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CAG detects revenue loss of Rs 1,166 cr in 2019-20

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SHILLONG, Sep 16: The report of the Comptroller and Auditor General (CAG) pertaining to the revenue sector till March 31, 2020 has revealed a revenue loss of Rs 1,166 crore for the state government. The report also mentioned that the budget estimate prepared by the government was not realistic.
The report, which was tabled on the last day of the autumn session on Friday, pointed out that the check of records of taxes on sale, trade etc., state excise, motor vehicles tax, forest receipts and other non-tax receipts conducted during the year 2019-20 revealed underassessment/short/non-levy/loss in as many as 498 cases amounting to revenue loss of 1,166.89 crore which is 48.19% of the state’s own tax revenue for 2019-20.
It stated that the departments accepted underassessment/short/non-levy/loss of revenue of Rs 376.97 crore in 293 cases pointed out by CAG in 2019-20 but the recovery was only Rs 12.81 crore.
The CAG also noticed that the revenue earning departments had weak internal controls to detect underassessment, short payment, evasion of taxes, fees, royalties and other irregularities.
“There was no system in place to actively exchange information and coordinate amongst the departments for cross-verification of records to detect illegal transportation of minerals, evasion of royalties, excise duty, etc,” the report stated.
During the year 2019-20 out of 153 auditable units, 50 units (or 32.67%) were audited. During the 2019-20 fiscal, revenue raised by the state government (Rs 2,421.36 crore) was 25.72% of the total revenue receipts, which is the highest percentage during the preceding five years.
The balance 74.28% revenue receipts during 2019-20 were received from the Government of India in the form of state share of Union taxes and duties and grants-in-aid.
Total revenue receipts of the state during 2019-20 decreased by Rs 305.10 crore which was 3.14% over the previous year. The decrease was mainly under share of Union taxes /duties as compared to the previous year.
The actual realisation of revenue was Rs 1.891.25 crore as against the budget estimate of Rs 2,089.80 crore, which was short by Rs 198.55 crore (10.50%). However, in comparison to the previous year, the overall revenue realisation increased by 5.47%.
It was further observed that revenue on account of state GST was not estimated in the budget although the details of minimum assured revenue from GST, based on the formula devised by the Gol, were available with the state government.
As per the formula, minimum assured revenue for the year 2019-20 was Rs 1,074.47 crore (base year revenue of Rs 636.17 crore). Had the revenue amount receipt under the SGST (Rs 909.78 crore) or the assured amount (Rs 1,074.47 crore) been accounted for in the budget estimate, the shortfall of actual realisation of revenue over the budget estimate would have been increased. This indicates that the budget estimate was not realistic, the CAG observed.
The actual realisation of revenue under non-tax receipts was Rs 530.11 crore against the budget estimate of Rs 600.57 crore, which was short by Rs 70.46 crore or 11.73%. The shortfall was most pronounced in interest receipts (Rs 26.15 crore), forestry and wildlife (Rs 44.56 crore), Public Works (Rs 8.93 crore) and Crop Husbandry (Rs 7.16 crore), the CAG said, adding that in comparison to the previous year (2018-19), the revenue realisation from non-tax receipts increased from Rs 427.70 crore to Rs 530.11 crore (23.94%).
The decrease in revenue collection in forestry and wildlife was stated to be due to court cases filed under NGT that affected extraction and export of minor minerals, as well as strict implementation of the Meghalaya Minor Minerals Concession Rules, 2016 that allowed only legal mining leases to operate in Meghalaya. The other departments did not intimate reasons for increase/decrease (March 2022), though the same was requisitioned in July 2020.
The CAG had recommended that the state government needs to review its revenue estimation and collection mechanism and put in place adequate measures to enable it to prepare a more realistic budget and strengthen its revenue collection apparatus.
Under the GST (Compensation to States) Act, 2017, states were guaranteed bi-monthly compensation for any loss of revenue in the first five years of GST implementation, starting from 01 July 2017.
An analysis of arrears of revenue revealed that the arrears of revenue as on 31 March 2020 under some principal heads of revenue amounted to Rs 209.23 crore, of which, Rs 78.73 crore was outstanding for more than five years.
Out of the total 36 pending refund cases valued with Rs 26.26 crore under the Sales Tax/MVAT, only three cases valued at Rs 5.33 crore were refunded. Similarly, under the State GST, 47 cases valued at Rs 50 lakh was refunded against the total 157 pending cases valued at Rs 26.36 crore.
The balance 33 cases involving Rs 20.93 crore under Sales Tax/MVAT and 110 cases involving Rs 25.86 crore under the State GST were yet to be refunded at the end March 2020.
The review of IRS upto March 2020 disclosed that 2,067 paragraphs involving money value of Rs 3,179.44 crore relating to 438 IRS remained outstanding at the end of June 2020 for want of replies or for unacceptable replies by various government departments.
The Excise department had recovered only Rs 59 lakh during the five year period (2014-19) against the total of Rs 21.68 crore, the report added.

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