True to the adage “fence eating the grass”, the Commercial Tax Department (CTD) instead of generating more revenue to the cash-starved state government had clandestinely refunded the tax collected through VAT resulting in a revenue loss of Rs.500/ crores.
This multi-crore scam in the Commercial Tax Department, which was unearthed by a civil society called Forum for Good Governance, was confirmed by the Directorate of Vigilance and Enforcement which in its report submitted to the State Government six months back had stated that the alleged Rs.500-crore scam did take place in the department.
Revealing this at a press conference on Tuesday M.Padmanabha Reddy, Secretary and Rao Chelikani , Vice President, Forum for Good Governance were shocked and wondered why no action like suspension or prosecution or properties attached of the concerned officials involved in such a huge scam of Rs.500 crores.
They pointed out that the inefficiency of the state administration to firmly deal with those involved in the scam was exposed with the Chief Vigilance Officer Revenue (Vigilance) Department in the Secretariat had informed the Forum for Good Governance that “disciplinary proceedings are being initiated against erring officers in connection with this scam”
The Forum for Good Governance was shocked that the Revenue Department was just sitting on the file on the pretext of initiating disciplinary action. The Forum authorities pointed out that when a common man paid excess amount towards electricity or water charges, such excess payments were adjusted in future bills and never returned in cash. Even Section 40 (1) of VAT Act specified adjustments in future bills for any excess payments. “When this be the case how Rs.500 crores was returned to the contractors was a mystery”, they observed.
Giving details about this Rs.500-crore scam unearthed by the Forum, Padmanabha Reddy explained that while preparing estimates for irrigation projects and other works, four percent VAT would be levied and the contractor has to remit the same to the Commercial Tax Department. In a number of projects taken up under Jalayagnam like Kalvakurthi, Nettampad, Bheema etc, the VAT collected was returned to the contractors clandestinely and during the last three years Rs.500 crores remitted by the contractors to CTD was refunded by some corrupt officials, he charged.
Padmamnabha Reddy further said taking advantage of an un-related court case money to the tune of Rs. 500 crores was returned to 61 companies, Forum for Good Governance had filed RTI application for details but after prolonged correspondence the information furnished was that the entire case was referred to the Director-General of Vigilance and Enforcement, which did enquire into the same and found the scam to be true and reported the same to the government, he added.
The Forum members further alleged that another serious irregularity being committed in the Commercial Tax Department was not taking timely action to file cases in the High Court. Businessmen or industrialists go in appeal before the appellate tribunal of CTD whenever notices were served to them by the field officers. In the tribunal if the orders go against the department, an officer of the rank of Additional Commissioner meant to look after the tribunal cases was expected to file an appeal in the High Court within 90 days. However surprisingly in about 185 important cases, in some which influential people including MLAs and ministers were connected, there was delay in filing appeals in the High Court which led to the dismissal of all the cases due to lapse of time. This resulted in huge revenue losses to the government and at the same time helped 60 companies to benefit, the said and as an example cited the case of M/s ITC Ltd, Secunderabad which got benefited to the tune of Rs.84.33 crores due to the delay in filing an appeal in the High Court.
The Forum members reminded that Commercial Tax Department was the largest revenue generator of the state government contributing over 60 percent of the total revenue. Till 2005 the tax collection was through AP G.S.T Act and C.S.T Act of 1957. However from April 1, 2005 A.P Value Added Tax (VAT) was introduced on the ground that it was more simple and dealer friendly and well integrated system. Moreover it helped serve multiple objectives like effective tax recovery, verification of tax exemptions, claims, collection of tax arrears etc. After the introduction of VAT in 2005, the tax revenue of the state government jumped from Rs.13,000 crores to Rs.42,800 crores in the year 2012-13, it was explained.
However the Forum for Good Governance has felt that there was no rationale behind fixing the VAT and gave the example of one percent tax being levied on gold and diamonds while five percent tax being levied on rice and other food articles. For food items like idly, coffee, tea etc the VAT levied is 14.5 percent. This is nothing but anti-people taxation, the Forum members charged.
The Forum members said that keeping in view the multi-crore scam in CTD, the VAT collection should be entrusted to an autonomous agendy to be constituted by the government.(NSS).
