Value Added Tax Information System
Commercial Tax Department, Govt. of Gujarat

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
Commercial Tax, Government of Gujarat, India, is mainly administering the tax on intra-state and inter-state sale of goods, viz. Gujarat Value Added Tax Act, 2003 (VAT) and Central Sales Act, 1956 (CST). As per the Constitution of India, there is a demarcation of indirect tax collection. The Central Government collects tax on goods manufactured and services while States are empowered to collect tax on sale of goods. Indirect tax payers (dealers) interact, directly or through the tax practitioners, with the Department for obtaining new registration, amendments to it, cancellation, filing periodic returns, obtaining Statutory forms, way bills for border check posts, return scrutiny, assessments, refunds, appeals, advance rulings, enforcement, check post activities, etc. Gujarat State is divided into 33 Districts and 249 blocks covering a population of about 60 million. At present there are 4.54 lakh live dealers under VAT and 2.74 lakh live dealers under Central Sales Tax Act, 1956. About 30% tax payers are having their annual turnover less than a million Rs. Some of them are migrants from other states and other countries. Women are heading some small trading units. In the absence of process re-engineering and inter-active web services such groups could not comply-with complex rules and procedures on their own. So, they were an easy prey for the greedy tax practitioners. The department is divided in 11 divisions, 23 ranges, 103 units and 11 border check-posts and a training institute. The registrations and other functions are area based and there is a strong one-to one relationship between the dealers and officers. Revenue implications are high as total collections are around Rs 50,000 crore, which is about 70% of the total State revenue. Most of the social welfare activities and spending on health, education, law and order and infrastructure are done through this source of revenue. Every year refund of around Rs 3000 crore is given. Data volume is high. Before computerization, which started from 2006-07, with the introduction of Value Added Tax, the tax payers had to visit offices in person and give applications in hard copy with their signature. Department also followed manual processes. There were errors, omissions, delays and grievances. Cost of compliance and cost of collection were on a higher side. Internal controls and audit trails were also weak. Doing business and complying with indirect tax rules in Gujarat was difficult and service delivery was slow. It is very important for the tax payers to obtain registration certificate from the registering area authority for carrying out business. Without a valid certificate a dealer cannot collect tax on behalf of Government from the buyer. He cannot also claim Input Tax Credit (ITC) for his purchases. These Certificates and other permissions are to be obtained from the Commercial Tax offices only. Such Certificates are not allowed to be sold in the market. Amendments and cancellations are also to be done by the concerned area officer. Earlier, the process of issuing Registration Certificates, amendments and cancellation was partly manual, causing delays and hassles.

B. Strategic Approach

 2. What was the solution?
VAT information system is a cluster of path- breaking web based applications like OASIS, TRACE, INFORM, m-INFORM, e-nivaran, VISIT, SCORE, ITC Ledger, etc. with innovative use of technology A stage-wise approach has been adopted in this project. Pain areas for the tax payers: like obtaining new registration, amendments to it, issuing CST forms and way bills and scrutiny, cross check of Input Tax Credit (ITC) and refunds, have been taken up for process re-engineering and e-services ahead of assessment, recovery, enforcement, check post and appeals module. At the same time, programs are so designed that dealer is neither called frequently to the office for verification nor does an inspector visit place of business of the dealer. Processes which are taken up for computerization under VATis are: •Migration of legacy dealer master of the Sales Tax era, including data of cancelled dealers •Registration (VAT& CST) including on-line application for registration and collection of PAN details •Filing of Periodic Returns and e-returns •Payments through chalans and e-payment •Forms Control : C, F and H (100% faceless) •Check posts: way bills, bar coding, etc. •Assessment, all audit assessments are done through VATis by the officers •Refund though ECS •Recovery of dues •Enforcement activity •Appeals •ITC profile •Dealer search •Dissemination of information through Web site It is possible for a tax payer to request for way bills through mobile phone under m-INFORM module of VAT information system. Besides, the workflow / approval process is electronic and access is role based. In multiple levels of processing, pending task is created in the account of higher levels of the hierarchy. Computer friendly forms were designed and suitable User requirements and system requirements were drawn. Computerization has the support of robust legal framework which makes it mandatory for the dealers to give unique invoice numbers, file e-returns, make e-payments, apply on-line for refunds, forms, way bills, etc. Computerization has the support of robust legal framework which makes it mandatory for the dealers to give unique invoice numbers, file e-returns, make e-payments, apply on-line for refunds, forms, way bills, etc. Further, 1)Changes were made in the VAT rules regarding number and type of documents to be produced and amount of security deposit to be paid in case of new registrations. 2)Macro based Excel templates with off-line validations were deployed for the convenience of the tax payers, so that they need internet connectivity only at the time of upload. 3)For secure delivery of certificate, use of signor code was made so no tax payer or officer was required to obtain DSC. 4)7 Special Registration Units (SRU) were established for the convenience of the tax payers. A special drive was also undertaken to dispose-off the pending applications for registration under old scheme. 5)Training and orientation sessions were conducted for capacity building of all the stake holders. 6)Project evaluation & monitoring team and Advisory Committee were made functional. Objectives: 1.Taxpayer facilitation 2.Timely, transparent and accurate service delivery 3.Improving the quality of service to the taxpayer by simplifying administrative procedures, i.e process re-engineering 4.Bring down cost of compliance and cost of collection 5.Efficient and transparent commercial tax administration 6.Provide better quality of information for decision making 7.Strengthening internal audit and control 8.Increase levels of Automation & Integration 9.Secure Delivery of Registration Certificates, way bills and forms 10.Data sharing with other Govt Agencies 11.Reduce leakages and increase revenue Target Group: Tax payers, Tax practitioners, Tax administrators and citizens at large

