Odisha Legislative Assembly Public Accounts

PRESENTED TO THE ODISHA LEGISLATIVE ASSEMBLY ON THE 3RD October, 2020

ODISHA LEGISLATIVE ASSEMBLY

PUBLIC ACCOUNTS COMMITTEE

2020-2021 SIXTEENTH ASSEMBLY

1ST REPORT ON C & A. G OF INDIA (REVENUE RECEIPT) FOR THE YEAR 2007-08 OF FINANCE DEPARTMENT

SECRETARIAT OF THE ODISHA LEGISLATIVE ASSEMBLY, BHUBANESWAR-751001

Sl. CONTENTS Page No. 1. Composition of the Public Accounts Committee, 2020-21 i 2. Composition of the Public Accounts Committee, 2019-20 ii 3. Composition of the Public Accounts Committee, 2018-19 iii 4. Composition of the Sub-Committee-V of the Public iv Accounts Committee, 2018-19 5. Introduction v 6. Report 1-22 7. Minutes of the meeting held on 20.03.2020 23 8. Minutes of the meeting held on 01.10.2020 24 (i)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2020-21

C H A I R M A N Shri Pradipta Kumar Naik, Leader of Opposition. M E M B E R S Smt. Pramila Mallik, Hon’ble Government Chief Whip. Shri Mohan Charan Majhi, Hon’ble Chief Whip, Bharatiya Janta Party Shri Narasingha Mishra, M. L. A. Shri Debiprasad Mishra, M. L. A. Shri Jaya Narayan Mishra, M. L. A. Shri Sarada Prasad Nayak, M. L. A. Shri Pranab Prakash Das, M. L. A. Shri Rajendra Dholakia, M. L. A. Shri Braja Kishore Pradhan, M. L. A. Shri Priti Ranjan Gharai, M. L. A. Shri Ananta Narayan Jena, M. L. A. S E C R E T A R I A T

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(ii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2019-20

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(iii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N

Shri Narasingha Mishra Leader of Opposition.

M E M B E R S

Shri Debiprasad Mishra, M. L. A. Smt. Pramila Mallik, M. L. A. * Shri Dilip Kumar Ray, M. L. A. Shri Pravata Kumar Tripathy, M. L. A. Shri Pravat Ranjan Biswal, M. L. A. Shri Mahesh Sahoo, M. L. A. Shri Saroj Kumar Samal, M. L. A. ** Shri Naba Kishore Das, M. L. A. Shri Samir Ranjan Dash, M. L. A. Shri Chiranjib Biswal, M. L. A. Shri Debasish Samantaray, M. L. A. S E C R E T A R I A T

Shri Amiya Kumar Sarangi, Secretary. Shri S. K. Swain, Joint Secretary. Shri M. Dungdung, Under Secretary. Shri Prafulla Kumar Parida, Desk Officer. Smt. Baijayanti Pattnaik, Desk Officer. N. B.:- * The Membership of Shri Dilip Kumar Ray, M. L. A. was ceased w.e.f. 30.11.2018 vide notification No. 10486/L. A., dated 5th December 2018. ** The Membership of Shri Naba Kishore Das, M. L. A. was ceased w.e.f. 28.01.2019 vide notification No. 742/L. A., dated 30th January 2019.

(iv)

COMPOSITION OF THE SUB-COMMITTEE-V OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N Shri Saroj Kumar Samal, M. L. A. M E M B E R S Shri Pravat Kumar Tripathy, M. L. A. Shri Mahesh Sahoo, M. L. A., S E C R E T A R I A T

Shri Amiya Kumar Sarangi, Secretary. Shri Shishir Kanta Swain, Joint Secretary. Shri M. Dungdung, Under Secretary. Shri Prafulla Kumar Parida, Desk Officer. Smt. Baijayanti Pattnaik, Desk Officer.

(v)

INTRODUCTION

I, the Chairman of the Public Accounts Committee having been authorised by the Committee on their behalf present this 1st Report of the C & A. G of India (Revenue Receipt) for the year 2007-08 relating to Finance Department.

The Sub-Committee-V of Public Accounts Committee had examined the above subject in its meetings held on 25.05.2018, 24.09.2018, 17.12.2018, 03.01.2019 and 14.02.2019. The findings and conclusion which are based on the result of the examination of the Committee, presented herewith.

The Public Accounts Committee, 2019-20, finalized the Report in their sitting held on 20.03.2020 and reapproved by the Public Accounts Committee 2020-21 on 01.10.2020.

The Committee place on record their appreciation of the assistance rendered by the officers of the Departments of Finance for their Co-operation.

The Committee further express their thanks to the Officers and Staff of the Odisha Legislative Assembly Secretariat for their Secretarial assistance.

Sd/- Bhubaneswar (PRADIPTA KUMAR NAIK) Date: 01.10.2020 C H A I R M A N PUBLIC ACCOUNTS COMMITTEE

R E P O R T Report of the C & A. G of India (Revenue Receipts) Chapter-II of Finance Department-2007-08

The Central Sales Tax (CST) Act, 1956 and Rule made thereunder read with Government notifications and executive orders issued from time to time provide that the calculation of tax on the dealer should be based on : i. completion of audit assessment based on Audit Visit Report (AVR) and levy of tax at the assessment stage at the prescribed rates, subject to certain conditions on the Net Taxable Turnover (NTO) of goods correctly determined at such stage and adjustment of admissible Input Tax Credit (ITC); and ii. imposition of penalty at the prescribed rate, for contravention of provisions of the Act and Rules, on the tax liability determined by the AA in audit assessment including penalty for mis-utilization of declaration in prescribed forms. Audit noticed that while finalizing the assessments, the AA did not observe some of the above provisions read with Government notifications/orders as mentioned in the following paragraphs. System deficiencies 1. Para-2.2.6. Acceptance of declaration forms on interstate sales. As per the provisions of the CST Act and the Rules made thereunder interstate sale of goods covered by valid declaration in form ‘C’ is eligible for tax at a concessional rate of four percent. A dealer who claims concessional rate of tax is required to obtain the declaration in form ‘C’ marked as ‘original’ from the purchasing dealer and produce it before the assessing officer (AO) at the time of finalization of the assessments. Further, penalty not exceeding one and a half times the tax assessed is also liable for concealment/furnishing incorrect particulars of turnover. To check the misuse of the form ‘C’ and various other malpractices associated therewith, the CCT issued instructions in October, 1972 and December, 1977 to all the AOs to select a certain percentage of the declaration forms for reference to the AOs of the concerned state for cross verification. Further, every circle and assessment unit is required to maintain two registers in the prescribed proforma, one for declaration form ‘C’ received from other states and the other for declaration form ‘C’ sent to other states, for verification. Test check of records of the circles covered in the review revealed non- maintenance of register for cross verification of declaration forms. Acceptance of defective, duplicate, photocopied and manipulated forms while allowing concessional rate of tax by the AOs at the time of finalizing the assessments led to underassessment, non/short levy of tax mentioned in the succeeding paragraphs. 2. Para-2.2.6.1 Acceptance of declaration forms on interstate sales. The Department complied the audit objection with the explanation that though it had taken initiative to cross verify the declaration forms on several occasions, it was felt that practically it is not feasible within the available resources and limited time period. It would be possible to do so only after a systematic improvement. At time of test check, the cross verification of forms were done through TINXSYS (Tax Information Exchange System). This was a Central Government scheme under which all states shared information on central network regarding issue and utilization of waybills, ‘C’ and ‘F’. Forms at the time of assessment verification of issue and utilization of statutory forms were made through TINXSYS or from the respective state websites. During VAT regime and also in non-VAT goods using GST regime, issuance and utilization of way bills, statutory forms are being done online. The Committee felt that the Department had taken appropriate steps and the Committee settled the para. 3. Para-2.2.6.2 Acceptance of declaration forms on interstate sales. Audit para pointed out that in Bolangir-II Circle, only three declaration forms were sent to the issuing authority of the forms at Delhi in October, 2006. Although

2 no reply was received till March, 2008 the AO did not bring the fact to the notice of ACCT (Intelligence) for further action. The Department had submitted three declaration forms which were sent to the issuing authority at Delhi in October, 2006. No reply had been received as if the matter was not referred to ACCT (Intelligence). The fact remand that in spite of attempt by the department there was no response from other states. It was ascertained that such a gap existed in all other states. The Committee examined the compliance notes and dropped para with the direction to obtain relevant data from other States of India. 4. Para-2.2.6.3 Acceptance of declaration forms on interstate sales. The Departmental compliance stated that 46 declaration forms were sent to the ACCT (Intelligence) for cross verification. As submitted by Jajpur Circle, since the case related to 2002-03 and the details of correspondence where not available, the exact position could not be ascertained. Nowa-days cross verification of declaration forms wherever required is made through TINXSYS and VATIS. The Committee considered the compliance and settled the para. 5. Para-2.2.6.4 Acceptance of declaration forms on interstate sales. As submitted by Cuttack-I-Central Circle, case of M/s Sailashree Enterprises, basing on AG objection, proceeding U/r 10 of the CST(O), Rules had been disposed off. The dealer submitted the original ‘C’ forms involving `16.77 lakh which were verified and found correct by the AO. Accordingly, the proceeding was dropped. The Committee settled the para after going through the departmental compliance. 6. Para-2.2.6.4 Acceptance of declaration forms on interstate sales. i) Shreejee Combine Coke (P) Ltd., Cuttack-II-766, 2002-03 As submitted by Cuttack-II-Circle, in case of Shreejee Combine Coke (P) Ltd., an amount of `1,67.061/- had been demanded vide DCR-Sl. No.1-09-10. As per

DCR, the dealer had been show caused for recovery of tax.

3 Reassessment proceeding had been initiated and the case was under examination. The Committee asked the department to apprise the recovery position of the firm for further consideration. ii) Dhenkanal- M/s Uma Shankar Agarwalla-DLC-106, 2002-03. The Departmental compliance stated that, as submitted by Dhenkanal Circle, the case related to Angul Circle. Angul Circle submitted that case assessment for the period 2003-04 had been completed on 18.03.2005 raising a demand of `78.463/-.

Against the order, the dealer preferred revision before the CCT (O), Cuttack on 06.06.2005, wherein Addl. CST (CZ), Cuttack granted stay with the order to the dealer to deposit `9.977/- by 27.06.2005. In the meantime, the ACST Cuttack-II returned the assessment record alongwith the audit objection to Angul Circle on 13.08.2008 and Angul Circle intimated the audit objection to the Addl. CCT to consider it at the time of disposal of appeal case. The Department was directed to apprise the present position of the appeal case to Hon’ble Public Accounts Committee. iii) Ganjam-I- M/s Monigi Store, GAC-507, 2003-04. Proceedings initiated u/r 10 of the CST (O) Rule had been disposed off on

25.10.2008 by raising an extra demand of `31.332/-. As submitted by the Ganjam

Circle-I, proceedings initiated u/s 10 of the CST (O) Rule in case of M/s Monigi

Store had been disposed of on 25.10.2008 by raising an extra demand of `31.332/.

