Introduction
State GST Department, previously known as Commercial Taxes Department contributes about 75% of the revenue of the state through Kerala Value Added Tax, Kerala General Sales Tax Act, Central Sales Tax Act, Luxury Tax Act, Money lending Act and Agricultural Income Tax Act. The functioning of the department essentially depends on the capability of human resource working in the department. Therefore there is a need to have structured capacity building program inbuilt in the system. Through such continuous capacity building measures the officers in the department will gain knowledge and develop various skills to take up initiatives to achieve the main stated objective of revenue generation.
Therefore, other than efforts of having induction and refresher training programmes for respective officers, it was felt to develop How to do…? series. This series will cover all important themes so that all the officers will understand the importance of the particular subject and they will use the knowledge for improving the performance.
In this series, one of the important areas covered is CAG Reports. There is a general tendency to look at CAG Report as an additional burden but we have to understand that the CAG Report gives lots of insights in the functioning of the department and gives pointers to improve the system. As the department is entrusted with the responsibility of revenue generation, it is important that all officers should take the Audit reports seriously and take follow up actions. This booklet How to do…? CAG Report follow up is published in order to give the information about the whole audit process and how the Reports can be used to the advantage for generating revenue.
CHAPTER I
I. The audit of revenue receipts of the State Government is conducted under Section 16 of the Comptroller and Auditor Generals (Duties, Powers and Conditions of Service) Act 1971.
II. Aim and purpose of the Audit
CHAPTER II
How the audit paras find place in C&AG Report
Inspection Report (IR) or LAR (Local Audit Report)
(a) Criteria for selection of audit by AG
Out of 500 or more files with an officer top files are usually selected on the basis of Turnover and Tax effect
(b) Visit of Audit Party of AG to CT Office / Spl.circle/ Intelligence wing/ CTCP
CHAPTER III
Action to be taken by Auditee
1. Provide maximum facility and co-operation to the audit party.
2. Make available all records and files required by the AG.
3. Rectify the irregularities, defects and omissions pointed out by the AG.
Field level officers should discuss with the senior auditors of the AG who are conducting the audit then and there. This will help to clear as many objections as possible on the spot.
Impact
1. Early disposal of inspection reports.
2. Reduce number of paras in the LAR
LAR Files will be sent from SRA(HQ) of AG`s office to
CHAPTER IV
Common heads of audit findings in the LAR
CHAPTER V
How to use LAR PARAS at Field Officer’s level:
1. Proper examination of the defect with the original para in the LAR, assessment records in the light of provisions of the Act, Rules, Circulars, Notifications, Clarifications and related judgements.
2. After examining the above, furnish the reply to the controlling officer through proper channel with evidences if any.
3. If the audit query is sustainable, assessment should be completed and the demand should be collected at the earliest. If any appellate or court interference is there, take all possible steps (such as urgency can informed to DC (A), Law Officer and DC (Law) for the speedy disposal of the same.
4. If any file is transferred to other circle office the remarks containing the information regarding the audit observation and its stage should also be informed to the transferee assessing officer.
5. If assessments were modified based on the directions of the Appellate authority in a sustainable case, the result may be informed to AG along with documentary evidence such as original assessment order, Appellate authority order, modified order, etc.
6. Reply should be furnished within the time prescribed with evidences.
7. If there is any doubt in adjudication of any matter, clarification can be sought from higher authorities concerned and action can be initiated accordingly.
8. If AG’s query is relating to a particular year, examine the assessment records of other years of the assessee and check the defect is existing in those years and correct the same by completing the assessment.
9. Identify the similar other cases in that section and pass the information of the audit query to other officers for verification. This will minimise the Paras in LAR in the coming years.
Impact
How to use LAR PARAS at the Controlling Officer’s level
The controlling officers should make entry of the LAR paras in the LAR Register.
