Hyderabad: The Commercial Taxes department, which is the state’s highest revenue-generating wing, is facing significant challenges due to a lack of necessary staff and the outsourcing of IT applications management, including tax collection data. Additionally, the absence of a full-time Minister to regularly oversee the department has led to disarray. This mismanagement has negatively impacted GST collections, making it difficult to meet revenue targets each year. Issues like tax evasion and scams in the Input Tax Credit (ITC) system are becoming common.
Recently, an ITC scam was uncovered, revealing the involvement of outsiders. One key figure identified was Sobhan Babu, an Assistant Professor at the Indian Institute of Technology (IIT)-Hyderabad. Plianto Technologies, a technology partner of commercial taxes, was also implicated. It is alleged that former Chief Secretary Somesh Kumar played a significant role in the scam, with the assistance of certain officials and the hired technology partners.
The Comptroller and Auditor General (CAG) report highlighted errors in the GST and VAT collections, specifically related to ITC amounting to Rs 7,589 crore. The report identified mismatches worth Rs 247 crore between ITC availed and tax payments. It also pointed out that many companies failed to file GST returns, and the Commercial Taxes department officers did not issue notices. In some cases, companies made incorrect calculations in their returns, particularly in the suburban circles, including Hyderabad City. Even when mismatches occurred, the authorities did not detect them during scrutiny and failed to take action.
One of the main reasons for these ongoing issues is the shortage of efficient commercial tax officers in the department. Since the GST Act was implemented in 2017, the department was supposed to be strengthened. However, the previous government did not prioritize recruitment or the development of advanced IT applications to prevent tax evasion and incorrect annual filings by companies. According to a senior official, the department is still facing a workforce shortage, which has hindered the vigilance wing’s ability to prevent irregularities. The official emphasized that the Commercial Taxes wing should have been given much more importance, as it is the only major revenue-generating department in the state.
The management of the key department was previously held by the Chief Ministers in both the past and present governments. However, due to their busy schedules with other state issues, the department has lost its importance in efficient functioning for nearly seven years. Former CM K Chandrasekhar Rao used to review the department’s performance every two months. Currently, Chief Minister A Revanth Reddy is focused on strengthening the department, but his busy schedule has meant that the department’s top officials are only able to meet with him once a month.
Officials have noted that while the Chief Minister has set targets for the Commercial Taxes wing, the current mechanisms have not been supportive in addressing the issues over the last seven months. They believe the entire department needs to be revived to meet the annual revenue targets, and the CM should take more initiatives by holding regular meetings.