The Committee accepted the departmental compliance and settled the para. iv) Keonjhar M/s ABS Merchants Pvt. Ltd., RC No-KJC-633, 2002-03. As per audit observation cross-verification of C forms bearing no-95C No.168470 by the ACST, Enforcement Range & Balasore Range revealed discrepancies of forms which resulted tax and penalty demand of `6,13.932/- which had been paid by the dealer.

4 The compliance notes stated that as submitted by the Keonjhar Circle, the cross verification of C form by the ACST enforcement Range, Balasore revealed discrepancies in case of M/s ABS Merchants Pvt. Ltd., which resulted in demand of tax and penalty of `6,13.932/- vide DCR No. 01/2008-09. The dealer had paid the entire amount vide PCR Sl. No.29/dtd. 30.08.2008 and PCR Sl. No.15/dtd. 20.03.2009. Since the amount had already been paid the Department requested to drop the para. The Committee observed that since amount had been realized the para be dropped. v) Mayurbhanj M/s Nicco Corporation Ltd., MBC-745, 2004-05 under CST Act. Proceedings u/r 10 of the CST (O) Rules 1957 had been initiated on the dt. 14.08.2008 and disposed of on dt. 30.06.2011 raising no extra demand as the ‘C’ declaration forms were in order. The Committee accepted the compliance. vi) M/s Bright Glass Works (P) Ltd. K. C. Pur, Baripada, MBC-14 for the year 2003-04. As pointed out by the audit proceeding u/r 10 of the CST(O) Rules had been initiated and the proceeding had been disposed off on 12.03.2010 raising an extra demand of `7,89.590/-

vii) M/s Nabadurga Minerals, Rairangpur, Mayurbhanj, MBC-873 for the year 2005-06 under CST Act. Proceeding u/r 10 of the CST (O) Rules was initiated after getting the AG objection. On 31.03.2008, the STO verified the original ‘C’ forms submitted by the dealer and found those to be correct. The proceeding initiated u/r 10 of the CST Rules for the material period was dropped. The Committee dropped the para. viii) Rourkela-I-M/s Anurag Ferro Products Pvt. Ltd., RI-I-C-2008.

5 Audit objection stated that the dealer submitted duplicate declaration form during assessment. In reply the department submitted that as per the submission of the Rourkela-I Circle, the audit had objected that 34 nos. of ‘C’ form, (26 nos. for 2003-04 and 8 nos. for 2004-05) submitted by the dealer at the time of assessment were not in order and annexure separately provided had not been by the same person (purchasing dealer) signing the original declaration forms on the front face of the form as required under the provision of the rule 8 (4) read with rule-12 of the CST (O) Rules. The dealer was also lagging behind by not filling the forms properly and the date of registration certificate no. were also not recorded. In this connection notice u/r 10 of the CST (O) Rules was issued to the dealer vide no. 1174, dtd. 28.02.2008 fixing the date to 27.03.2008. The case was examined and the dealer furnished a written submission that the ‘C’ form submitted earlier were in order and though signed by different persons in the front and in the annexure, belonged to the same dealer. He also submitted that ‘C’ forms were original and the amounts tallied with the transactions. He further submitted that Registration Certificates of the purchasing dealers were valid at the time of effecting interstate purchase and the payments were received through banks. It is also submitted that genuineness of ‘C’ forms might be verified at the official level by making correspondence with outside State Sales Tax Authorities. Considering the written submission of the dealer and taking into account the particulars available in the ‘C’ form the re-assessment proceeding u/r 10 was dropped. The Committee settled the para. ix) M/s Shree Salasar Cashings Pvt. Ltd.. Audit para stated that the dealer had furnished a duplicate copy of ‘C’ form for

`19,12.477/- on sales made to M/s Laxmi Steel Overseas (P) Ltd., Bangalore. The case was reopened u/r 10 of the CST (O) Rules and was dropped as the dealer furnished a fresh ‘C’ form of the total amount. The department in view of the steps taken by the dealer urged the Public Accounts Committee to drop the para.

6 The Committee observed that since the amount had been realized the para be dropped. x) M/s Shree Jagannath Alloys Pvt. Ltd.-RI-I-C 2253, 2004-05. Audit pointed out that the dealer was unassessed for tax. The department submitted that basing on the audit objection the case was re- opened u/s 12 (8) of the OST Act and assessment was completed raising an extra demand of ` 7,19,984/-. Show case notice u/s 13 (5) of the OST Act had been issued for realization of dues. An amount of ` 7,19,894/- had been realized from the dealer in 3 (three) phases. The Committee observed that since the amount had been realized the para be dropped. xi) Balasore-M/s JK Darsmall Jute Products Ltd. The department stated that on the basis of audit objection the reassessment proceedings was done on the dealer and an extra demand of `82,938/- was raised.

The dealer preferred 1st appeal where it submitted the C forms after due rectification and with supporting documents. After verification of the same the appellate authority reduced the demand to original assessment figure. The Committee observed that since the C forms submitted by the dealer during reassessment were certified and were in order the objection be dropped. xii) M/s Oriplast Ltd. The department stated that the as per audit objection reassessment in case of the dealer was done as per audit objection and the amount was raised to `3,47,760/-.

The dealer went for 1st appeal and submitted the C forms after due rectification and with supporting documents. After due verification of C forms submitted by the dealer the appellate authority reduced the demand to Nil. The department submitted that C forms produced by the dealer were in order. Since the C forms submitted by the dealer were in order, the settled the para. xiii) M/s Emami Paper Mills Ltd.

7 The audit objection revealed that the dealer was under assessed. The department complied that reassessment was done and the demand was increased to ` 3,22,132/-.

The Committee examined the submissions made by the department and dropped the para. xiv) Bolangir-II (Now Kantabanjhi). As per audit objection a dealer registered Bolangir-II circle effected interstate sale of rice worth of `19.83 crore during June to December 2004 and claimed exemption by furnishing declaration in five ‘C’ forms after having paid purchase tax on the corresponding paddy. The dealer went for 1st appeal and submitted the C forms after due ratification and with supporting documents. The Committee observed that since the C forms submitted by the dealer were certified and were in order the objection be dropped. xv) Bhubaneswar-M/s Konark Cylinder and Container (P) Ltd., BHC-I- 1273-2002-03. Though emphasis had been given to collect correct supporting declaration forms at the time of assessment, sometimes in some cases, defective/duplicate photocopied declaration forms have been received by assessing officers due to overload of work. The department submitted that the Bhubaneswar Circle records were not readily traceable. The dealer was issued a demand notice of `5.31 crore. But the dealer was residing at Raipur after closing down his business in Odisha. The department was asked as to how it was going to collect the amount. The AG commented that legal course of action should be taken for recovering the amount. The Committee went through all the submissions made for all the circles and dealers respectively. The Committee was of the opinion that the department is not sincere regarding the submission of C forms in time by the dealers. Since most of

8 the amount had been recovered the department requested the Committee make take steps to settle the para. On the assurance of the department that it was initiating steps for recovering the amounts the Committee dropped the para with the instruction to submit the recovery position to the Committee. 7. Para-2.2.7 Deficiency in the proforma prescribed for utilization statement of declaration forms. According to the CST (Odisha) Rules, every registered dealer to whom any declaration form ‘C’ and ‘F’ is issued shall maintain a true and complete account of utilization of every such form. The proforma prescribed in CST (Orissa) Rules for utilization accounts of the declaration forms does not provide columns for capturing basic information such as Registration Certificate (RC), number of the dealers to whom these forms are issued on purchase of goods or on receipt of goods by stock transfer. In absence of the above information the scope for cross verification of the genuineness of the transactions covered in declarations by referring the details to the assessing authorities of other states appears to be limited. After the case was pointed out, the Government in August 2008 stated that action was being taken to amend the proforma. The department submitted that since it was a procedural problem and has been rectified the para may be dropped. The Committee went through the observations and dropped the para. 8. Para-2.2.8 Internal audit. Internal audit is one of the most vital tools of the internal control mechanism and functions as the ‘ears’ and ‘eyes’ of the management and evaluates the efficiency and effectiveness of the mechanism. It also independently appraises whether the activities of the organization/department are being conducted efficiently and effectively. An Internal Audit Wing (IAW) was introduced in the Sales Tax Department in 1975-76 with seven audit parties headed by the CTOs (Inspection). In course of this review, it was seen that the IAW did not carry out a single inspection during 2003-04

9 to 2006-07 and was rendered defunct. Due to the failure of the Government to strengthen the IAW, adherence to the provisions of the statutes and instructions for reduction of the risk of committing errors and irregularities to guard against leakage of revenue, was not ensured. The Government, while agreeing to the audit observations, stated (August 2008) that over a period of time though the number of dealers increased manifold, yet proportionately the number of field officials remained more or less the same. The audit comment stated that the Government might take immediate steps to strengthen the IAW at the earliest to ensure strict compliance with the provisions of the Act and the rules by various wings of the department and to prevent leakage of revenue. The Committee dropped the para with the observation that since internal audit is obsolete and does not hold on any repercussion in today’s GST regime, there is no justification to linger the matter anymore. 9. Para-2.2.9 Interstate sales. As per provision of the CST Act, tax on interstate sales is leviable at the concessional rate of four per cent subject to production of declaration in form (C). In case a dealer fails to obtain and produce such a declaration, tax is leviable in respect of declared goods at twice the rate applicable to the sale or purchase of such goods inside the state and in case of other goods, at the rate of 10 percent or at the rate applicable to the sale or purchase of such goods within the state, whichever is higher. 10. Para-2.2.9.1 Test check of records revealed discrepancies in 23 cases of seven circles of the AOs while finalizing the assessments between May, 2003 and August 2007 for the years between 2002-03 and 2004-05. The Committee examined all the cases one by one. i) M/s Hi-Tech Powercon (P) Ltd. The amount was set-aside for re-assessment. The dealer furnished the ‘C’ declaration forms covering total turnover 5.28 crore, there was no extra demand.

10 Since, the case was re-opened by the assessing officer and the dealer could produce the ‘C’ forms. The para was dropped. ii) M/s Shree Trading Co-Dhenkanal. Assessment proceeding u/r 10 of the CST (O) Rule had been disposed of on a demand of ` 34,59,389/-. In the meantime the dealer had closed his business and attachment notice had been issued to the 3rd party. The Committee directed the Department to take steps for recovery and dropped the para. iii) M/s Subudhi Brother, Ganjam-I. Proceedings were initiated against the dealer and the original demand was reduced in the 1st appeal. The dealer went to Tribunal and the reduced amount was confirmed. The dealer had paid-up the amount. The Committee dropped the para. iv) M/s Ganesh Rice Mill. The Department replied that the case had been set aside by the Tribunal. The para was dropped by the Committee. v) M/s Gayatree Traders. The Department replied that the dealer had already paid the amount. The para was dropped by the Committee. vi) M/s Harekrishna Traders. The Department replied that the dealer went for 1st appeal on the amount and the amount was reduced. The dealer paid-up the reduced amount. The Committee dropped the para. vii) M/s Janata Rice Mill. The Department replied that the dealer went for 1st appeal and the amount was reduced to nil in the first appeal. The Committee dropped the para. viii) M/s MSP Sponge Iron (P) Ltd. -Keonjhar

11 The Department replied that the demand was reduced in the 1st appeal and the dealer was issued a notice to realize the amount. The para was dropped. ix) M/s Bright Glass Works (P) Ltd.-Mayurbhanj The Department replied that dealer was charged an extra demand and was issued a notice for collection. The para was dropped. x) M/s Rourkela Steel Corporation

The Department replied that there was a demand of ` 1.39 crore on the dealer. The dealer, went to High Court. As per the direction of the High Court the dealer paid ` 72 lakh and the balance had been stayed by the High Court.

