Report No. 7 of the year 2015

Government of Uttar Pradesh

his booklet presents abridged contents of the Report of the Comptroller and Auditor General of India, Revenue receipts of the Government of Uttar Pradesh for the year ended March 2015.

andated by the constitution, the audit of the receipts of the State Government is conducted under Section 16 of Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971.

e test checked records of 1,135 units relating to Tax on Sales, Trade, etc., State Excise, Taxes on Vehicles, Goods and Passengers, Stamps and Registration fees, Entertainment Tax and Mining Receipts during the year 2014-15. These revealed underassessment/ short levy/ loss of revenue

aggregating to ̀ 851.14 crore in 5,145 cases.

Preface

T

M

W

he Report contains 31 paragraphs including one

Performance audit. The complete report and this

handbook are avai lable on our websi te

agup.cag.gov.in.

(Vinita Mishra)Accountant General

(Economic and Revenue Sector Audit)Uttar Pradesh, Lucknow

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NOTE: While every effort has been made to ensure conformity of the contents of the publication with the related Audit Report, in case of any discrepancy the facts and figures as stated in Audit Report are to be as final or and to that effect.

General

otal revenue receipts of Government of Uttar TPradesh for the year 2014-15 increased by 15 percent over 2013-14 and it was ` 1,93,421.60 crore. However, the revenue (` 94,107.22 crore) raised by the State Government through tax and non-tax revenue remained at 49 percent of the total receipts, the same as last year.

0

50,000

1,00,000

1,50,000

2,00,000

2,50,000

2010-11 2011-12 2012-13 2013 -14 2014 -15

Total revenue receipts of the State Government

74,172.42

19,934.80

Tax and Non-tax Revenue

Tax revenue

Non-tax revenue

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Audit Scope ut of 2,639 auditable units offices under the Departments of Tax on Sales, Trade, etc., State O

Excise, Taxes on Vehicles, Goods and Passengers, Stamps and Registration fees, Entertainment Tax and Geology and Mining we test checked 1,135 units offices during the year 2014-15. These revealed underassessment/ short levy/ loss of revenue aggregating to ` 851.14 crore in 5,145 cases. During the course of the year, the Departments concerned accepted underassessment and other deficiencies of ` 20.92 crore in 456 cases. The Departments recovered ` 19.21 crore in 349 cases.

he Audit Report (Revenue Sector) contains 31 Tparagraphs including one Performance audit pointing out short/non-levy of tax, duty and interest, penalty etc. The financial impact of the Report is ` 560.72 crore of which ` 420.74 crore pertains to performance audit.

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Highlights

Performance Audit

he performance audit on "System of TAssessment under VAT" showed systemic issues besides compliance issues in tax administration.

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Highlights

Compliance Audit

n 273 cases there was not/short levy of tax, Iconcealment of turnover, delayed deposit of tax, not/short levy of entry tax, non-reversal of ITC and non-imposition of penalty and interest amounted to ` 31.19 crore.

asic licence fee and security deposits was not Bforfeited in 32 cases, interest was not charged in 65 cases and licence fee was short levied in 2 cases which amounted to ̀ 4.90 crore.

n 15,923 cases tax/ additional tax and penalty Iamounting to ` 38.82 crore was not levied and realised.

hort levy of stamp duty and registration fees in S224 cases amounted to ̀ 8.70 crore.

n 33 cases additional licence fee, tax and interest Iamounting to ` 31.05 crore was either not levied or short levied and realised.

n 2,602 cases royalty, cost of minerals, penalty Iand interest amounting to ` 25.32 crore was not realised.

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Performance Audit

System of assessment under VAT

Major Audit Findings

Lack of mechanism for inter-departmental exchange of data/information for registration of dealers

icensees of 79,363 liquor shops were running Ltheir shops without getting registration in Commercial tax Department and selling liquor valued at more than ` five lakh per year. For running their business without getting registration, they were liable to pay penalty of ̀ 289.82 crore.

Irregularities in ITC claims

n 34 cases there were irregularities in ITC claims Ilike irregular/inadmissible ITC claims, excess claims, non-reversal of ITC and not charging of interest thereon etc. of ̀ 6.98 crore.

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Performance Audit

Short/non levy of tax

n 74 cases due to application of incorrect rate of tax, Imisclassification of goods, turnover escaping assessment etc. tax of ` 6.48 crore was not/ short levied.

Penalty not imposed

n 82 cases there were cases of concealment of Iturnover, delayed deposit of admitted tax, import of goods without declaration forms and furnishing of false declarations but Assessing Authorities did not impose penalty of ̀ 114.82 crore.

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Performance Audit

Other observations:

Filing of return

nformation collected from the office of the Commissioner, Commercial Tax revealed that I

49,705 to 1,08,152 registered dealers had not filed their returns during the year 2010-11 to 2014-15.

