CAG detects Rs 460-cr scam in Excise Dept

Tribune News Service

Chandigarh, January 18

The Comptroller and Auditor General (CAG) has found underassessment of taxes collected by the Punjab Excise and Taxation Department and other irregularities worth Rs 460.26 crore.

In its report, the CAG has found irregularities worth Rs 281.4 crore in the system of assessment under Value Added Tax, excess or inadmissible allowance of funds worth Rs 92.89 crore, short levy of output tax worth Rs 50 crore, inadmissible allowance of input tax credit worth Rs 24.75 crore, non-recovery of exemption availed worth Rs 3.41 crore, non-levy of penalty worth Rs 30 lakh and other irregularities worth Rs 7.51 crore.

The allegations of these irregularities in the assessment of traders were first brought to light by Badish Jindal, president of the Federation of Punjab Small Industries Associations. This has subsequently been investigated by CAG, which has said bogus billing is going on a massive scale.

The report says there was no institutionalised system in the Excise Department for selection of returns for audit and selection of cases for assessment. “The department made assessments without framing any parameters. Non-adherence to procedures mentioned in the PVAT Act and Rules led to avoidance and evasion of tax. Failure of department officers to follow prescribed procedures also led to undue benefit to the dealers and loss of revenue in the form of bogus transactions, non/short levy of tax, under declaration of output tax, excess allowance of ITC etc.

There was no monitoring mechanism for recovery of tax demands after assessment. There were cases of non-levy of interest on delayed payment of tax and shortfall in conducting internal audit of planned units. In the absence of properly maintained daily collection register as well as institutionalised mechanism for issuing disposal register, correct realisation of due tax could not be ascertained,” says the report.

The report, after examining the assessment disposal registers/assessment files, says tax demands of Rs 910.85 crore were raised in assessments. These demands were still lying outstanding in the disposal registers.

None of the AETCs maintained demand and collection registers in Form VAT-55 (Rule 82) to watch recovery of outstanding demands. In the absence of this, position of outstanding recovery in respect of tax demand of Rs 910.85 crore could not be ascertained.

In a damning indictment, the assessing authority allowed the benefit of transactions made on fake/non-genuine statutory declaration forms to a dealer amounting to Rs 76.76 crore for 2009-10. The same dealer also submitted fake/non-genuine forms for Rs 141.67 crore for 2008-09 and 2010-11. The daily collection register in Form VAT 54 and demand and collection register in Form VAT 55 were not being properly maintained.