The case was sub-judice. The Committee opined that since the matter was sub-judice the para can’t be dropped. The Department should expertise the court case and apprise the Committee after disposal of the case. xi) M/s Odisha Food Supply Syndicate The Department replied that the dealer had been issued a bank attachment order for the demand raised against him for submitting the demand. The Committee dropped the para. xii) M/s Ashok Ispat Udyog The Department replied that from 1994 to October, 2003 there was no requirement of ‘C’ form for interstate sale of iron and steel good. In 2002 the CST Act was amended by Government of India and the Government of India asked the states to make respective rules. Our state made the rule by inserting coverage of C forms w.e.f. 13.10.2003. Hence the interstate sale of tax paid Iron and Steel from 13.05.2002 to 13.10.2003 took place without coverage of ‘C’ form. The Committee dropped the para. M/s Barbil Khanija Udyog

12 M/s S. L. Agarwalla & Co. M/s Utkal Trading Co. M/s Manjit Trader M/s Gulf Oil Corporation M/s R. M. Steel Metal M/s Rashi Steels The Department replied all the above cases had gone to the Tribunal for the tax recovery amount. The Tribunal had set aside the demand. In view of the submission of the Tribunal the Committee dropped the para.

13 11. Para-2.2.9.2 Interstate sales. i) M/s Ramaprasad Rice and Chuda Mills, Bolangir-II. The AG’s objection was that the dealer was liable to pay on its purchases. The assessing officer said that he was not liable to pay on its purchases because he was paying on his sales. The AG’s objection was considered and found not correct. The Committee dropped the para. ii) M/s Neelachal Ispat Nigam Ltd.

The demand of ` 1.84 crore was made against which ` 33 lakh 50

thousand was paid. Then the dealer went for 1st appeal. In the 1st appeal the

demand was redetermined at ` 3.02 crore. The dealer had gone to Tribunal.

The Tribunal had to finalise the case. The Committee went through the compliance and decided that since the case was with Tribunal it would be decided by the Tribunal. Whatever might be the decision the department would have to enforce it after communicating the decision to the Public Accounts Committee. The Committee accepted the compliance and dropped the para. 12. Para-2.2.10.1 Interstate sales. M/s Spaa Straw Board Industries Pvt. Ltd. The AG’s point was examined by the department. The dealer had all the supporting documents vis-à-vis ‘F’ form. The original F form was submitted by the dealer alongwith the supporting documents. The Department also submitted that the dealer submitted the F form alongside supporting documents, after the audit objection was communicated to him. The Committee settled the para with the observation that the Department had to establish that the case was under the CST Act. 13. Para-2.2.10.2 to 2.2.10.5 Branch Transfer. The above paras involved cases of Branch Transfer relating to -

14 M/s Satyam Castings Pvt. Ltd. M/s Shri Jagannath Roller Flour Mill M/s Jwala Flour Mills The Cases were considered because of underassessment of tax due to acceptance of F forms. The Committee considered the cases and dropped the para. 14. Para-2.3.1 Irregular/excess grant of exemption under the sales incentive scheme. M/s Neelachal Ispat Nigam Ltd.

The AG’s objection a demand was raised for ` 73.92 lakh but M/s

Neelachal Ispat Nigam Ltd. went to 1st appeal and also the High Court. As per

High Court order he paid 50% that is ` 36.50 lakh. The 1st appeal was

disposed off. The dealer has again gone for 2nd appeal. The Committee was of the opinion that since the case is before the Hon’ble Tribunal the final result may be intimated to the Public Accounts Committee. With these observation the Committee dropped the para. 15. Para-2.3.2 Irregular/excess grant of exemption under the sales tax incentive scheme. M/s Anurag Ferro Products Pvt. Ltd. The AG’s objection was that CR coils and strips was not a manufacturing projects. Therefore the dealer was not entitled for the benefit. The assessing officer on the basis of Supreme Court order ultimately held that it was nothing but a manufacturing project and the dealer was entitled for the benefit. The Industries Department had also given the certificate to the dealer entitling it for the benefit of tax exemption. In the case of ‘Jindal Steel and Power’ the AG was asked to give his opinion to which AG replied that as per the judgment of West

15 Bengal Sales Tax Tribunal CR strips produced through a manufacturing process. Raw materials (HR strips) and the end products (CR strips) were different commercial commodities involving process which amounted to manufacture. Hence, the exemption was allowed under sales tax incentive schemes. The Committee went through the submission of the Department and dropped the para. 16. Para-2.3.3 Irregular/excess grant of exemption under the sales tax incentive scheme.

The objection in accordance to C & A. G Report was done and demand of `

5.42 lakh for 2002-03 was made. This was reduced to ` 2.16 lakh by the 1st appellate authority. The dealer had deposited the entire amount as reduced by the 1st appellate authority. In the year, 2003-04 also the original demand was ` 7.46 lakh which was reduced to ` 2.98 lakh by the 1st appellate authority. The dealer had also paid the amount. The Committee recommended that since the dealer had paid-up the amount the para should be dropped. 17. Para-2.4.1 Underassessment of tax due to suppression of purchase. The Department replied that it was time-barred. The para was dropped. 18. Para-2.4.2 Underassessment of tax due to suppression of purchase. The Department compiled that the para was sub-judice as the case was pending in the Tribunal. The dealer was asked to pay off the amount as raised by audit objection. The dealer had got a legal right to challenge it. The Department requested that since demand had been raised the para may be dropped. The Committee pointed out that the sub-judice cases could not be settled as the dealer could approach the Tribunal and if he was defeated in the Tribunal then he could go to the High Court and then to Supreme Court.

16 The Sub-Committee referred the sub-judice cases to the Main-Committee with the submission that the Department had complied appropriately with the audit objection. The Main-Committee considered the matter and asked the Department to apprised the Committee after disposal of Court Case.

19. Para-2.5 Non-levy of penalty. The Department replied that the audit objection raised by AG had been communicated to the dealer. The dealer had approached the High Court and the petition was allowed by the High Court. The Committee dropped the para as the High Court had allowed the decision. 20. Para-2.5 Non-levy of penalty. The Department replied that as per audit objection the additional demand was raised against the dealer. The dealer went to 1st appeal where the demand was confirmed. Then he approached the Tribunal and the case was sub-judice. In the mean-time the dealer had paid-up half of the demand, but the case was pending in the Tribunal. The Sub-Committee was satisfied with the reply furnished by the Department and referred the matter to the Main Committee. The main Committee directed the Department to expedite the case and apprising the Committee after finalization of the case. 21. Para-2.6 Evasion of Tax. The Department stated that the objection raised by AG has been met with. The AG replied that they were satisfied with the Report furnished by the Department relating to the case pointed out. The Committee went through the compliance and dropped the para. 22. Para-2.7 Non-levy of Tax for contravention of declaration.

17 The Department replied that in this case also the audit objection was compiled with and an extra demand of ` 2.08 lac was raised. The dealer took the matter to the

Tribunal and in the meantime the dealer paid-up 50% of the raised demand. The matter was still pending for decision. The Sub-Committee replied that since the objection had been complied with and the matter was pending for finalization Main Committee would consider the objection. Main Committee examined the matter and settled the para with the observation that the Department should submit report to the Public accounts Committee after disposal of Tribunal case. 23. Para-2.8 Underassessment of tax due to non-inclusion of entry tax in the taxable turnover. The matter was sub-judice, Committee asked the Department to expedite finalization of the case and apprise the Committee. 24. Para-2.9.1 Short levy due to application of lower rate of tax. The C & A. G Report stated that a work contract dealer had purchased cement and chemicals valued at ` 6.82 crore on the strength of declaration in form ‘C’ during 2003-04 and 2004-05 and utilized those in work contract. The AG objection resulted in increasing an additional demand of ` 30.01 lakh.

The Department replied that they had initiated tax recovery proceedings against the dealer, but nothing had been recovered since the dealer was not physically traceable. The Department however ensured that they maintain a DCR (Demand Collection Register) where the unrealized amounts were recorded so that the Department could monitor the demand. The Committee opined that since this was a continuous legal process the para be dropped. 25. Para-2.9.2 Short levy due to application of lower rate of tax.

18 The para involved two cases; one relating to Hindustan Lever which had already been realized. Another case pertaining to Park Enterprises also remained unrealized since nothing could be recovered from the dealer. The AG was of the opinion that the Department should take adequate measures for the recovery. Accordingly 3rd party attachment of demand had been done. The Committee dropped the para after going through the submission. 26. Para-2.10 Evasion of purchase tax. The C & A. G Report stated that the dealer was reassessed for an additional demand of ` 12.23 lakh and the demand order had been served on the proprietor at his Kolkata address. The Department replied that the tax recovery proceedings had been initiated on 25.06.2018 for realization of the demand dues. The Department also stated that the original 12 lakh was enhanced to 33 lakh in the 1st appeal. The 1st appeal is also an extended form of assessment. The Committee dropped the para. 27. Para-2.11 Underassessment due to incorrect application of concessional rate of tax.

As per the audit objection extra demand of ` 9.76 lakh and ` 10.80 lakh roughly aggregating to ` 20 lakh pertaining to two years i.e. for 2003-04 and 2004-

05 was raised against M/s Akhandalamani Saw Mill. The Department submitted that the dealer went to the Tribunal, but the Tribunal disposed off the case in favour of Revenue. Next the dealer approached the High Court but no stay was granted by the High Court. Therefore the Department have started the tax recovery proceedings. In view of the submission of Department the Committee dropped the para. 28. Para-2.12.1 Underassessment of entry tax.

19 a) The C & A. G Report stated that as per the audit objection extra demand of

` 5.68 lakh for another year had been raised against M/s SAIL (RSP) for

the year 2002-03 and 2003-04. The Department had started the tax recovery proceedings. Since it was a state PSU their account could not be attached still then the tax recovery proceedings had been initiated against the dealer. It was further stated that the objection was not sustainable as per rule 3 (4) of the OET Act, 1999. The Committee dropped the para. b) It was compiled that recovery proceedings had also been initiated against M/s Ferrocrome & Alloys Ltd. (2002-03). The Committee settled the objection. 29. Para-2.12.2 Underassessment of entry tax.

