Rs 3,000 cr imposed citing cash crunch. CAG says nearly Rs 22,000 cr left uncollected

The report of the Comptroller and Auditor General of India on Revenue Sector, which was tabled in the Assembly on Thursday, could not have come at a more inopportune moment for the Pinarayi Vijayan ministry.

A week after the 2023-24 Budget imposed nearly Rs 3,000 crore as additional burden on the public and right after water tariffs were pushed up, the CAG report has revealed the revenue the government has been unable to collect: a whopping Rs 21,797.86 crore till March 31, 2021.

Of this, the report states, Rs 7,100.32 crore was outstanding for more than five years. The total arrears, Rs 21,797.86 crore, is 22.33 per cent of the total revenue of the state.

Further, Rs 6,422.49 crore or 29.46 per cent of the total arrears were to come from the government and local bodies. "This necessitates urgent intervention from the government to clear the outstanding arrears," the report notes.

The report gives a clear hint that the government could have sat on a fatter cash reserve had the departments shown less apathy towards getting the arrears cleared. "The arrear figures are furnished by the departments every year only at the instance of the audit (CAG's)," it states and adds: "Absence of prompt reporting of arrears to the Revenue Department and pursuance by the departments concerned for realising the arrears are the main reasons for the huge pendency of arrears."

Considering the grave situation, the CAG has recommended a system for monitoring and realisation of arrears. Reality is, the departments have not kept a database of outstanding arrears. This makes monitoring and follow-up virtually impossible. The Stamps and Registration Department, for instance, was not able to furnish the amount outstanding for the last five years.

The three revenue heads bogged down by the heaviest arrears are GST (Rs 13,830.43 crore), taxes on vehicles (Rs 2,616.90 crore), and duties on electricity (Rs 2,929.11 crore).

In the GST Department, 93.45 per cent of the total arrears or Rs 12,924.31 crore was pending from individuals, private firms and companies.

The government argues that the delay in collecting arrears was mostly on account of court cases. Fact is, only 40.32 per cent of the arrears are kept under judicial stays. This means, at least Rs 8254 crore could be recovered in a relatively easy manner.

Of the Rs 2,616.90 crore arrears under tax on vehicles, KSRTC alone accounts for 70.49 per cent or Rs 1,844.73 crore.

Virtually all or 99.06 per cent of the arrears of Rs 2,929.11 crore under duties on electricity are to be paid by the government and government bodies.

Main findings of CAG in a nutshell

* The total arrears as on March 31, 2021, amount to 22.33 per cent of the total revenue of the State.

* Out of the total arrears, Rs 6,422.49 crore is pending from the various government departments and local bodies.

*  An inspection conducted at select offices under the GST Department has brought to light financial irregularities worth Rs 471 crore.

*  The revenue dipped by Rs 11 crore just due to levying the wrong duty on products. Similarly, the GST Department lost Rs 7.54 crore after failing to properly examine documents. The imposition of the wrong duty on tea resulted in a loss of Rs 6.36 crore.

* The Department incurred a loss of Rs 9.72 crore by extending undue concessions to those who have filed tax returns.

* The State erred in the rate of tax on inter-state sales, leading to a loss of Rs 12.38 crore.

* It didn’t receive Rs 88 crore from bar hotels upon failing to impose the tax. It also failed to levy Rs 26 lakh fees for the transfer of bar licences.

*  The State suffered a loss of Rs 1.51 crore due to the shortcomings in correctly determining the fair price value of flats.