CAG detects revenue loss of Rs 1166 cr in 2019-20

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SHILLONG, Sep 16: The Comptroller and Auditor General (CAG) report for the revenue sector up to March 31, 2020 has revealed a revenue loss of Rs 1166 crore for the state government. The report also mentioned that the provisional budget prepared by the government was not realistic.
The report, which was tabled on the last day of the fall session on Friday, pointed out that auditing records of sales, trade, etc. taxes, state excise, vehicle tax engine, forest revenue and other non-tax revenue carried out during the year 2019-2020 revealed an undervaluation / a short / a non-collection / a loss in no less than 498 cases equivalent to a loss of revenue of 1166.89 crore or 48.19% of the state’s own tax revenue for 2019-20.
He said departments had accepted understatement/short/no draw down/loss of revenue of Rs 376.97 crore in 293 cases flagged by CAG in 2019-20 but recovery was only of Rs 12.81 crore.
The CAG also noted that revenue-generating departments had weak internal controls to detect understatements, late payments, tax evasion, fees, charges, and other irregularities.
“There was no system in place to actively exchange information and coordinate across departments for cross-checking records to detect illegal transportation of minerals, evasion of royalties, excise duties, etc. “, says the report.
During the year 2019-20 out of 153 auditable units, 50 units (or 32.67%) were audited. In the financial year 2019-2020, the revenue generated by the state government (Rs 2,421.36 crore) accounted for 25.72% of the total revenue, which is the highest percentage in the five previous years.
The balance of revenue of 74.28% in 2019-20 was received from the Government of India in the form of a state share of Union taxes and duties and grants.
Total government revenue in 2019-20 decreased by Rs 305.10 crore or 3.14% from the previous year. The decrease was mainly due to the share of Union taxes/duties compared to the previous year.
The actual revenue realization was Rs 1,891.25 crore against the budget estimate of Rs 2,089.80 crore which was Rs 198.55 crore (10.50%) lower. However, compared to the previous year, the overall revenue realization increased by 5.47%.
It was further observed that the GST revenue of the state was not estimated in the budget, although details of the minimum assured GST revenue, based on the formula devised by the Gol, are available. to the state government.
According to the formula, the minimum assured income for the year 2019-2020 was Rs 1,074.47 crore (base year income of Rs 636.17 crore). If the amount of income received under SGST (Rs 909.78 crore) or the amount insured (Rs 1,074.47 crore) had been taken into account in the budget estimate, the shortfall in actual realization of income compared to the budget estimate would have been increased. This indicates that the budget estimate was unrealistic, the CAG observed.
The actual revenue realization under non-tax revenue was Rs 530.11 crore against the budget estimate of Rs 600.57 crore which was lower by Rs 70.46 crore or 11.73% . The deficit was most pronounced in interest revenue (Rs 26.15 crore), forestry and wildlife (Rs 44.56 crore), public works (Rs 8.93 crore) and livestock (Rs 7.16 crore), the CAG said, adding that compared to the previous year (2018-19), the realization of income from non-tax revenues increased from Rs 427.70 crore to Rs 530.11 crore (23, 94%).
Decreased revenue collection in forestry and wildlife is believed to be due to legal actions under the NGT that affected the extraction and export of minor minerals, as well as strict enforcement of concession rules Meghalaya Mining Minerals, 2016 which only allowed legal mining leases to operate in Meghalaya. The other departments did not give intimate reasons for the increase/decrease (March 2022), although the same was requisitioned in July 2020.
The CAG had recommended the state government 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 (States Indemnity) Act 2017, states were guaranteed fortnightly compensation for any loss of revenue during the first five years of GST implementation, effective July 1, 2017 .
An analysis of income arrears revealed that income arrears as of March 31, 2020 under certain major income heads amounted to Rs 209.23 crore, of which Rs 78.73 crore had been outstanding for over five years.
Out of the total of 36 pending refund cases valued at Rs 26.26 crore under sales tax/MVAT, only three cases valued at Rs 5.33 crore have been refunded. Similarly, under the state GST, 47 cases valued at Rs 50 lakh have been reimbursed out of the total of 157 open cases valued at Rs 26.36 crore.
The remaining 33 cases involving Rs 20.93 crore under sales tax/MVAT and 110 cases involving Rs 25.86 crore under state GST had yet to be reimbursed as of the end of March 2020.
The IRS review till March 2020 revealed that 2,067 paragraphs involving monetary value of Rs 3,179.44 crore relating to 438 IRS remained outstanding at the end of June 2020 due to lack of responses or unacceptable responses from various ministries.
The Excise Department recovered only Rs 59 lakh over the five-year period (2014-19) against a total of Rs 21.68 crore, the report adds.

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