 3. How did the initiative solve the problem and improve people’s lives?
1)The Registration Certificate, CST forms, Way bills are issued under Digital Signature Certificate (DSC). However, no dealer or officer is required to obtain DSC. Instead, use of signor code available under JAVA is made. 2)Macro based Excel Templates with off-line validations are used so that internet connectivity is required only at the time of upload. 3)Tasks for spot visit are generated through the system on a round robin pattern so there is no scope of favoring any officer. 4)Minimum human intervention and optimum use of IT as the discretionary powers to decide security deposit amount and number of minimum documents have been structured in such a way that registering authority cannot go beyond that. 5)If there is no action for 30 days, system generates registration certificate under deemed registration provision. 6)With special MOU with Microsoft, fonts called “shruti” were designed so that one can type in Gujarati language also. 7)On-line matching of Input Tax Credit, shown in the log-in of the tax payer. 8)Request for way bills can be made through mobile phone also. 9)Status tracking at every point of activity of scrutiny and approval through SMS and e-mail.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
1)Fine tuning of the existing VAT & CST dealer data for effective date of registration, change in address, commodity, constitution, etc. on which other modules of registration, returns and payments, assessment, recovery, appeals, etc. can work. 2)Massive drive was initiated for carrying out all pending amendments and disposing off all applications for cancellation of registration certificates. 3)An IT committee was formed headed by Additional Chief Secretary of the Finance Department. PeMT and Advisory Committee have also been formed. Gujarat Informatics Limited has been appointed as consultant for the project. 4)Module-wise teams consisting of 4 to 5 officers from head office and field were formed to give requirements to the software vendor. 5)Appointment of a moderator for different software application modules where modules were hyper linked. 6)Suitable changes for e-services were made in law, rules and procedures and forms were so designed as to capture optimum information. 7)Process re-engineering taken up where number of un-necessary scrutiny steps were reduced and initiated steps to shift from person dependency to process dependency. 8)Testing and iterations were done on the maintenance server. UAT were conducted module-wise. 9)Representatives of trade bodies and bar associations were also consulted 10)Review and modifications of the modules developed were done by a group of senior officers 11)Changes were required due to change in law or procedures. These changes in the modules were tracked by version numbers 12)People from Cyber treasury, accounts department and various banks were also frequently consulted for e-payments and refund through ECS. 13)User manuals and handbooks with screen shots were prepared in English / Gujarati language. 14)A 12 hour help desk for the department personnel was made functional for trouble shooting. For tax payers 24 x 7 facilitation centers were created where they can ask for solution of their problems. Each call is given a unique reference number which can be tracked till the time problem is solved. For this use of FAX and a common e-mail id is also made. 15)Hands on training given to 4000 personnel in the state of the art computer lab in the training school. 16) All manual registers were converted in electronic format in the form of MIS and reports. Old circulars were reviewed and detailed internal instructions were issued for proper implementation of the e-gov project. 17) Officers were directed to carry out registration, amendments, cancellation, assessments, refunds, etc through the compute only. 18)Passing Computer competency exams was made mandatory for further promotions. It consisted of on-line MCQ type exam and practical questions on Word, Power Point, Excel, Internet explorer, use of intranet and internet, etc. 19)Instructions and guides were put on the web site for the benefit of tax payers. Awareness was also created by advertisements in the newspapers 20)District-wise Orientation programs were held for tax payers and tax practitioners. 