Cases not assessed as per pro-rata basis and Arrears in assessment

uring 2010-11 to 2014-15 assessment cases was not finalised equally in each month by the D

Assessing Authorities resulted in pendency of cases between 6,042 to 1,84,052 ranging between 1.09 to 27.87 per cent in the later months of the year. This also affects upcoming year's assessments.

Tax audit by the Department

ut of 6,54,828 dealers only 2,075 dealers were Oselected for tax audit during 2011-12 to 2014-15 which were very low in percentage ranging from 0.27 to 0.44 per cent and in 2010-11 no dealer was selected.

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Performance Audit

Position of internal audit of sectors, outstanding paras and recovery thereof

he audit planning of the internal audit wing for sectors' audit was not realistic as shortfall T

ranged from 9 to 96 per cent during 2010-11 to 2014-15. Position of outstanding paras increased from 8,506 to 11,228 and pendency of recovery

thereof increased from ` 69.98 crore to ` 445.13 crore.

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Performance Audit

We recommend that Government may put in place:

mechanism for inter-departmental exchange of Adata/information and modalities for survey for the purpose of identification of unregistered dealers.

system to take effective steps for finalisation of Aassessment cases within the prescribed time limit.

system for effective implementation of tax Aaudit to adhere to the sample size fixed so that more cases of revenue loss may be detected and rectified by the Department itself.

system to ensure proper scrutiny of returns by Athe Assessing Authorities at the time of assessments to prevent leakage of revenue.

system to strengthen the internal audit wing for Aeffective operation of VAT administration by filling the vacant posts.

Compliance Audit Findings

Tax on sales, trade etc.

he Assessing Authorities while finalising the Tassessments, did not apply correct rate of tax given in the schedule of rates, in some cases lower rate of tax was applied due to misclassification of goods, short levy of composition money and in some cases no tax was levied which resulted in short/not levying of tax of ` 7.23 crore alongwith penalty of ̀ 2.39 crore in 108 cases.

hort realisation of entry tax through Smanufacturer and irregular rebate on entry tax on purchases resulted in short/not levying of entry tax of ` 2.76 crore alongwith penalty of ` 2.35 crore in 34 cases.

ases of wrong/false claim of Input Tax Credit C(ITC) was not detected by which ITC was not reversed, interest and penalty amounting to ` 3.59 crore was not imposed in 32 cases.

V A T

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Compliance Audit Findings

State Excise

he licensees did not deposit the entire amount of security deposit within prescribed time limit. T

For this default action for cancellation of settlement and forfeiture of deposited basic licence fee and

security money amounting to ` 3.66 crore, was not initiated as envisaged in the Rules.

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Compliance Audit Findings

Taxes on vehicles, goods and passengers

n transport offices of Kanpur nagar, Lucknow and Varanasi 464 JnNURM buses under City I

Transport Services Limited were found plying outside the municipal corporation area from November 2009 to March 2015 for which they were

liable for payment of additional tax of ` 30.36 crore was not levied.

ue to non-renewal of fitness certificate of 5,820 vehicles which plied without valid fitness D

certificates revenue of ` 2.69 crore was not realised.

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Compliance Audit Findings

Stamps and Registration fee

n 194 deeds of conveyance relating to Inon-agricultural land measuring 4.45 lakh square meter were registered between April 2013 and January 2015 for ` 40.71 crore at agricultural rate. Correct valuation at residential rate worked out to ` 169.72 crore which resulted in short levy of stamp duty and registration fees of ̀ 7.78 crore.

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Compliance Audit Findings

Entertainment Tax

ntertainment Tax of ` 17.94 crore was not Elevied on the activation charges of ` 71.76 crore on 5.98 lakh Set Top Boxes installed in subscriber's premises in 11 District Entertainment Tax Officers between 2012-13 and 2014-15 by 23 Multi System Operators.

dditional licence fee of ` 9.41 crore for Aoperation of local channels on 13 MSOs in seven DETOs was not levied.

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Compliance Audit Findings

Geology and Mining

overnment Orders authorised executing agencies to recover only royalty in such cases G

where minor minerals were supplied without pass in form MM-11, while provisions of MMDR Act stipulate that the recovery of price thereof and imposition of penalty is mandatory in absence of pass. This deprived the Government of ` 13.20 crore on account of cost of minerals and penalty of ` 77.75 lakh.

xcavation of minerals without mining plan in Etwo district mining offices in respect of seven lessees resulted in non-realisation of the cost of excavated minerals of ̀ 3.08 crore.

or the period 2011-12 to 2014-15 royalty, Fpermit fees of ` 6.84 crore from 1,430 brick kiln owners in 16 DMOs was not realised.

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Press clippings

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Press clippings

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Notes

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Notes

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Notes

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