Rs 440.76 cr penalty not levied on 14 dealers in Haryana: CAG

Haryana government has not levied penalty to the tune of Rs 440.76 crore on 14 dealers for claiming Input Tax Credit (ITC) on bogus purchase or suppressing sales, government auditor CAG has said.
The CAG also pulled up the state government for under- assessment of tax to the tune of Rs 89.39 crore with respect to 12 items, including guar gum, railway track machine, etc.
In its latest report on revenue sector for 2012-13, Comptroller and Auditor General of India (CAG) conducted checking of assessment records of six offices of Deputy Excise and Taxation Commissioner in Faridabad (E & W), Jagadhari, Panipat, Rewari and Sonipat in Haryana for the period between May 2008 and June 2013.

During checking, CAG noticed that eight dealers had claimed ITC of Rs 4.79 crore on bogus purchase while three dealers had suppressed sales involving tax of Rs 1.52 crore, , said Principal Accountant General (Audit), Haryana, Onkar Nath while addressing media here today.
Besides, three other dealers had claimed interstate sale as branch transfer out of state involving tax of Rs 165.21 crore.
"For the above defaults, tax and penalty was required to be levied as per provisions of section 38 of Haryana Value Added Tax (HVAT) Act, 2003. The AA (Assessing Authorities), however, rejected ITC claims and levied tax but did not levy penalty of Rs 440.76 crore," the report said.

As per provisions of HVAT Act, if a dealer has maintained false or incorrect accounts with a view to suppress sales, purchase, imports into state, exports out of state before any authority then such authority can direct him to pay by way of penalty, a sum of thrice the amount of tax.

Report said that a demand of Rs 423.55 crore had been created by assessing authorities in five cases. The Excise and Taxation Department has also accepted the audit observation in October 2013 and Excise and Taxation Commissioner directed the departmental officers to examine cases in detail and register FIRs against such fraudsters.

CAG also noticed under-assessment of tax amounting to Rs 89.39 crore due to application of incorrect rate of taxes.
Report said 133 dealers had sold goods valuing Rs 1,078.97 crore during 2004-05 to 2009-10 and paid tax of Rs 27.19 crore against the payable tax of Rs 116.58 crore due to misclassification of goods. It resulted in short levy of tax of Rs 89.39 crore, besides interest of Rs 64.98 crore.
In one of such cases, the Department had to levy VAT at a rate of 12.5 per cent on guar gum sale of Rs 163.11 crore during 2007-08 and 2009-10 but no tax was levied which caused non recovery of Rs 20.39 crore.

In another case, the Department was to levy tax at a rate of 12.5 per cent on sale of railway track machine but it charged tax at a rate of 4 per cent, leading to short recovery of tax by Rs 16.48 crore.