Obtain:
Impact
How to use LAR PARAS at the Head Quarters level
A. Acquire the present position of the LAR Paras included in LAR file from the Auditee Office so as to ascertain –
B. Issue proper direction and follow up:
Impact
CHAPTER VI
Draft Notes
How to use Draft Notes at the Head Quarters level
1. Collect all the facts related to Draft Note from the Controlling Officers
2. Verify whether direct or indirect involvement of any officials behind the irregularity committed.
3. Verify whether there is any lack of proper instructions or defects in the organizational setup
4. If there is any loss to the Govt. the responsibility for the same should be fixed
5. Steps should be taken to recover the loss
6. If irregularity committed was due to ambiguity in the Rules, steps should be taken to amend the Rules.
7. In order to prevent recurrences of irregularity, issue proper instructions, circulars.
8. Capacity Building.
How to use Draft Notes at the Controlling Officer’s level
The controlling officers should make entry of the details of Draft Note in the respective Register.
Obtain:
Impact
How to use Draft Notes at the Field Officer’s level
Impact
CHAPTER VII
Draft Paras
How to use Draft Paras at the Head Quarters level
1. Collect all the facts related to Draft Para from the Controlling Officers
2. Verify whether direct or indirect involvement of any officials behind the irregularity committed.
3. Verify whether there is any lack of proper instructions or defects in the organizational setup
4. If there is any loss to the Govt. the responsibility for the same should be fixed
5. Steps should be taken to recover the loss
6. If irregularity committed was due to ambiguity in the Rules, steps should be taken to amend the Rules.
7. In order to prevent recurrences of irregularity, issue proper instructions, Circulars.
8. Capacity Building.
How to use Draft Paras at the Controlling Officer’s level
The controlling officers should make entry of the details of Draft Para in the respective Register.
Obtain:
Impact
How to use Draft Paras at the Field Officer’s level
Impact
CHAPTER VIII
C & AG Report
C&AG Report at a Glance
Chapter I | Trend of revenue receipt
Analysis of arrears of revenue Arrears in assessments Analysis of collection Cost of collection Analysis of stay granted Response of the Govt/Departments Department committee audit meeting Non production of records of audit for scrutiny Action taken on the recommendations accepted by the Depatments/Government Results of audit |
Chapter II | Tax Administration
Results of Audit Performance Audit Selected Draft Paras |
Chapter III | Tax Administration Internal Audit |
Results of Audit Selected Paras |
|
Chapter IV | Taxes on Vehicles |
Chapter V | Land Revenue and Building Tax |
Chapter VI | State Excise |
Chapter VII | Other Tax Receipts |
CHAPTER IX
Format for furnishing action taken notes on Comptroller and Auditor General’s Reports
i. (a) Department
(b) Subject/Title of the Review/Paragraph
(c) Paragraph Number
(d) Report Number and Year
II. (a) Date of receipt of the Draft Paragraph/Review in the Department
(b) Date of Department’s Reply
III. Gist of Paragraph/Review
IV. (a) Does the Department agree with the facts and figures included in the Paragraph?
(b) If not, indicate the areas of disagreement and also attach copies of relevent documents in support.
V. (a) Does the Department agree with the Audit conclusions?
(b) If not, indicate specific areas of disagreement with reasons for disagreement and also attach copies of relevant documents, where necessary
VI. Remedial Action Taken
1. Improvement in system and procedures including internal control.
2. Recovery of over payment pointed out by audit
3. Recovery of under assessment, short levy or other dues.
(a) How to utilize C & AG Reports at Head Quarter level
1. Communicate copies of the report to CCT, other major wings of CCT, all district DC’s concerned.
2. Sorting the Paras office wise, assessee wise and year wise.
3. Obtain Factual Report from concerned DC’s.
4. Examine the reply and furnish the reply in cases found satisfactory or seek revised report in unsatisfactory replies with remarks for re verification.
