CAG tells govt to tighten tax audit

While observing that a test check of records of Commercial Taxes Department revealed under-assessment of tax and other irregularities in 3,344 cases amounting to Rs 3,950.08 crore. 

The irregularities in the audit of tax exemption to industries amounted to Rs 3,719.65 crore while the assessment, levy and collection of VAT amounted to Rs 118.72 crore. The incorrect exemption of tax worked was pegged at Rs 6.03 crore while incorrect rate of tax was worked out to Rs 12.74 crore and incorrect computation of taxable turnover was arrived at Rs 9.32 crore. 

The report pegged the irregularities due to non/short levy of tax at Rs 10.36 crore, non-levy of penalty/interest at Rs 7.39 crore and incorrect allowance of input tax credit at Rs 43.73 crore while others category accounted for Rs 22.14 crore. 

The Department accepted under-assessment and other deficiencies amounting to Rs 23.64 crore in 572 cases of which Rs 5.58 crore was involved in 181 cases that were pointed out during the year and the rest in earlier years. Out of the above, an amount of Rs 7.96 crore had been collected. 

The CAG report rapped the failure of department to institute a system of inter-departmental collection of data and failure of Assessing Authorities (AAs) to make use of available information. 

“The AAs failure resulted in not only contractors being out of the tax base, but also the receipts of contractors having escaped assessment,” it said. It indicted the SIPCOT in issue of eligibility certificate for tax exemption to industries for not fixing the Base Production Volume (BPV)/Base Sales Volume (BSV) in terms of quantity and its lack of coordination with the Commercial Taxes Department, which led to disbursement of soft loans prior to achievement of BPV.