- Corrutpion in Sales Tax Offices
- Excise Department Favours Abkari Contractors
- Broiler 'Scam' and Scapegoats: Fox is still in hiding
State lose Rs.278 crores due to tax, excise favours in one year. Antony's Austerity Measures Thiruvananthapuram: The Broiler scam is only a small concession made by the Kerala State Finance Minister to the big broiler companies outside the state. Even leading leaders like K.Karunakaran and V.S. Achuthananthan have demanded judicial inquiry into the broiler deal.
When compared to large scale corruption in other tax collection centres, the state exchequer lost only a modest amount of Rs.50 crores. The state chief minister A.K.Antony has started a series of austerity measures to improve financial health of the state. Is it enough to improve the state financial health?
Due to rampant corruption and malpractices involving the political babus, the state exchequer is losing several croroes of rupees every year. A casual examination of the official records at the Sales Tax, Agricultural Income Tax, State Excise, Motor Vehicles, Forest and other departmental offices would reveal the amount of money being misappropriated by a cotery of officials, businessmen and politicians. A random check conducted by the Comptroller and Auditor General in one year revealed under-assessments-short levy--loss of revenue amounting to Rs 278.32 crore in 2,703 cases.What is more surprising is the rampant corruption and mismanagement in various tax collecting departments in Kerala. Let us start with the sales tax department.
Corrutpion in Sales Tax Offices
According to official audit reports, random test check of sales tax assessments and refund cases and connected documents of Sales Tax Offices throughout the state in the year revealed that there was gross under-assessment of tax, non-levy of penalty etc., amounting to a whopping Rs 20731.20 lakh in 1,859 cases!
According to the audit reports, in 244 under assessment of turnover, an amount of Rs. 17447.27 lakhs was lost to the state exchequer. Similarly in 230 incorrect grant of tax exemption, the state treasury lost a whopping Rs.1047.74 lakhs. In 405 cases of incorrect rate of tax Application, the state lost more than Rs.346 lakhs. Due to incorrect grant of concessional rate of tax, non-levy of penalty and other irregularities together cost the state exchequer loss of Rs. 207.31 crores of tax revenue.
According to the Comptroller and Auditor General of India report, rampant corruption is taking place in sales tax office at Third Circle, Kannur, Special Circle, Kollam, First Circle Perumbavoor, Agricultural Income Tax and Sales Tax Office, Adimali, Special Circle, Kollam and Special Circle II, Ernakulam. It is difficult to believe that our political babus have no role in this large scale corruption and favouritism.
Under Section 23(3) of the Kerala General Sales Tax Act, 1963, for failure to make timely payment of tax or any amount assessed or due to Government, an interest at the rates prescribed in the Act is charged. However in five tax circles -- Special Circles, Alappuzha, Special Circle III, Ernakulam, Special Circle, Kollam, Special Circle, Kottayam, Special Circle, Mattancherry, no interest was levied for delay in tax payment ranging from 1 to 83 months. This resulted in non-levy of interest of Rs 78.96 lakh from eight businessmen.
Under the Central Sales Tax Act, 1956, in the case of inter-State sales of goods, other than declared goods, not supported by declarations in Form C, tax is leviable at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the State, whichever is higher. Under the Kerala General Sales Tax Act, 1963, the rate of tax depend on the nature of sales and the kind of commodity. The rates are prescribed in the Schedules modified from time to time.
However in 11 circles --First Circle, Ernakulam, Special Circle III, Ernakulam, Third Circle, Kannur, Third Circle, Kozikhode, Sales Tax Office, Medumangad, Sales Tax Office, Taliparamba, First Circle, Thrissur, Second Circle, Thrissur, Third Circle, Thrissur, Fourth Circle, Thrissur and Sales Tax Office, Wadakkancherry--offices the inter-State sales turnover of Rs 1016.31 lakh, not supported by Form C declaration was taxed at the concessional rate of 4 per cent resulting in short levy of tax of Rs 61.04 lakh.
In Special Circle, Kollam, while finalising the January 1998 the Central sales tax assessments of a dealer, additional sales tax was not calculated correctly on inter-State sales turnover of Rs 2306.25 lakh not covered by Form C declaration resulting in short levy of tax of Rs 49.21 lakh.
Similarly, A sales tax assessee of Special Circle I, Kozhikode was assessed to tax at the rate of 5 per cent instead of correct rate of 6 per cent on his turnover of Rs 6.65 crore while another assessee of Third Circle, Kannur was assessed to tax at 10 per cent instead of correct rate of 15 per cent to 20 per cent on his turnover of Rs 18.50 lakh. This resulted in short levy of tax of Rs 9.31 lakh.
Kerala Government by notifications exempted new small scale industrial units from payment of tax due on goods produced and sold by them for a period of five-seven years from the date of commencement of production. As per the notifications, exemption from sales tax is admissible only for goods manufactured and sold and for the period and up to the amount specified in the eligibility certificate-cum-exemption order. However, exemption was granted incorrectly in at least 5 cases resulting in short demand of tax of Rs 11.64 lakh.