The C & A. G Report stated that the demand had been raised to 1.94 crore against Hindalco Industries Ltd. The Department stated that as per the submission of Sambalpur Range, the said para had already been settled. It also submitted that due to the Western Odisha High Court Bench demand, the Sambalpur offices were not opening. The Department also submitted that since the dealer had a captive power plant and used coal as raw material. Whether coal could be treated as a raw material or not was still sub-judice at the Supreme Court. Since, the matter was sub-judice, High Court had opined that the assessment could be done only after the case had been disposed off at Supreme Court. The Department was waiting for the High Court order. The Committee opined that the Department should apprise the latest position. The Department stated that regarding Hindalco the matter had been disposed of by the Supreme Court and demand had been raised on the company. The case was Entry Tax case, in which 300 dealers had gone to the High Court. Since the State Government had won the case the demand had been made and some amount had been realized from Hindalco. It was also submitted that since Supreme Court had

20 disposed of the Entry Tax case, all interim orders had been vacated. As the matter related to a number of parties the entire amount required time for realization. The Committee observed that the department should submit a report after realization of the entire amount. 30. Para-2.13 Loss/Non-Realisation of entry tax. This para is not a commercial tax subject. 31. Para-2.14.1 Short levy of entry tax due to application of low-rate. The Department replied that the para involved many cases. First was from Cuttack-II one dealer named M/s Hindustan Construction Co. Ltd. The para involved a lot of old records which was hard to get by the Department. Secondly cases involving Rourkela-I and II and Sambalpur-I and Jajpur were dropped after discussion and submission by the Department and AG.

M/s Bhusan Power & Steel Ltd.- (Lower rate) (Goods specified in part-III can be taxed maximum to the extent of 12% as under OST Act) The Department replied that the dealer went to Supreme Court, but the Supreme Court had disposed of this case. All Entry Tax cases had been disposed of together by the Supreme Court. Bhusan Power & Steel Ltd. had gone under Insolvency and Bankruptcy and there was a moratorium that till the IBC proceeding was taken to a logical end no demand could be coercively collected from the defaulter. The Sub-Committee went through the compliance notes and opined that since the case was pending before Hon’ble High Court it should be referred to the main Committee for discussion. Main Committee considered the para and observed that the para would be settled after finalization of Court case. 32. Para-2.15 Non-levy of penalty.

21 The C & A. G Report stated that under the OET Act and Rules made thereunder every registered dealer shall submit to the concerned AA a statement containing the particulars of scheduled goods brought into the local area during the month or quarter as the case may be within the prescribed time limit accompanied by a receipt towards the full payment of the admitted tax. The Department submitted that the AG had gone through each individual case separately and verified the records. The cases were thoroughly examined with reference to compliance as well as submission of the Department. The Committee went through the compliance of the Department and AG and settled the para. 33. Para-2.16 Non-levy of entry tax due to escapement of taxable turnover. The Department submitted that four dealers; i.e.; 1. M/s Agarwal Spices & Food Processortc Pvt. Ltd. 2. M/s Shivani Vanaspati Ltd. 3. M/s Mahavir Vanaspati (P) Ltd. 4. M/s Divine Construction related to Cuttack-II which were examined by AG and detailed submission was provided by the dealers. The Committee went through the Departmental submission relating to various dealers of Rourkela I and II and opined that AG had examined and was satisfied with the action taken by the Department on the dealers. The Department stated that AG had gone through each case of individual circle and asked for detailed documentation of the action taken by the Department on the dealers. The Committee opined that since the Departmental compliance had been thoroughly verified by AG and the action taken on the dealers relating to payment of entry tax had been dully assessed the para be dropped. 34. Para-2.17 Short levy of entry tax due to incorrect determination of taxable turnover. The Report of the C & A. G of India stated that the OET Act and the Rules made thereunder provide for levy and collection of tax on entry of scheduled goods

22 into a local area for consumption use or sale therein at the prescribed rates on the purchase value inclusive of incidental charges, excise duties, countervailing charges, sale tax, transport charges, etc. Test check of records stated that the AA of Cuttack-I (Central), Anugul and Rourkela-I and Rourkela-II assessed the records of dealers relating to the above circles and finalized the taxable amounts. Ambuja Cement- The dealer was assessed for in the first appeal. The dealer went to Tribunal which set aside the case and asked for re-assessment. After the case was set aside the dealer went for fist appeal which was sub-judice. The Department submitted similar cases of Lafarge India Ltd. Orissa Pump Ltd. Ashok Coal Agency M/s Nalco M/s Century Fibre Places (P) Ltd. M/s Methodex Systems Ltd. M/s Jaico India Ltd. M/s Vishnu Traders. M/s Swaraj Motors. All the dealers were assessed on the basis of short levy of entry tax, whose assessment proceedings were assessed on the basis of short levy of entry tax due to incorrect determination of taxable turnover. The AG stated that it had gone through the compliance of each dealer separately and examined the assessment proceedings made by the department on each dealer and the payments made by them. The Committee asked AG that if it was satisfied with the compliance submitted by the Department for each dealer. AG stated that since each dealer who was under assessed had been booked by the Department and the correct determination of the amount had been done.

23 Some dealers had gone for first appeal and Tribunals and cases were sub-judice and some dealers had made part payment of the taxable amount. The Committee went through the entire compliance and dropped the para with the observation that sub-judice cases should be referred to the main Committee for action. Main Committee examined the matter and the para was settled.

******

24 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2019-20 HELD AT 04:00 P. M. ON 20.03.2020 IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

********* P R E S E N T Shri Pradipta Kumar Naik. CHAIRMAN Leader of Opposition. Shri Mohan Charan Majhi, Hon’ble Chief Whip, Bharatiya Janta Party Shri Debiprasad Mishra, M. L. A. Shri Jaya Narayan Mishra, M. L. A. MEMBERS Shri Rajendra Dholakia, M. L. A. Shri Ananta Narayan Jena, M. L. A. S E C R E T A R I A T Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

The Committee met as scheduled and approved the following Reports:- 1. 1st Report of PAC, 2019-20 on the Report of the C & A. G of India (Revenue Receipt) for the year 2007-08 relating to Finance Department. 2. 2nd Report of PAC, 2019-20 on the Report of the C & A. G of India (Revenue Receipt) for the year 2015-16 relating to Finance Department. 3. 3rd Report of PAC, 2019-20 on the Report of the C & A. G of India (G & SSA - Report No. 4 of the year 2016) relating to Electronics & Information Technology Department for the year, 2014-15. 4. 4th Report of PAC, 2019-20 on the Report of the C & A. G of India (G & SSA) for the year 2016-17 relating to Higher Education Department. 5. 5th Report of PAC, 2019-20 on the Report of the C & A. G of India (G & SSA) for the year 2014-15 relating to Home and Women & Child Development Department. 6. 6th Report of PAC, 2019-20 on the Report of the C & A. G of India (G & SSA) for the year 2013-14 relating to Rural Development Department. 7. 7th Report of PAC, 2019-20 on the Report of the C & A. G of India (G & SSA) for the year 2013-14 relating to Rural Development Department. 8. 8th Report of PAC, 2019-20 on the Report of the C & A. G of India (G & SSA) for the year 2014-15 relating to School & Mass Education Department. The Committee also authorized the Chairman to present the same to the Assembly. The meeting of the Committee adjourned sine-die.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE

25 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2020-21 HELD ON 01.10.2020 AT 03:00 P. M. IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

********* P R E S E N T Shri Pradipta Kumar Naik. CHAIRMAN Leader of Opposition. Shri Mohan Charan Majhi, Hon’ble Chief Whip, Bharatiya Janta Party Shri Narasingha Mishra, M. L. A. MEMBERS Shri Jaya Narayan Mishra, M. L. A. Shri Priti Ranjan Gharai, M. L. A. S E C R E T A R I A T Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

The Committee met as scheduled and approved the following Reports finalized previously by the Public Accounts Committee, 2019-20 on 20.03.2020 for presentation in the House during the 4th Session of the 16th Assembly. 1. 1st Report of PAC, 2020-21 on the Report of the C & A. G of India (Revenue Receipt) for the year 2007-08 relating to Finance Department. 2. 2nd Report of PAC, 2020-21 on the Report of the C & A. G of India (Revenue Receipt) for the year 2015-16 relating to Finance Department. 3. 3rd Report of PAC, 2020-21 on the Report of the C & A. G of India (G & SSA - Report No. 4 of the year 2016) relating to Electronics & Information Technology Department for the year, 2014-15. 4. 4th Report of PAC, 2020-21 on the Report of the C & A. G of India (G & SSA) for the year 2016-17 relating to Higher Education Department. 5. 5th Report of PAC, 2020-21 on the Report of the C & A. G of India (G & SSA) for the year 2014-15 relating to Home and Women & Child Development Department. 6. 6th Report of PAC, 2020-21 on the Report of the C & A. G of India (G & SSA) for the year 2013-14 relating to Rural Development Department. 7. 7th Report of PAC, 2020-21 on the Report of the C & A. G of India (G & SSA) for the year 2013-14 relating to Rural Development Department. 8. 8th Report of PAC, 2020-21 on the Report of the C & A. G of India (G & SSA) for the year 2014-15 relating to School & Mass Education Department. The Committee also authorized the Chairman to present the same to the Assembly. The meeting of the Committee adjourned sine-die. Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE

26 PRESENTED TO THE ODISHA LEGISLATIVE ASSEMBLY ON THE 3RD OCTOBER, 2020

ODISHA LEGISLATIVE ASSEMBLY

PUBLIC ACCOUNTS COMMITTEE

2020-2021 SIXTEENTH ASSEMBLY

2ND REPORT ON C & A. G OF INDIA (REVENUE SECTOR) FOR THE YEAR 2015-16 OF FINANCE DEPARTMENT

SECRETARIAT OF THE ODISHA LEGISLATIVE ASSEMBLY, BHUBANESWAR-751001

Sl. CONTENTS Page No. 1. Composition of the Public Accounts Committee, 2020-21 i 2. Composition of the Public Accounts Committee, 2019-20 ii 3. Composition of the Public Accounts Committee, 2018-19 iii 4. Composition of the Sub-Committee-V of the Public iv Accounts Committee, 2018-19 5. Introduction v 6. Report 1-27 7. Minutes of the meeting held on 20.03.2020 28 8. Minutes of the meeting held on 01.10.2020 29 (i)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2020-21

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(ii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2019-20

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(iii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N

Shri Narasingha Mishra Leader of Opposition.

M E M B E R S

(iv)

COMPOSITION OF THE SUB-COMMITTEE-V OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N Shri Saroj Kumar Samal, M. L. A. M E M B E R S Shri Pravat Kumar Tripathy, M. L. A. Shri Mahesh Sahoo, M. L. A., S E C R E T A R I A T

Shri Amiya Kumar Sarangi, Secretary. Shri Shishir Kanta Swain, Joint Secretary. Shri M. Dungdung, Under Secretary. Shri Prafulla Kumar Parida, Desk Officer. Smt. Baijayanti Pattnaik, Desk Officer.

(v)

INTRODUCTION

I, the Chairman of the Public Accounts Committee having been authorised by the Committee on their behalf present this 2nd Report of the C & A. G of India (Revenue Sector) for the year 2015-16 relating to Finance Department.

The Sub-Committee-V of Public Accounts Committee had examined the above subject in its meetings held on 25.05.2018, 12.11.2018, 17.12.2018, 03.01.2019 and 14.02.2019. The findings and conclusion which are based on the result of the examination of the Committee, presented herewith.

