Out of the Rs 2.75 lakh crore received from 35 cesses, levies and other charges in FY19, only Rs 1.64 lakh crore had been transferred to Reserve Funds/Boards during the year, and the rest was retained in the Consolidated Fund of India (CFI), found the Cromptroller and Auditor General (CAG) of India in its audit of the Union Government Finance Accounts (UGFA) for FY19.
"This included collections amounting to Rs 382 crore on account of 17 cesses abolished/subsumed in GST with effect from 1 July 2017, which were retained in the CFI," the report found.
The report said not only was the revenue/fiscal deficit understated due to the non-transfer of these amounts to reserve funds, failure of the Ministry of Finance to create or operate essential reserve funds makes it difficult to ensure that the cesses had been utilised for the specific purposes
intended by Parliament.
The Goods and Services Tax (GST) Compensation Cess Act, 2017, provides for levy of a cess for the purpose of providing compensation to the states for loss of revenue arising due to implementation of the GST for a period specified in the Act.
"Audit examination of information... with regard to collection of the cess and its transfer to the GST Compensation Cess Fund, shows that there was short crediting to the Fund of the GST Compensation Cess collections totalling to Rs 47,272 crore during 2017-18 and 2018-19," the report found.
The report said short-crediting was a violation of the GST Compensation Cess Act, 2017, and the amount by which the cess was short-credited was also retained in the CFI and became available for use for purposes other than what was provided in the Act.
Cesses in the nature of additional excise duties on petrol and diesel collected under the Central Road Fund Act, 2000, are to be credited to the Central Road Fund (CRF) to the extent provided by Parliament through appropriation by law. The fund was re-designated as the Central Road and Infrastructure Fund (CRIF) with effect from April 1, 2018, enlarging its scope of deployment and increasing the quantum of cess.
"Against total collection of cess of Rs 1.10 lakh crore under the CRIF Act, Parliament approved Rs 1.03 lakh crore for appropriation. However actual
transfer to the fund was only Rs 73,130 crore," the report found.
Part of the short transfer was due to erroneous transfers of Rs 13,000 crore and Rs3,680 crore to the Railway Safety Fund by the Ministry of Railways and to other funds by the Ministry of Power, respectively.
"These funds were, however, fully utilised for the purposes for which
the CRIF had been created. Similarly, Rs 10,880 crore was not transferred to the CRIF on the tenuous ground that accounting procedures for the CRIF had not been finalised," the report said.
According to the report, the amount, however, was spent for intended purposes as General Budgetary Support (GBS). This left Rs 10,157 crore which was not transferred/utilised for the purpose for which the cess was collected.
During FY19, the total collection under the health and education cess was Rs 41,309.07 crore. "Though the new health and education cess was levied at a composite rate of 4 percent, the principles on which these total collections would be allocated between health sector and education sector and within the latter between primary education and secondary and higher education were not spelt out," the report said.
On cess on crude oil, the report found that for the years 2009-10 to 2018-19, the total cess on crude oil collected was Rs 1.24 lakh crore.
"Scrutiny of Statement 9 of UGFA for the above mentioned years shows
that no funds were transferred out of net proceeds of cess to OIDB (Oil Industry Development Board)," the report found.
Due to non-transfer to OIDB, the cess was retained in CFI. As a result, there was no assurance if the cess was used for the purpose for which these were collected, the report said.