Meghalaya has lost revenue of around Rs 1,175 crore, much of it due to deficiencies in the transitional process from sales tax to VAT, a Comptroller and Auditor General report has said.
In the absence of a mechanism for monitoring the receipt of the returns, the assessing officers could not detect non-submission of returns by 11,816 dealers between May 2005 and March 2009, and consequently a penalty of Rs 372.21 crore could not be levied, the report tabled in the Assembly recently said.
The State Government also failed to claim compensation from the Centre due to the implementation of VAT which led to a revenue loss of Rs 247.49 crore, it said.
According to the report, the government failed to detect and register 606 dealers who sold taxable goods of Rs 27.44 crore, resulting in tax evasion as well as a loss of penalty of over Rs 6 crore.
In absence of a mechanism to check input tax credit claimed by the dealers coupled with the failure to scrutinise returns effectively, the government failed to detect excess claims of input tax credit of Rs 30.40 crore.
Further, delay in implementation of VAT on liquor led to a revenue loss of Rs 39 crore, the report said.
The CAG also took a dig at the Meghalaya Government for not finalising the VAT manual even after four years of implementation of VAT in the State, due to which functional areas of the Taxation department could not be streamlined.
In its audit result, the CAG detected that there was non-levy of fine of Rs 271.80 crore on 3,58,992 commercial trucks for carrying excess load beyond the permissible limit.
Also, 13 registered dealers concealed turnover of Rs 54.96 crore and evaded tax of Rs 2.74 crore on which a penalty of Rs 5.48 crore was also leviable.
Accountant General Onkar Nath said, If action is taken, the government can still recover much of the amounts.
If the government is really serious with its revenue collection, it would not have to approach the Centre with a begging bowl everytime, Nath said, pointing to this years plan size of Rs 2,230 crore, 50 per cent of which can be met from revenue generation if the departments are streamlined.
However, the AG rued that the response of the government towards the assessments of the CAG has been very, very unsatisfactory.