Comptroller and Auditor General (CAG) of India in its report General, Eco-nomic and Revenue Sectors for the year ended 31 March 2019, tabled in the recently concluded Assembly session, pointed out that the Finance department made an irregular deduction of VAT and de-partmental charges of Rs. 7.48 crore from the Central funds received.
Upon examination of records, CAG said that the Finance department deducted Rs. 3.17 crore as VAT [Rs.2.77 crore (87.38%) was deducted from CSS grants] at the time of drawal of funds, the VAT deduction ranging from 4.24 per cent to 7.5 per cent on the total grants, in-stead of deducting the same from the contractor’s bills.
It said that the deduction was irregular and also diluted the quantum of funds available to the State for programme implementation under the Scheme. CAG also observed that irregular deduction of VAT of Rs. 45 lakh was made from funds available under NLCPR for construc-tion of housing units for judicial officers.
CAG said that the department in reply (June 2020) stated that VAT deductions were made as per the directives of Finance department at prevailing rates notified by Government and the matter regarding deduction of VAT at source instead of deducting from the contractor’s bills will be reviewed with the Finance department. CAG said that the issue was reported (Octo-ber 2020) to Finance department, to ascertain the deduction of VAT at source.
In reply, Finance department stated (November 2020) that matter will be examined as and when department of Justice and Law would forward the case for review.
Similarly, CAG also observed that irregular deduction of departmental charges amounting to Rs.5.48 crore was made at source [Rs.4.71 crore (86 per cent) was deducted from the CSS grants].
It would not be out of place to mention here that despite this irregular deduction being point-ed out previously by the C&AG, the same irregularity continued.
Irregular deduction of Rs.7.83 crore at source towards departmental charges from the funds allocated out of NEC/NLCPR funded projects had been highlighted in C&AG Audit Report-Government of Nagaland, ending March 2013, the CAG stated.
Further, CAG said that the Ministry of DoNER released Rs. 8.09 crore in three instalments during 2014 to 2017. Accordingly, the state government also released its matching share of RS. 90 lakh in two instalments and the department drew net amount of Rs. 8.54 crore after deduction of VAT of Rs. 45 lakh at source. "The irregular deduction of VAT at source is not only a violation of codal provisions but also reduced the amount available to the executing agencies to undertake the works…," CAG stated.