.”

In his letter to Kejriwal, Saxena claimed that Delhi has the “inglorious distinction” of having the highest tax evasion rate in the country.

Overall, 483 “bogus firms” were discovered, evading Rs.3,028 crore in taxes, he claimed.

“It is undoubtedly doubtful that the country’s capital leads the list of tax evasion among all states and union territories, with the one in second place behind Delhi by up to Rs.827 crore. This is a severe situation, and the likelihood of cooperation among GST officials cannot be ruled out,” the LG stated.

Saxena recommended the chief minister to direct the finance minister to conduct a thorough investigation into the situation and determine the root cause of such tax evasion.

“This not only reflects poorly on the status of tax governance in the national capital, but it also results in a significant loss for the public exchequer.

“This resource could have been meaningfully utilised for investments in public interest,” claimed the governor’s office.

He cited a January report from the Central Board of Indirect Taxes and Customs that highlighted the issue of “bogus registrations and fake invoices” in the country.

The report for the third quarter contains “shocking” information regarding the magnitude of tax fraud in Delhi, he claimed, referring to alleged GST evasion.

“I hope that you will personally take an interest in the matter and inform me of the efforts being made to tighten the tax administration in the city,” Saxena wrote in his letter to Kejriwal.

The Delhi government stated in a statement that it strongly opposes any cases of tax evasion and is unwaveringly committed to ensuring stringent tax compliance. The culprits will face the most severe penalties available, according to the statement.

The Delhi government claimed it was “dismayed” that despite its proactive partnership with IIT Hyderabad to build software to combat tax evasion and boost revenue collection, the proposal has been sitting in bureaucratic offices for nearly a year.

A full year has passed since the initiative was initiated in February of last year. This delay is solely due to the GNCTD Amendment Act, it stated.

“It is essential that we collectively prioritise upholding the integrity of the tax system and safeguard the interests of the citizens of Delhi,” the statement went on to say.