The Public Accounts Committee, 2019-20, finalized the Report in their sitting held on 20.03.2020 and reapproved by the Public Accounts Committee 2020-21 on 01.10.2020.

The Committee place on record their appreciation of the assistance rendered by the officers of the Departments of Finance for their Co-operation.

The Committee further express their thanks to the Officers and Staff of the Odisha Legislative Assembly Secretariat for their Secretarial assistance.

Sd/- Bhubaneswar (PRADIPTA KUMAR NAIK) Date: 01.10.2020 C H A I R M A N PUBLIC ACCOUNTS COMMITTEE

R E P O R T

Report of the C & A. G of India (Economic Sector) Chapter-II of Finance Department - 2015-16 1. 2.4: Audit of “Pendency and Disposal of Review and Appeal cases in Commercial Tax Department and their impact on revenue collection”. The C & A. G Report stated that the assessment and collection of taxes under Odisha Value Added Tax (OVAT Act, 2004), Odisha Entry Tax (OET act, 1999) and Central Tax act, 1956 in the State is entrusted with the Commercial Tax (CT) wing of the Finance Department. As per the provisions of the above Acts, any dealer, aggrieved by an assessment order passed for any tax periods is allowed to prefer appeal within 30 days of the receipt of the assessment order. While preferring an appeal the dealer is required to deposit 20 per cent of the tax or interest or both demanded in the disputed order. The balance is to be adjusted after disposal of the appeal. Pendency of appeals and revision cases, having a direct impact on the Government revenues was taken up for audit between April and July, 2016. In four out of the total twelve cases covering the period from 2012-13 to 2014-15 it was to ascertain whether the cases were disposed of in time and in the manner prescribed under the Acts, the Rules made thereunder and the executive instructions issued from time to time. After test check of records relating to monitoring and disposal of appeal and revision cases, audit observed that the percentage of disposal during the above 3 yrs against the total pending appeal cases ranged between 28.28 and 36.96. It was observed by AG that appeal cases as old as 28 years (since year 1988-89) were pending for disposal.

2. 2.4.3 System deficiencies Para-2.4.3.1 Absence of executive instructions for timely disposal of first appeal cases. Audit para stated that no executive instruction was issued by the CCT prescribing time limit for disposal of appeal cases. The absence of departmental instruction contributed significantly to the pendency of appeal cases. The Department submitted that previously there was no time limit for disposal of first appeal cases. But the VAT amendment Act effective from 01.10.2005 has stated that all appeal cases have to be cleared within 4 yrs. The CCT after passing of the Act has reviewed the first appeal cases for the years 2015-16, 2016-17 and 2017-18. The Departmental compliance stated that disposal of appeal cases become slow at some point because of non-availability of Appeal Officers or Lawyer‟s strike in Western Odisha, for two months, causing no hearings. But after all hindrances the Commissioner has regularly monitored the appeal and cases have been disposed off. The Committee expressed its displeasure stating that the AG’s observation of cases pending for 10 years is a real matter of concern. It opined that the Department should take enough steps to review the cases and timely disposal of the same as it involves crore of rupees which has direct implications on the state Revenue. However, it was dropped the para with the opinion that since it is part of the Act and it has to be disposed off within 4 yrs the Department should take effective steps for timely disposal of the pending cases. 3. 2.4.4 Compliance Deficiencies Para-2.4.4.1 Irregular acceptance of 1st appeals after the stipulated period. As per section 77(3) of the OVAT Act, first appeal shall be preferred within 30 days from the date on which the order is served on the dealer. Test check of records relating to appeals in the Additional CCT (Appeal), Central Zone, Cuttack and JCCT, Balasore Range showed that appeals of three dealers were admitted after 500/600 days. The AG objected that these appeal cases should not have been accepted after such delay as it involved contravention of the provisions of the Act.

2 The Department replied that the appellate authority relating to three appeal cases relating to Additional CCT, Central Zone, Cuttack were filed by two petitioners in Nov, 2011 within 30 days after receipt of assessment order in October and November 2011-In respect of the remaining four cases relating to Balasore Range, Government stated that the appellate authority had admitted the cases following the principle of natural justice considering the vested right of the petitioner and thereafter, the appeal portions were cancelled. The Departmental officials replied that there is provision in the Act, for condonation of delay, but it depends on the appellate authority if he is going to condone the delay or not. Delay can be condoned on reasonable ground. The delay in the four reported cases were ultimately rejected due to filing of the same after 500- 600 days. The Department did not condone the delay. The Committee opined that since the para did not cause revenue loss and AG was satisfied with the reply the para should be dropped. 4. Para-2.4.4.2 Irregular acceptance of 1st appeals without mandatory deposit of 20% of tax in dispute. The C & A. G Report stated that as per section 77(4) of the OVAT Act read with Rule 87 of the OVAT Rules, no appeal against any order shall be entertained by the appellate authority unless it is accompanied by satisfactory proof of payment of admitted tax in full and twenty percent of the tax or interest or both in dispute along with Form – 501. The CCT, Finance Department stated that 10 cases observed by AG, which were filed first appeal without 20 per cent deposit by the dealer. The AG‟s objection cases pertained to tax period from 2005-2006 and with mandatory 20% deposit. This provision in the CST Act changed in July, 2006. So, on account of appeal cases relating to tax period of 2005-06 the first Appeal Officers, accepted the cases without the 20% deposit amount. In the meantime, the appeals have been disposed off. There was no loss of revenue and all cases were disposed off. The Committee went through the submission of the Department and settled the para since all the cases had been disposed off.

3 5. Para-2.4.4.3 Admission and disposal of appeals without having valid jurisdiction. Under Sub-Rule (1) and (2) of Rule-86 of OVAT Rules, 2005, read with CCT‟s circular dated 12th Nov, 2013, the JCCT or DCCT (Appeal) has jurisdiction over all first appeal cases arising out of orders passed by Assistant Sales Tax Officers or Sales Tax Officers/Assistant Commissioners only. The CCT, Finance Department replied to the objection raised by AG, Odisha stating that the first appeal cases pending before the Sales Tax Officers, Assistant Commissioner, Deputy Commissioner and Joint Commissioner are often assigned to be first appeal officers according to the load of cases pending before them. The CCT, Finance Department informed that if the department notices that the workload of Additional Commissioner or Deputy Commissioner is often adjusted after taking approval from the Government. The Committee asked the Department to produce official order regarding procedural issues relating to timely disposal of first appeal cases and other issues relating to admission and disposal of appeals without having valid jurisdiction. After thorough scrutinisation of Departmental Compliance and submission of CCT, Finance Department opinion of the AG that validated steps had already been taken the Committee dropped the para. 6. Para-2.4.4.4 Blocking of Government Revenue due to irregular assessment of cases set aside. The test check of Appeal Disposal Register in Angul Range regarding assessment made against NALCO audit para revealed that the company went for 1st appeal which was done by the Deputy Commissioner rank officer who was the first appeal officer. The assessment officer stated that the dealer was referred for fresh assessment. The dealer went to High Court challenging the re-assessment order. The High Court reassigned the case to another Deputy Commissioner rank officer. The case had been reassessed and completed and a demand had been raised. The Committee opined that since the Department had complied with the objection of AG the para should be dropped.

4 7. Para-2.4.4.5 Blocking of Government Revenue due to admission of appeal cases without having jurisdiction. The C & A. G Report stated that the during test check of records 22 cases involving an amount of ` 3.87 crore were traced out over which the JCCT or DCCT

(Appeal) of the ranges were not having appellate jurisdiction. Hence during the time of final disposal the appellate authorities of Balasore Range transferred the cases to the appropriate appellate authority, while the Angul Circle rejected the appeals. This led to undue pendency of appeals and consequent blocking of Government Revenue. The Department submitted in its compliance that out of 22 cases transferred to appropriate appellate authority 19 had been disposed off and the remaining 3 cases would be disposed off within three/four months. The Committee went through the compliance and opined that since the cases have been disposed off and the remaining cases would be disposed off quickly the para should be dropped. 8. Para-2.4.4.6 Irregular allowance of adjournment in hearings. The C & A. G Report stated that as per the provisions of Rule 89 (i) of OVAT Rules, 2005, the appellate authority shall fix a day for hearing of the appeal and may from time to time adjourn the hearing provided that not more than three adjournments shall be granted to a party for hearing of the appeal. During test check of pending as well as disposed of appeal cases in the four test checked ranges it was found that in 21 cases involving an amount of ` 25.29 crore, four to nine adjournments had been allowed to the appellants in contravention of the provisions. The Departmental compliance stated that the audit had raised objection in the cases where the dealers had been allowed opportunities of being heard more than three adjournments. It is relevant to mention that providing natural justice/reasonable opportunities of being heard forms a basic structure of the constitution. Accordingly, considering the genuineness of the case, the same cannot be denied under the plea that OVAT Rules do not provide to allow more than three adjournments to party for

5 hearing of appeal. Generally, rule prescribes the procedures and cannot override provisions laid down under the said Act. The rules of procedure are intended to advance the cause of justice and not to defeat it. However, for speedy disposal of appeal cases, the appellate authorities have been instructed by the CCT (O) not to allow more than three adjournments for disposal of appeal cases. The Committee accepted the observation of AG. The Department submitted that to serve the purpose of justice more than three opportunities can be given but it should not be indefinite. The CCT, Finance Department stated that tax matters are quite complicated and they are not as easy as Revenue cases since tax matters include lots of document verifications and calculations. In view of the above procedures the Finance Department submitted that time limit condonation is required in some appeal cases. The Committee went through the submission and settled the para. 9. Para-2.4.4.7 Non-assessment of set-aside cases. The C & A. G Report stated that the CCT has instructed JCCTs of ranges to monitor remanded/set-aside cases regularly, review those cases and take appropriate action on them. To monitor timely assessment of set-aside cases the CCT in his circular prescribed that a „Set-Aside Register‟ shall be maintained at circle level. The verification of the Set-Aside Register and information furnished nine circles showed that out of total set-aside cases of 109 no re-assessment proceedings has been initiated by the circles till the end of July, 2016 although a period of one to six years has elapsed. The Report also stated that due to non-initiation of re-assessment proceedings, potential revenue involved in these cases remained unrealized. The Department replied that they had taken immediate steps to dispose off all the set-aside cases pointed out by AG audit, by the 30th of September, 2018. The Balasore and Angul circles had 2 and 1 case pending respectively under the OVAT which they had taken immediate steps to comply at the earliest. The Committee expressed its displeasure stating that Demand Collection Register was not maintained in accordance to the instruction of the CCT. Since it

