Report No.2 of 2017 - Revenue Sector, Government of Tamil Nadu

Overview

Audit of ‘Assessment, levy and collection of Value Added Tax on transfer of goods involved in the execution of works contracts revealed the failure of CTD to institute a well established system of inter-departmental collection of data and  the failure of the AAs to make use of the available information, resulted in not only contractors being out of the tax base but also the receipts of contractors having escaped assessment.  Absence of mechanism to verify the genuineness of Form-S certificate filed by the dealers was also observed.  The correctness of the amount of VAT-TDS claimed by the dealers in the monthly returns was not susceptible of verification due to failure to forward the statement of deduction in Form-R and certificate in Form-T to the AAs of the concerned Assessment Circles.  The failure of the AAs to conduct scrutiny of returns had resulted in underassessment of tax. 

Audit of Exemption to Industries revealed deficiency in issue of Eligibility Certificate by SIPCOT in not fixing the BPV / BSV in terms of quantity.  There was lack of coordination between CTD and SIPCOT which led to disbursement of soft loan prior to achievement of BPV.  The failure of MoU Cell to forward to the Assessment Circles, the details of TCs issued to industries for refund of tax paid on purchases resulted in the AAs of the Assessment Circles not being able to ensure the correctness of the amount of ITC, which were carried forward by the industries in the monthly returns.   The assessees, who were granted incentives should be considered as high risk and selected either for detailed scrutiny or for VAT audit / surprise inspection.

Performance Audit on Collection of taxes and fees and delivery of citizen services by Home-Transport Department revealed that the Home-Transport Department had not utilized available data to monitor payment of tax by owners of transport and non-transport vehicles, and to issue demand notices in cases of non-payment of periodical taxes.  The adherence to conditions of permit by stage carriage operators was not ensured by the Department and MTC was allowed to operate vehicles in violation of permit conditions.  Though, erroneous driving was identified by the Department as one of the major cause of accidents, the absence of testing tracks in RTOs to ensure the quality of driving tests was a major concern.  The pace of implementation of other infrastructure and citizen service schemes or measures had been tardy.  With just three per cent of vehicle population subjected to pollution check, there was inadequate control of vehicular pollution in the State.  Our audit exercise also revealed non / short collection of motor vehicle tax and fees and non-levy of penalty for violation of permit conditions by MTC.  

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