21)Concept of work flow management was adopted. Access rights were given based on the location of posting and role of a person, like appeal, enforcement, check post, registration, etc. For example a person posted in city ‘A’ and doning registration cannot access any other functionality in city ‘B’ except MIS. 22)Creation of user-id and password based on General Provident Fund, a unique number/code for the tax administrators even if they are transferred or promoted. 23)After warranty period, planning for AMC of hardware was done. 24)SLAs were also done. 25)Security audit of the application was got done through a third party. 26)Change management programs were also conducted to adopt technology for increasing efficiency and self-compliance.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
Basically, tax administrators, tax payers and tax practitioners including banks were involved in design and implementation of the project. Civil servants like Additional Chief Secretary (Finance) and Additional Chief Secretary (Science & Technology) were at the top to drive the whole initiative by policy decisions and future planning. At the Commissioner level, an e-gov cell headed by an Additional Commissioner is functioning for day to day implementation issues and trouble shooting. An advisory committee headed by the Commissioner consists of 2 representatives each of bar association and trade and industry. This committee advises primarily on implementation and formulates strategy for new initiatives. Project evaluation and Management Team headed by Special Commissioner monitors the progress of the project every 15 days. User Statistics are monitored for each functionality. Number of complaints for trouble shooting is also closely analyzed.
 6. How was the strategy implemented and what resources were mobilized?
Details of the Financial resources deployed for this project From 1.06.2006 to 30.09.2014 are as under: Year Expenditure (Rs in crore) 2006-07 8.78 2007-08 5.40 2008-09 5.93 2009-10 3.81 2010-11 7.75 2011-12 9.58 2012-13 5.90 2013-14 64.44 (Due to procurement of Oracle Software Licenses for Centralised Architecture) 2014-15 (upto Sept 2014) 4.00 The project was started with the budgetary provision of Govt of Gujarat. Later, for enhancements, it has been partly funded to the tune of Rs 33 crore by the Govt of India under Mission Mode Project. Further, about 50 Junior programmers have been deployed for effective implementation. A special branch of about 20 persons functions full time in e-gov cell.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
Dealers I Citizen: 1.Number of trips to the office reduced 2.Freedom from appearing in person 3.Faceless service delivery 4.Transparency, better response for services, avoidance to un-ethical practices 5.Direct and meaningful communication through web portal as single window for services 6.Time & Location Independence due to e-Services. 7.Number of persons engaged in issuing statutory forms has been brought to 27 from 300 wef 1.7.2008 in the first phase and then to 7 from 17.08.2011 8.Forms issued in 24 to 36 days earlier can now be issued within 24 to 36 hours. Cost of compliance and cost of collection have come down. 9.Delivery of Secured Forms and certificates by means of Digital Signature, Bar-code and Watermark Tax Administrators I Commissionerate: 1.Daily updated data dashboard and MIS for informed proactive decision support 2.Holistic view of state and national-level transactions and health of VAT/ CST revenue collection 3.Data of forms issued electronically has been shared with other states for cross verification, resulting into control on inter-state transactions. Data co-relation and data mining has become possible 4.High value, citizen friendly image 5.Self-compliance resulting in better controlling 6.Saving in human resources and diversion for more intelligent work 7.Saving on printing & postage expenses Employees of the department: 1.Reliable tool for support in decision making process 2.Data at the click of mouse 3.Relief from searching voluminous manual files 4.Speedier internal process such as scrutiny, assessment and monthly report preparation with digitized data and automated triggers and work flows 5.Spare time and effort for core work of leveraging tax-net and revenue generation State Government: Predictable revenue in-flow and refund forecast I planning