6 is a procedural kind of thing the circles should maintain it in accordance and in conformity to the instruction issued by the Department. However, since steps had been taken to dispose off the cases the para should be dropped. 10. Para-2.4.4.8 Shortfall in achievement of targets in disposal of appeal cases. The Report of the C & A. G of India stated that in order to ensure achievement of target by the appellate authorities the CCT (O) had been reviewing the disposal position periodically and issued instructions to the first appellate authority to exercise more urgency in clearing up the backlog as well as present cases. As per the instruction the JCCT and DCCT (Appeal) of the 12 ranges had a target of disposing 360 first appeal cases during a year. But test check of records of different circles revealed that there was a major shortfall of achievement of target and no action was initiated by CCT against the JCCT and DCCTs. The Department submitted that in order to ensure achievement of target by the appellate authorities the CCT (O) was reviewing the position periodically and issuing suitable instructions for speedy disposal of pending appeal cases. The Law Department had also instructed that all pending cases should be disposed of within a period of three years from the date of commencement of OVAT (Amendment) Act, 2015. The CCT also submitted that timely disposal of pending cases were being made. Regular reviews were being made every month through video conferencing. The Department also submitted that appeal cases statutorily have no target. The only statutory restriction is that appeal cases are to be disposed of within three years which had been amended to four years. But sometimes adjudication process is hindered because of many constraints since the process of enforcement of twenty cases target can‟t be achieved. The CCT also submitted that if the appellate authorities become too much target oriented the cases will be disposed off without giving reasonable opportunity to the parties which will be in violation of natural justice. The Committee went through the submission of the Department and observed that since the disposal of pending cases were reasonable and the setting

7 up targets for the disposal of pending cases was only a procedural instruction, the para settled. 11. Para-2.4.4.9 Non-adherence to executive instructions for utilization of VATIS for appeal/revision cases:- With the intention of streamlining the disposal of appeal/revision cases, a system was put in place by CT wing of Department to link the audit assessments with appeal cases through VATIS. Besides all the appellate/revision authorities were directed to scrupulously ensure that the petitions were entered and the appeal orders uploaded in the VATIS. Further, all the legacy data were also required to be entered in VATIS. The test check of three out of the four test checked ranges revealed that they did not furnish any information regarding entry of appeal details and uploading appeal orders in VATIS. Thus the instructions of the CCT for entering and uploading data relating to appeals/revisions in the VATIS were not complied with and the purpose of linking of audit assessments with appeal cases for streamlining disposal of appeal cases could not be achieved. The Department replied that the objection raised by audit in the above mentioned para relates to non-uploading of appeal and revision petition and legacy data in VATIS. Due to some technical problem in the system uploading of appeal cases and generation of receipts was not made before the time of audit visit. But the same had been rectified and all related data had been uploaded later. The Committee opined that since it was a procedural error the para may be dropped. 12. Para-2.4.4.10 Non-production of records/information relating revision cases:- During inspection of records and information relating to revision cases disposed during 2012-15 and cases pending for disposal as of March 2015 in the CT Wing of the Department and issue of subsequent reminders, it was found that the CCT did not produce such records/information. As a result audit could not ascertain the position of pendency and disposal of such cases.

8 The Department in its reply stated that as per audit observation no record and information relating to revision cases disposed of during 2012-15 and cases pending for disposal was produced before them for inspection. The objection raised in this regard was not correct. The audit officers during their inspection made requisition for submission of information on appeal and its disposal. The appeal/revision records relating to Addl. CCT (Appeal), South Zone and North Zone were maintained and available in their respective offices at Sambalpur and Berhampur for which the same could not be produced. The records were available for examination whenever the audit party desired. The Committee opined that since the information was available the para be dropped. Para-2.5.6 System Deficiencies. The Report of the C & A. G of India stated that there were deficiencies in the system and non-adherence to the prescribed system. 13. Para-2.5.6.2 Ineffective system for review of arrear cases by the supervising authorities. The audit observed that no periodical reports/returns were prescribed for the JCCTs for submission in support of reviews conducted by them. To an audit query, the TRDs of the test-checked circles stated that reviews of arrear cases on a monthly basis had been done. However, no periodical review report containing the suggestions/recommendations of the JCCT and the action taken there on by the circles was furnished to audit for verification. The Department replied that pursuant to directions of the CCT the arrear cases exceeding 25 lac were reviewed from time to time by the JCCTs concerned and instruction were issued to the circle officers at the time of review. The JCCTs were also monitoring collection of arrear and intimating the monthly collection of arrear in respect of each circle under their jurisdiction to the CCT (O). The collection of arrear was monitored and regularly collected for each circle as a result of which arrear amounts were realized amounting to ` 343.92 crore .

9 The Committee stated that since the amount had been realized the para be dropped. 14. Para-2.5.7.1 Certificate requisitions (Form-1) not issued in case of default in payment of tax after issue of show cause notices. The Report of the C & A. G of India stated that as per Clause-2 of the Schedule-E to the OVAT Act, where an assesse or dealer is in default or is deemed to be in default in making payment of tax or any other amount due under the Act, the AA may forward to the TRO a certificate requisition in Form-1 under his signature specifying the amount of tax and any other amount due from the assesse or dealer. The CCT vide his letter dtd. 10.12.2012 issued instructions in this regard. The audit observed that in nine out of ten test-checked circles relating to 213 cases the defaulting dealers did not pay the tax dues even after issue of show cause notices for realization of tax dues. The AAs did not issue certificate requisitions in Form-1 to the TROs for initiation of tax recovery proceedings. The Department replied that certificate requisition in Form-1 to the TRO for initiation of tax recovery proceedings in most of the cases had already been initiated. Since the matter was sub-judice in same cases and recovery of the balance had been stayed those requisitions in Form-1 to the TRO had not been issued. The Committee dropped the para. 15. Para-2.5.7.2 Non initiation of tax recovery proceedings in time led to loss of Government revenue. As per Sub-Section-4 of Sect. 50 of the OVAT Act, the amount of tax not paid along with return and net tax and penalty payable as assessed under different sections of the Act shall be paid by the dealer within 30 days from the date of service of demand notice. In case the dealer fails to pay such tax and penalty within due date, the AA after giving him the opportunity of being heard through issue of a show cause notice, direct the dealer to pay, in addition to the amount due, a penalty at the rate of two per cent of such amount per month. All amounts remaining unpaid after the due date of payment in pursuance of the above notices, shall be recoverable as arrears of

10 public demand in accordance with the provisions contained in Schedule-E appended to the Act. During the examination made by audit it was observed that there were 142 cases in which after elapsing of 5 years, the AAs had not initiated any action for issue of TR proceedings by issuing certificate requisition for recovery of arrear dues which resulted in loss of Government revenue. The Department submitted that initiation of TR proceedings had already been made by the AAs before becoming time barred by limitation. Also the department submitted that the statutory period of 5 years had been amended to 7 years under the OVAT Act. The Committee examined the compliance and dropped the para. 16. Para-2.5.7.3 Notices in Form-2 issued but not served due to closure of business. The CCT in his letter dated 10th Dec, 2012, instructed that the certificate requisition in Form-1 to the TRO should be issued within six months from the date on which the demand becomes due for collection. He also instructed that the TRO should issue notice in Form-2 within 15 days from the date of receipt of Form-1. The audit observed in the test checked four circles that in 12 cases involving arrears of ` 24.55 crore demanded during 2009-10 to 2013-14, the AAs had issued

Form-1 after 6 to 57 months from the due dates of collection. Similarly in 3 out of the above 12 cases, the TROs had issued Form-2 with delays ranging from one to six months. Due to the delay in issue of Form-1 and Form-2, the said notices could not be served on the dealers concerned, as they had already left the place after closing their business. Thus due to delay in initiation of tax recovery proceedings despite instructions of CCT, arrear dues of ` 24.55 crore remained unrealized.

The Departmental compliance stated that out of 12 cases, re-assessment of two dealers had been made on the basis of exported fraud case report submitted by vigilance wings. In three more cases show cause notices remained unserved by the postal department with the remarks that “factory closed”. In the remaining seven

11 cases, the closure of business led to delay in issue of Form-1 and Form-2. Some of dealers had disposed their plant and machinery by way of sale as scrap. Attachment of their bank account also did not yield any result. Tahalsidar and Sub-Registrar of the concerned place had been requested to furnish information regarding movable and immovable property of the defaulting dealers but the same also did not yield any result. The Committee observed that the difficulties as apprised by the Commissioner relating to the process of recovering arrear from dealers who had closed business were genuine and recommended to settle the para. 17. Para-2.5.7.4 Tax recovery proceedings initiated but not followed up. The OVAT Act state that in case the amount mentioned in the notice issued in Form-2 is not paid within 15 days or such further time as the TRO may grant, he shall proceed to realize the amount by issue of warrant and attachment of property of the defaulter. The audit findings stated that in 54 cases involving arrears of ` 8.85 crore assessed during 2009-10 to 2014-15, although the TROs had initiated TR proceedings by issue of notices in Form-2 to the defaulting dealers, the said proceedings were not followed-up by the TROs. As per the provisions of the schedule-E i.e. collection of information on movable and immovable properties of the defaulting dealers issue of warrants and attachment of the properties of the dealers for sale by public auction to recover Government dues should have followed.

Absence of follow-up action by the TROs resulted in non-recovery of ` 8.85 crore.

The audit pointed out the cases. The TROs stated that appropriate action would be taken after examination of the cases. The Department stated that after issue of notices in Form-2 the TROs had taken-up further steps to collect information regarding immovable and moveable properties of defaulting dealers for attachment of their properties. The CCT also stated that as explained previously the tax recovery proceedings process is too tedious. The Committee went through the compliance and settled the para.

12 18. Para-2.5.7.5 Non-levy of penalty despite default in payment of dues. As per Section 50(5) of the OVAT Act, where a dealer fails to make payment of the tax assessed, interest payable or penalty imposed or any other amount due from him under the Act within 30 days of the date of service of the notice of demand, the AA shall after giving the dealer a reasonable opportunity of being heard, direct that such dealer shall pay, in addition to the amount due for payment by way of penalty or any other amount due, for every month for which payment has been delayed by him after the date on which such amount was due to be paid. In case a dealer fails to make payment of the tax assessed, interest payable or penalty imposed or any other amount due from him under the Act the AA may impose a penalty equal to two percent of such amount of tax, interest, penalty or any other amount due. If the dealer further fails to make payment a penalty of two and half percent may be imposed on the said amount and it should be paid within first three months of due date of payment failing which third party attachment to the movable and immovable must be made.

The audit observed that in 96 cases involving arrear dues of ` 25 crore, though show-cause notices had been issued to the concerned dealers, penalty of ` 7.04 crore was not imposed as per the provision of the Act. The same continued in three circles, where certificate requisitions in Form-1 were issued for realization of arrear dues of ` 25.76 crore in 37 cases imposing penalty of ` 10.16 crore.

The Department replied that arrear amount of ` 61,12,199/- (including tax and penalty) had been collected in 48 cases of Kalahandi, Jajpur and Keonjhar circles. In remaining 48 cases where there was no response tax recovery proceedings had been initiated for realization of tax including interest and penalty. The Committee went through the objections of audit and departmental compliance. In view of steps taken by the Department the para was settled. 19. Para-2.5.7.6 Non-issue of show-cause notices and penalty leviable thereon.