As per the Kerala General Sales Tax Act, 1963, concessional tax rate is leviable in respect of raw materials used by a dealer in the production of finished goods for sale in the State. This concessional rate of tax is not however applicable in cases where the sale of such goods is not liable to tax in the State either under the Kerala General Sales Tax Act, 1963 or under the Central Sales Tax Act, 1956. If any dealer, after purchasing any goods by furnishing a declaration fails to make use of the same for the purpose for which the declaration was furnished, he is liable to pay the tax that would have been payable by him had the declaration not been furnished. This norm has also been circuvented on several occasions to favour inter state dealers.
In First Circle, Peurmbavoor, an assessee engaged in the business of manufacture and sale of PVC pipes, consigned to branches outside the State finished products worth Rs 85.02 lakh produced using the raw materials purchased at concessional rates by issuing Form 18 declaration. While finalising the tax assessment the assessing officer did not, levy tax on the purchase turnover of raw materials used for manufacture of the finished products consigned to branches outside the State. This resulted in short levy of tax of Rs 3.37 lakh including surcharge.
If any dealer after purchasing raw materials/packing materials making use of Form 18 declaration fails to make use of the goods for the declared purpose the assessing authority may direct such person to pay by way of penalty an amount not exceeding twice the amount of sales tax evaded or sought to be evaded. However, in the Special Circle, Palakkad, a dealer after purchasing raw materials worth Rs 6.43 lakh and Rs 12.09 lakh by issuing Form 18 declaration during 1987-88 and 1988-89 respectively, violated the conditions by consigning a major portion of the finished products to outside the State on branch transfer. When finalising the assessments the assessing authority failed to levy any penalty.
Under the Kerala General Sales Tax Act, 1963, no registered dealer can collect any sum by way of tax on the sale of goods in respect of which he is not liable to pay tax or at a rate exceeding the rate at which he is liable to pay tax. If any person collects any sum in contravention of the provision he is liable to pay penalty not exceeding five thousand rupees. Any sum collected in excess shall be liable to be forfeited to Government by an order issued by the assessing authority.
At least in three circles --Sales Tax Office, Chavakkad, Special Circle III, Ernakulam and Special Circle, Mattancherry, three dealers made excess/illegal collection of tax worth Rs 4 lakh. The assessing officers however did not forfeit the amount illegally collected by the dubious dealer.
E.K.Nayanar, former Chief Minister favoured the Abkaris? Excise Department Favours Abkari Contractors
The State Excise Department, another crucial revenue source to the state exchequer, has been equally plagued by corruption. Through under assetssment of tax on toddy and liquor, the State Government loses several lakhs of revenue. In 43 cases favouring big Abkaris, the state exchequer lost Rs 98.02 lakh in one year.
At least in five cases, the exchequer lost more than Rs. 70 lakhs due to short collection of duty on spirit or Indian Made Foreign Liquor. Another major malpractice has been to favour Abkari contractors by not collecting their dues.
From March 1996 onwards a fee of Re 1 per bulk litre of toddy is levied on each permit issued for inter-district transportation of toddy. As per Section 24 of the Abkari Act the fee for such permit was required to be paid in advance. However, in practice this fee is not collected at all.
In Excise Division Offices, Palakkad and Ernakulam 178 permits valid from the date of issue to the end of the respective half years were issued for the transportation of specified quantity of toddy every day to other districts. Instead of collecting the fee in advance, on the entire quantity of 328.13 lakh bulk litres of toddy permitted to be transported during the half year, excise officials collected fee only on 3.02 lakh litres resulting in short collection of permit fee of Rs 325.11 lakh.
According to the Kerala Excise Manual Volume II, the average out turn of spirit from every tonne of molasses used is fixed at 475 proof litres whereas the norm fixed by Central Board of Molasses was 373.5 proof litres. It was pointed out that there is
low production of spirit involving excise duty of Rs 23.35 lakh in a distillery at Cherthala. Verification of the records of the same distillery for a period of two years revealed that the production of spirit was short by 4,00,940.89 proof litres calculated on the basis of the norms fixed by the Central Board of Molasses involving excise duty of Rs 62.15 lakh.Rule 15A of the Foreign Liquor Rules provides that a gallonage fee is paid by the FL9 [ Licence for possession and supply of foreign liquor in wholesale by the bonded warehouse to other licensees.] licensee on the quantity of Indian Made Foreign Liquor sold by such licensee. As the licence period ends on 31 March every year the licensee is required to clear all dues to Government by that date. Being an excise revenue delay in payment of gallonage fee attract interest at 18 per cent per annum under the Kerala Abkari Shops (Disposal in Auction) Rules, 1974.
The gallonage fee payable by the FL9 licensee in the State for a particular year was Rs 980.95 lakh. Out of this Rs 822.81 lakh was paid on 16 April and the balance of Rs 158.14 lakh on 11 and 14 May of a particular year. However, interest payable for delayed payment is neither demanded nor collected by the officials. This causes another financial loss to the state excequer. A part of the tax evasion is donated to political babus.(keralamonitor.com)
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