Performance
Uttar Pradesh

Report of 2009 - Performance Audit on State Excise Department of Government of Uttar Pradesh

Date on which Report Tabled:
Date of sending the report to Government
Government Type
State
Sector Taxes and Duties

Overview

With a view to provide better quality of liquor at a reasonable price to the consumers, curb the supply of illicit liquor and for gathering revenue from excise duties a 'New Excise Policy' was promulgated with effect from 1 April 2001 in Uttar Pradesh. It also aimed to reduce the monopoly of the liquor syndicates and bring in new players in the business. In order to examine the gamut of elements which total up to the excise revenue in the state, we examined the system in existence. To preset a holistic picture we focused on both the Headquarters structure and field formations, financial management vis-a-vis appropriate accounting thereof, operational control and staffing requirement of the State Excise Department. We have also examined the aspects of leakage of revenue and lack of coordination in the working of the department.

Our test check of the records of the offices of State excise, conducted during the years 2008-09 and 2009-10 (upto December 2009) for this Performance Audit Report, indicated a large number of cases of low recovery of alcohol from molasses, non-lifting of minimum guaranteed quota (MGQ) of country liquor, non-realisation of licence fee, non-levy of interest and other irregularities which have a revenue impact of RS 1,344.56 crore. We found that the department had no monitoring mechanism for ascertaining the total sales made by the retailers during a year for working out the actual license fee payable by them in respect of the Foreign Liquor shops. This led to loss of licence fee of RS 2.07 crore. Excise duty of RS 1.04 crore was not levied by the department on short lifted quantity of country liquor and the entire Basic Licence Fee and security deposits of RS 11.28 crore were not deposited in time as required under the rules.

To ensure that correct quantities of molasses arrived in the distilleries from the sugar factories there is a system of verification of MF 4 passes. Inaction in verifying the same by the department led to the loss of excise revenue of RS 58.09 crore. In the accounting system of the molasses there are lacuna due to which there was short accountal of molasses with involvement of excise revenue of RS 21.40 crore. Deposits in molasses fund at lower than prescribed rates by sugar factories led to short deposit of RS 75.77 lakh in the fund.

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