13 The C & A. G Report stated that in 89 cases in Bhubaneswar-II Circle involving tax dues of ` 3.71 crore demanded during the period from 2012-13 to

2014-15 was not deposited within due date. Show cause notices had not been issued till the month of audit (May 2016) although such notices were required to be issued after the due dates of payment of the dues. The period elapsed from the due date till the date of audit ranged between 4 to 35 months. It contravened the provisions of the Act and the Rules as well as executive instructions. The departmental compliance stated that the DCCT had examined all the records of the 89 cases and found that all those cases were pending before different forums of appeal. He also found that in most cases show-cause notices were issued but as the same were not entered in the DCR, the discrepancies were reported in the para. Later DCRs had been updated and audit observation was complied with. In this regard, it may be mentioned that the quantum of penalty is depended upon the final outcome of appeal, provided that where any appeal/revision under the act or the rules made there under has been filed – I) Such penalty shall be payable from the date so specified on the amount ultimately found due from the dealer; II) The tax or penalty if any is enhanced in such appeal or revision, such penalty on the excess amount shall be payable from the date by which the dealer is required to pay such excess amount. Since all the cases were pending for disposal under appeal that‟s why the penalty amount was not calculated. The Commissioner, CT and GST also submitted that all the defaulters had been issued show cause notices and it was reflected in the DCR which had been updated. The Committee dropped the para in view of the compliance submitted the Department. 20. Para-2.5.7.7 Non-maintenance of registers/records prescribed for monitoring of recovery of arrears.

14 The C & A. G Report stated that the CCT, in his Circular dated 28th April, 2008 had prescribed a register namely Demand Collection Register (DCR) for watching the status of collection of tax, interest and penalty etc. demanded during assessments. Similarly, the demanded revenue remaining non-realized at the end of the year is to be entered in a consolidated Demand Collection Register (CDCR) through which the status of the demand is watched and updated from time to time until final recovery/adjustment. The above registers are required to be reviewed periodically by the concerned AAs and updated with the latest position of recovery and/or appeals pending in the appellate forum/court. The CCT in his letter dated 10th December, 2012 instructed the JCCTs (JCCTs) and other senior supervisory officers to record their remarks regarding correct maintenance of the said registers at the time of visits to the circle. The audit findings stated that four out of ten circles had not maintained the CDCRs for the years from 2012-13 to 2014-15. Other than the above registers/records 1) Register for Recovery as per Tax Recovery Schedule. 2) Register of Show Cause under Section 50(5) of the OVAT Act. 3) Requisition Register for Tax Recovery and 4) Tax Recovery Register prescribed by CCT In his circular dated 28th April, 2008 for monitoring recovery of arrears were not maintained by any of the test-checked circles. It was observed that neither the CCT had monitored the maintenance of these registers not any action was taken for non-maintenance of these records. Non-maintenance of the above records showed that internal controls were lax. The audit was not able to examine timely payment of tax, time taken for issue of show-cause notices after failure in payment of tax by assesses and the average time taken for issue of Form-1 and Form-2 against the stipulated period of 15 days. In the absence of these registers audit was not able to ensure if the steps as enumerated in the codal provisions of the Act for the recovery of arrears were taken in a time bound manner.

15 The CCT (O) is monitoring maintenance of these registers in the monthly review meeting and verifying the same physically during inspection of circle offices. To ensure maintenance of these registers on regular basis, instructions had been issued by the CCT (O). Since, this is a procedural issue and AG had agreed to this earlier for settlement from time to time, the centre might have not maintained the same during audit review. But the department is taking regular steps for maintenance of registers. The Committee went through the audit observations and in view of steps taken by the department dropped the para. 21. Para-2.5.7.8 Non-pursuance of cases of arrears stayed by appellate authorities. The CCT had issued instructions (October 2012) to the first appellate authorities of the department that no appeal case should remain pending for more than 26 weeks. Further, the CCT had instructed (December 2012) the officers at all levels that in high value cases, action should be taken for filing petitions before different appellate authorities to vacate stays or dispose of appeals. The information furnished by CCT in respect of outstanding arrears, out of a total arrears of ` 6.63 crore under different Acts excluding OST pending for recovery as of March, 2015 sum of ` 3791.75 crore (57.26 per cent) had remained stayed at different levels. This included arrears of ` 1,121.65 crore which were stayed by the CCT and JCCTs without being disposed of. The audit analysed the information relating to the stayed cases and observed that out of the total arrears of ` 3,791.75 crore, the recovery of which was stayed by appellate authorities, an amount of ` 2,655.88 crore (70.04 per cent) related to the test-checked circles. Out of the same, arrears of ` 384.53 crore relating to the period from April 2005 to March 2015 were locked-up with the first appellate authorities of the department although more than one year had elapsed from the dates of appeal in each case. Thus, the appellate authorities had failed to comply

16 with the instructions of the CCT for disposal of pending appeal cases within 26 weeks. Further, the AAs of the above circles could also not produce any document to audit in support of initiatives taken by them in filing petitions for vacation of stays and early recovery of the arrears. This underscores the fact that the instructions of the CCT were not complied with by the AAs. The departmental compliance stated that there is no provision under the law empowering the assessing officer to move the 1st AAs for vacation of stay. The main cause of delay in disposal of appeal cases are due to late filing of appeal petition, consideration of condonation of delay and allowing reasonable opportunity of being heard before disposal of appeal petition. In the meantime the cases relating to more than three years have already been disposed of by the appellate authorities. The CCT (O) was also reviewing the disposal position of pending appeal cases periodically for which the disposals were 982 and 804 cases during 2013-14 and 2014-15 respectively. The appeal disposal during 2015-16 and 2016-17 stood at 1844 involving amount of ` 203.30 crore and 2345 cases involving ` 632.57 crore respectively. The high stake cases had already been disposed of by the 1st AA. Steps were being taken to collect arrear dues. The CCT also submitted that in cases stayed by the Tribunal or High Court, unless the stay was vacated and the case was finally settled the department could only pursu, not act. Pursuance of 1st appeal cases by the 1st Appellate Authorities were reviewed every month and disposal cases were reviewed. Virtually disposal of cases was more than the receipt due to regular monitoring by the Commissioner. The 1st appeal cases had to be made within four years as amendment of the OVAT Act. The Committee went through the compliance notes and audit objections and in view of the initiatives taken by the department dropped the para. 22. Para-2.5.7.9 Details of arrear cases not uploaded into VATIS. The C & A. G Report stated that as per the orders (Dec‟ 2012) of the CCT, all pending arrear cases were required to be entered in the arrear module of VATIS by the circle office and updated regularly. The CCT had also been monitoring the updation of the arrear module in VATIS through monthly video conferencing.

17 The verification of DCRs and information collected from VATIS, audit findings reported that 360 cases involving arrears of ` 257.93 crore had not been uploaded into the arrears module of VATIS till the date of audit (between April and June 2016). As a result, the amount of arrears as per VATIS was less than the actual due to delay in uploading the cases on the software. Thus monitoring the compliance of the executive instructions was ineffective. The department replied that at the time of audit the arrear cases for the period from 2012-13 to 2013-14 were not uploaded but the same have been entered in the arrear module of VATIS regularly by all circle offices. The Committee dropped the para in view of the reply given by the department. Para-2.5.8 Analysis of robustness of system for demand and collection of arrears. 23. Para-2.5.8.1 Delay in issue and service of demand notice. Audit observation pointed out that out of the total 185 cases, demand notices were served within 30 days (67.57 per cent) involving demand of ` 31.08 crore, while in 48 cases involving demand of ` 2.80 crore, demand notices were served beyond 30 days and within 90 days and in cases involving ` 7.10 crore demand notices were served within 30 days and within 90 days and in 11 cases involving `

7.10 crore, demand notices were served after 90 days. In a specified case a demand involving an amount of ` 6.55 lakh, demand notice was not served on the dealer till date of audit (July 2016) although the case was assessed in Feb, 2015. Thus, the circle did not ensure that demand notices were served, soon after finalization of assessments or within a reasonable period of 30 days. The department stated that the delay in issue of demand notices beyond 30 days as pointed out by audit due to return of the notices sent through registered post by the Postal Department because of absence of the dealer in the declared place of

18 business. In some cases, it was due to closure of the business of the dealer at declared place of business. The department replied that out of 185 cases, the full demand amount had already been collected in 101 cases and recovery in 37 cases were under stay. In balance 47 cases, tax recovery proceedings had been initiated and certificate of requisition in Form-1 issued and Form-2 had been served. The CCT stated that during AG‟s visit there was some delay but subsequently after being pointed out by Accountant General, the notices had been sent. The matter related to Bhubaneswar-Circle-III, which had 185 cases, the full demanded amount had already been collected in 101 cases and recovery in 37 cases was under stay by High Court. In balance 47 cases, tax recovery proceedings had been initiated. In view of the reply given by the department the Committee dropped the para. 24. Para-2.5.8.2 Non-issue/delay in show-cause notices. The Report of the C & A. G of India stated that out of cases involving demand of ` 33.97 crore not stayed in appeal, 6 cases were set aside/reduced by appellate authorities. Out of the remaining 80 cases, show cause notices in respect of 37 cases involving demand of ` 9.62 crore were issued within 30 days and in 42 cases involving ` 6.93 crore such notices were issued after 30 days from the due dates of payment. The audit pointed out that the show-cause notice was not issued in the remaining one case involving demand ` 6.55 lacs.

The department replied that the delay in issue of demand notices beyond 30 days as pointed out by audit is due to return of the notices sent through registered post by the postal department because of absence of the dealer in the declared place of business. In some cases it is due to closure of the business of the dealer at the declared place of business. In the case pointed out by audit of one dealer

M/s Achyotananda Traders involving demand of ` 6.55 lakh the demand notice was served on the dealer on dated 07.06.2015.

19 The Committee went through the submission of the department and dropped the para. 25. Para-2.5.8.3 Non-issue of certificate requisitions in Form-1 and notices to dealers in Form-2. The Report of the C & A. G of India stated that out of 80 cases (excluding 6 cases set aside/reduced) involving demand of ` 16.63 crore, tax recovery were initiated only in two cases involving ` 11.51 lakh and in the remaining 78 cases

(97.5 per cent) involving arrears of ` 15.48 crore, tax recovery proceedings through issue of certificate requisition in Form-1 by the AA and issue of notices to the dealers in Form-2 by the TRO had not been initiated till the date of audit (July, 2016) even after the lapse of 3 to 21 months. The full collection of demanded amount had been made in 31 cases. In the remaining cases tax recovery proceedings had been initiated through issue of Form-1 and Form-2 before being time barred. The Committee settled the para in view of the steps taken by the department. 26. Para-2.5.8.4 Delay in payment of demanded tax by dealers. Audit para revealed that out of 65 cases in 29 cases, payment were made within the prescribed period of 30 days from the date of service of demand notices and in the remaining 36 cases (55 percent), payments were made with delays ranging from 5 to 553 days from the due dates of payment. The circle did not take any action as per provisions of Act. The department replied that steps were being taken by the assessing officers for calculating the interest and penal interest on the delayed payment and tax by 36 dealers. The Committee recommended that since the department had taken steps for recovery of the amount the para be dropped. 27. Para-2.7.1 Short levy of tax and penalty due to application of lower rate of tax.