 8. What were the most successful outputs and why was the initiative effective?
1)User requirement specifications were given to the application software vendor. Their progress was reviewed by module-wise groups and PeMT. 2)Performance of hardware was monitored through CPU usage and on-line editing by DBA. 3)Service users’ feedback is taken in various manners including the feedback section in the web portal, e-communication, seminars, workshops, conducting Customer Satisfaction Index (CSI), etc. Client side team which regularly interacts with the business users at all levels for obtaining the requirements, clarifying the requirements, obtaining the feedback and suggestions for improvement. 4)A critical aspect of any system security policy is the monitoring and recording of activities within that system i.e., “auditing”. To address these requirements, system provides number of features and functions to enable accountability of actions taken by users of the database.

 9. What were the main obstacles encountered and how were they overcome?
1)Problems of using computer in vernacular language were overcome by deployment and use of special fonts in “shruti” 2) In the notices, assessment orders, demand notice, etc it is possible to type in Gujarati and attach the document through browse facility. 3) All notifications and circulars in Gujarati are published on web site in Gujarati language. 4) Some of the content on profession tax has been put on web site in Gujarati including the link name. 5) Managing a vast database of critical information was a key part of the project. This support was provided by the software vendor. 6) Like in any other initiative, it was difficult to help the department staffs adjust to the use of technology. To overcome this, orientation programs were organized for tax payers, tax practitioners and tax administrators. Staff was given hands on training. Training material was prepared and made available in vernacular language. There is an advisory committee for e-services consisting of officers and advocates.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
Post implementation of the project, the impact of the project was studies through various parameters and a clear improvement in governance was notice. 1. Stages of Scrutiny – From the earlier practice of multi-stage scrutiny and several levels of approval, the number of stages of scrutiny were reduced. The value addition to the project was in the form of a faceless government with minimal human intervention required for processing. 2. The cost of compliance reduced because the use of technology enabled the department to streamline their operations and reduce costs for monitoring compliance. The same was the case with the cost of collection which reduced drastically. 3. The total manpower requirements of the department was reduced to the use of ICT by almost 50% of the original number. Infact the manpower has now been diverted to other development activities which help in raising revenue for the department. From a state of person dependency, the department has moved on to process dependency. 4. Originally, the time required for service delivery varied between 24 to 30 days and this has now come down to almost 2-4 days which is a good improvement by any standards 5. Monitoring of tax was initially done through registers and notebooks which was tardy and bulky procedure. MIS was not easily available and unnecessary non value adding effort was being put in. With most processes computerized, monitoring of the system is easy with real time information only a click away thus making tax administration very easy. Performing any kind of audit was very difficult as information was distributed across registers and books. With a computerized system, a thorough audit became possible. 6. With online availability of services, the number of trips to office reduced. Earlier, most people would end up making 2 trips for very trivial services where now most services along with the status is available online. Disruption in service due to absence of staff is no more in the picture as e-Services have 24x7 availability and citizens can seek them anytime. 7. Internally, compliance has improved considerably due to set processes defined in the computerized system and internal control is also better.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The project is running successfully for the last 8 years, with periodic changes and enhancements. It can be scaled for: 1.Integration with Central Board of Direct Taxes (CBDT) and passport portal for on-line validation of Permanent Account Number and passport. 2.Make it Unique Identification Authority of India (UIDAI) compatible. Then the registration application will be 100% on-line. 3.Share real time data with (Tax Information Exchange System) TINXSYS project of the Empowered Committee of State Finance Ministers. 4.Exchange data with the Government of India for 360 degree view of tax payers with the data of CBDT and Central Board of Excise and Customs (CBEC) to match Central Sales Tax data with other Commercial Tax authorities in all the States of the country on a real time basis. 5.It can be integrated with Railways and ports for monitoring movement of goods. 6.Through API it can be integrated with Commercial Departments of other State Governments.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
1)Change management is the key. One cannot bring change in one shot. It is a continuous process. The project should be designed in such way so that stakeholders can adapt to changes gradually and easily. 2)Merely bringing hardware like servers, PCs, printers, etc. is not enough for the success of the project. Focus on the end solution is key. 3)Stage-wise approach is better. Then enhancements can be easily made based on experience and expectations of the stake holders. 4)One of the most essential ingredients of a successful e-gov project is process re-engineering. It is the opportunity to bring simplicity into archaic processes and develop citizen centric solutions. 5)As far as possible make use of vernacular language in handbooks, guides and tool tips. 6)Timely AMC and SLAs of hardware is must. 7)One should go for technology refresh every five years. 8)Stakeholders should be treated as implementation partners.

Contact Information

Institution Name:   Commercial Tax Department, Govt. of Gujarat
Institution Type:   Government Agency  
Contact Person:   Dr. P.D. Vaghela
Title:   Administration  
Telephone/ Fax:   079-26581929
Institution's / Project's Website:  
E-mail:   commi-stax@gujarat.gov.in  
Address:   C/5 Rajya kar Bhavan, Ashram Road Ahmedabad
Postal Code:   380009
City:   Ahmedabad
State/Province:   Gujarat
Country:  

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