With a sizeable number of Goods and Services Tax (GST) works contractors and suppliers in the state found to be escaping from GST, the government, vide a memorandum, has tightened the screws on compliance for the contracting sector.
The office memorandum to all the government departments, corporations, local bodies etc has now made it mandatory for them to ask for submission of documentary proof towards GST compliance from contractors before permitting participation in any tender or quotation.
Further, before issuing any work supply order, the concerned department will have to obtain from the contractor the application reference number (ARN) generated from the GST portal. The memorandum says that before making payment, the department will have to seek GST return of the contractor.
Even for issuing permission for exhibition-cum-sale or any other event, the authorities must seek the GST registration number of the organiser and all the stalls participating in the exhibition.
The memorandum issued by the finance department and the commercial tax department contains a series of measures that the government departments have to follow to prevent GST evasion by contractors. It applies to all departments, municipal bodies, panchayats etc that publicly tender bids to contractors. However, the memorandum does not apply to contracts below Rs 50,000.
The memorandum observes that although GST is stabilised in the state and the tax is being collected online, it has been noticed that contractors and suppliers are missing on the GST portal. A sizeable number among them is non-compliant and they fail to file timely returns.
The memorandum says, “Contractors get the entire portion of payment,
including the 12 per cent tax, from government departments without deduction of TDS. By defaulting in filing the GST returns, the contractor is able to utilise the tax amount for his business without depositing the same in the government treasury.”
In view of the practice and in interest of revenue collection, the memorandum asks government departments to link the GST compliance of all works contractors in the state with their online systems to filter out the non-taxpayers.
According to the commercial tax department, around 20 per cent of the registered GST payers are “defaulters and non-payers” and avoid payment of the tax.”
The memorandum is among the measures implemented by the government to plug loopholes in payment of GST. Goa’s GST tax collection in August 2018 was Rs 237 crore.