5. Obtain Factual Report relating to all paras and try to furnish the RMT’s within the time prescribed.
6. Verify whether direct or indirect involvement of any officials behind the irregularity committed.
7. Verify whether there is any lack of proper instructions or defects in the organizational setup
8. If there is any loss to the Govt. the responsibility for the same should be fixed
9. Steps should be taken to recover the loss
10. If irregularity committed was due to ambiguity in the Rules, steps should be taken to amend the Rules.
11. In order to prevent recurrences of irregularity, issue proper instructions, circulars.
12. Capacity Building.
13. Preparation for PAC actually starts as and when the date for ‘PAC discussion’ is declared by the Legislature Secretariat. The RMT’s already furnished are re-examined and modifications are done, if any needed. Assessment records are examined for ascertaining the accuracy of the reply, for additional information and for collection of more evidences in random cases if needed.
14. The Audit report so placed will be examined by the Public Accounts Committee. The Government Secretary concerned and the Head of Department will have to appear as witnesses.
15. In similar way SOAT to the paras in PAC Recommendations are also prepared and furnished to the Govt. for vetting.
16. Normally the following questions are being raised by the committee to the witnesses
Action points
CHAPTER X
Data as on 31st March 2018
Pending LAR Cases as on 31st March 2018
SI No | ||
1. | Number of Paras pending | 24167 |
2. | Number of short levy cases | 14455 |
3. | Sustainable cases | 9474 |
4. | Non sustainable cases | 4981 |
Sustainable cases
SI No | ||
1. | Above 1 crore | 316 |
2. | Between 50 lakh crore to 1 | 202 |
3. | Below 50 lakh | 8956 |
Total | 9474 | |
Total cases assessed | 5560 | |
Total cases balance | 3914 |
District wise pending cases
SI No | District | Cases |
1. | Thiruvananthapuram | 312 |
2. | Kollam | 100 |
3. | Pathanamthitta | 152 |
4. | Kottayam | 507 |
5. | Idukki | 85 |
6. | Alappuzha | 280 |
7. | Ernakulam | 1049 |
8. | Mattancherry | 174 |
9. | Thrissur | 587 |
10. | Palakkad | 110 |
11. | Malapuram | 160 |
12. | Kozhikode | 133 |
13. | Wayanadu | 65 |
14. | Kannur | 103 |
15. | Kasaragod | 97 |
Draft Notes
SI No | ||
1. | Number of draft notes pending for want of factual report as on 1st April 2017 | 84 |
2. | Received during the year 2017-18 | 24 |
3. | Factual Report furnished | 108 |
4. | Balance | Nil |
Draft Paras
SI No | ||
1. | Number of draft paras pending for factual report | 5 |
2. | Received during 2017-18 | 24 |
3. | Factual report furnished | 24 |
4. | Balance | Nil |
CAG Reports
Year | Opening Para | RMT furnished | Balance |
Reported ended 31st march 2013 | 92 | 92 | Nil |
Report ended 31st March 2014 | 153 | 153 | Nil |
Report on KVATIS 2014 | 25089 | 4574 specific cases and report processed 1152 | 3422 |
Report ended on 31st March 2015 | 502 | 183 | 319 |
Report ended on 31st March 2016 | 926 | 380 | 546 |
PAC recommendations
SI No | ||
1. | Number of Paras pending | 56 |
2. | Received during the year | 42 |
3. | SOAT furnished | 98 |
4. | Balance | Nil |
Acknowledgements:
C & AG Report is a process which commences from audit enquiry stage and culminates in PAC Recommendations. This Statutory constitutional process should be utilized by the auditee department. This can be achieved by proper actions and follow up by all units of the Department mentioned above. We hope that the booklet will not only guide the officers of State GST Department but also other departments.
After the decision to develop the series How to do…?, the teams were formed to prepare the draft. This draft underwent series of changes from time to time. Shri Muraleedharan Superintendent (Rtd) and the audit section were ably guided by Shri Ziavudeen then Jt Commissioner. Later Shri Raveendran Superintendent and Smt Beejikumari Jt Commissioner Audit and Inquiry and the Audit section followed up all the actions. I appreciate their contribution.
Dr Rajan Khobragade
Prl Secretary & Commissioner