20 The Report of the C & A. G of India pointed out that as per section 14 of the OVAT Act, 2004 tax payable by a dealer under the Act shall be levied on his taxable turnover (TTO) in respect of different goods at the rates specified in schedules B and C appended to the Act. Goods not specified in Part II or IIA of schedule B as well as schedule C are taxable under Part-III of schedule B at the rate of 13.5 per cent. Electrical goods and equipment such as battery and home UPS being unspecified under Part II or IIA of schedule B or schedule C are taxable Part III of schedule B of the OVAT Act. Further, as per section 42(5) of the Act, if any tax is additionally assessed during the audit assessment, penalty equal to twice the amount of tax so assessed has to be imposed on the dealer. The test check of assessment records in Bhubaneswar-III Circle, revealed (November, 2015) that the sales turnover of a dealer dealing in batteries and home UPS was assessed on 31st March, 2015 from the tax period from 1st April, 2012 to

31st March, 2014 and the AA determined the TTO at ` 71.81 crore. The AA, while finalizing the assessment levied the tax at lower rate of interest which resulted in short levy of tax of ` 14.41 lakh. Besides, penalty of ` 28.82 lakh was also imposable. The department in its submission stated that the dealer company M/s Amar Raja Batteries Ltd. was engaged in trading of Home UPS and Batteries and collects VAT @ 5% on UPSs. It stated that in accordance to various judgments passed by various High Courts as well as per decision of Apex Court in various cases relating to the nature of tax to be levied on UPS (Sl. No. 69(g) of Part-II of the schedule – B of Rate Chart under OVAT Act, 2004) the assessing authority taxed @5% on home UPS treating the same as static converter under the lead Uninterrupted Power Supplies. It was pointed out that the dealer was selling Home UPS to the customers and collecting 5% VAT thereon. So, the amount of tax assessed on the same by AAs was absolutely correct. In view of the submission by the department, the Committee dropped the para.

21 28. Para-2.7.2 Short levy of tax and penalty due to irregular deduction of freight charges. The Report of the C & A. G of India stated that the definition of sale price as per Section – 2 (46) of OVAT Act, 2004 was amended vide Law Department notification No. 5495/legis, dtd. 07.05.2008 and the said amendment was given effect from 01.06.2008. As per the amendment of the said provision, any sum charged for freight, delivery, distribution installation or insurance at the time of delivery or before delivery of such goods are to be included in the sale price. The period of assessment related to the period both prior and subsequent to the amendment of the said section i.e. 01.04.2006 to 30.06.2010. The assessing officer completed the assessment not including the freight charge in the sale turnover keeping in mind the pre-amended provision. The case related to the Angul Range, where the assessment records stated that a dealer engaged in manufacture of refractory bricks-monolithic and castables and mortar had effected sale of finished goods valued at ` 61.76 crore inside the state during tax assessment period from 1st April 2006 to 30th June 2010 which included tax exempted sale of goods valued at ` 2.75 crore to SEZ and freight charges of `

4.58 crore. The AA, while assessing the dealer under the OVAT Act, for the above tax periods, had determined (August 2013) the gross turnover (GTO) of ` 61.76 crore. It was, however observed that though freight charge of ` 4.58 crore was a part of taxable turnover, the AA had deducted the same from GTO and levied tax on the remaining TTO of ` 54.43 crore. This resulted in underassessment of TTO by ` 4.58 crore and consequent short ley of tax of ` 18.53 lakh. Besides penalty of ` 37.06 lakh was imposable. The department replied that on receipt of audit observation, the JCCT Angul Range, re-opened the cases and reassessed the dealer for the time period 01.04.2006

22 to 30.06.2010, u/s 43 of the OVAT Act raising extra tax of ` 18,53,512/- and penalty of ` 37,07,024/- totaling to ` 55,60,536/- vide order dated 24.05.2016. The dealer challenged the same in High Court. The Committee considered the departmental compliance and dropped the para. 29. Para-2.7.3 Short levy of tax and penalty due to application of lower rate of retreaded tyres. Audit para revealed that as per the Section 14 of the OVAT Act, 2004, tax payable by a dealer under the Act shall be levied on his TTO in respect of different goods at the rates specified in Schedules B and C appended to the Act. The Act states that tyres including retreaded tyres, not specified under Part II or IIA of Schedule B or Schedule C, are taxable under Part III of the Schedule B of the OVAT Act. Further, as per Section 42 (5) of the Act, if any tax is additionally assessed during audit assessment, penalty equal to twice the amount of tax so assessed shall be imposed on the dealer. The scrutiny of assessment records in Keonjhar Circle, Audit observed that the AA had assessed the sales turnover of a dealer, engaged in retreading of tyres under the OVAT Act for the tax periods from 1st April 2011 to 31st March 2013 and determined the TTO at ` 56.33 lakh. However, instead of levying tax at the rate of

13.55% on the entire TTO, the AA, while finalizing the assessment, levied tax at the rate of 4% on ` 25.63 lakh for the period from 1st April 2011 to 31st March 2012 and at 5% on ` 30.67 lakh for the period from 1st April 2012 to 31st March, 2013. This resulted in short levy of tax of ` 5.04 lakh. Besides penalty of ` 10.08 lakh was also imposable. The findings of the assessments when informed to the department re-assessed the case and raised a demand of ` 15.12 lakhs. The department replied that the dealer in the instant case was granted Registration Certificate under OVAT Act for

23 manufacturing and wholesale distribution of retreaded tyres. For the purpose, it used rubber goods and gum as raw material and manufactured retreaded tyres. Tyre relreating material including tread rubber was inserted newly at Entry-121-A of Part- II of Schedule-B to the OVAT Act, 2004 w.e.f 01.04.2014 vide FD notification No. 14302/dtd.31.03.2010 and @5% from 01.04.2012 onwards. The dealer manufactured retreaded tyres using raw materials such as retreading materials tread rubbers and consumables. The AO might have accepted collection of tax @ 4/5% as done by the dealer to be correct under the impression that the dealer is engaged in wholesale and retail distribution of retreaded material at per Entry No. 121-A of Part-II of Schedule- B of the OVAT Act, 2004. But still the department after receipt of the audit observation the tax recovery proceedings had been initiated and Bank attachment had been done and local Tahasildar had been moved for obtaining immovable property for attachment. The Committee dropped the para since statutory action had been initiation against the dealer. 30. Para-2.7.4 Underassessment of sales turnover led to irregular allowance of excess input tax credit. As per audit observation Section II of the OVAT Act, 2004 read with Rule 10 of the OVAT Rules, 2005 provides that tax shall be levied on TTO of goods sold inside the State, determined after deduction of sales turnover which is not taxable. The dealer is liable to pay the net tax after adjustment of ITC towards tax paid on purchase of such goods inside the State. The assessment records of a dealer on scrutiny of a dealer in Cuttack-I Circle, during the period of 1st April 2011 to 31st March 2013, the dealer effected gross sales valued at ` 37.53 crore (excluding tax) under the OVAT Act, which included sales turnover of tax exempted goods and first point taxable goods worth ` 10.91 crore.

The TTO was thus ` 26.62 crore on which output tax of ` 4.92 was leviable. Since, the dealer had paid tax of ` 0.05 crore while filing the return, the remaining tax of `

24 4.87 crore was to be adjusted against the ITC admissible. The assessment finalization made by AA erroneously levied output tax of ` 3.48 crore only on the

Sales Turnover relating to the period from April 2012 to 31st March 2013 by determining GTO at ` 20.09 crore (excluding tax) and TTO at ` 15.19 crore. It was further observed that although the AA had assessed the transactions for the period from 1st April 2012 to 31st March 2013 against the above output tax of ` 3.48 crore and allowed the dealer to carry forward the remaining ITC of ` 1.39 crore to the next tax period, erroneous underassessment of sales turnover led to irregular allowance of

ITC of ` 1.39 crore.

The department was informed about the audit findings and on receipt of the same raised the extra demand of tax and penalty of ` 27,146/- which had already been paid by the dealer. The remaining audit findings were revised and restricted to `

14,91,216/- which was carried forward to be filed by the dealer in 2013. In the meantime an extra demand of ` 13,537/- had been made.

The Committee dropped the para. 31. Para-2.7.5 Non-initiation of action against dealers for default in submission of certified audited annual accounts. Audit para observed that as per Section 65 (2) of the OVAT says that the dealer is supposed to file its annual audited statement by a chartered accountant by 31st October of the next financial year to the AA concerned. Revised the CCT circular of October 2014 allowed the dealers to submit their audited accounts, both manually and electronically by 31st December 2014. In case the dealer fails to file the annual audited statement then per day of ` 100/- fine has to be paid and it does not have an upper limit as to how much penalty can be levied. The audit scrutinized the registers relating to receipt of audited annual accounts in 27 circles and observed

25 (November 2015 and April 2016) that out of 14,344 dealers having GTO exceeding `

60 lakh during 2013-14 as many 6,166 dealers had not submitted the copies of

CAAA for that year. The delays in submission of CAAA ranged from 304 to 456 days till the dates of Audit and warranted levy of penalty of ` 22.43 crore after giving those dealers reasonable opportunities of being heard as per provisions of the Act. The AAs had not initiated any action against the dealers for non-submission of CAAA. The audit reported the matter to the CCT. The CCT replied that the issue related to the section has been amended subsequently and Government of Odisha has passed a notification limiting the penalty maximum upto ` 10,000/-. The case findings of audit are all prior to amendment. The CCT had requested the Finance Department to waive penalty in excess of ` 10,000/- in all pre-amended cases. The circle officers have been instructed at the time of review meetings to ensure timely submission of audited accounts by the dealers in future to avoid litigation. The Committee dropped the para with the direction that the department should furnish the amendment circular for the information of the Hon’ble Members of the Committee. 32. Para-2.8.1 Non levy of entry tax on Chemicals (Bhadrak Circle, M/s Krishi Rasayan). Audit para revealed that as per Section 3(I) of OET Act, 1999, scheduled goods that have entered into a local area for consumption, use or sale therein are taxable at rates prescribed in the schedule appended to the Act. During scrutiny of assessment records under the OET Act, in Bhadrak Circle, audit observed that a dealer engaged in manufacture of pesticides had purchased goods valued at ` 237.54 crore during the period from 1st April 2007 to 31st March 2012 including raw materials such as „Chemicals in technical grade pesticides‟ were nothing but chemicals and were therefore taxable at the rate of 0.5% when used as raw materials

26 for production of pesticides. The AA while finalizing the assessment of the dealer under the OET Act for the above period, determined taxable turnover as ` 63.93 crore after deducting ` 173.61 crore from the gross purchase turnover of `

237.53 crore towards value of goods declared by the dealer as non-scheduled and non-taxable under the OET Act. The underassessment of taxable turnover of `

154.34 crore, treating the same as non-scheduled goods resulted in short levy of entry tax of ` 0.77 crore. Besides penalty of ` 1.54 crore was also imposable.

The department went through the observation of audit and stated that while completing the assessment the AA accepted the contention of the dealer and concluded that chemicals in technical grade pesticides were nothing but pesticides which were non-scheduled goods. The AA re-assessed the case and fixed up the demand of ` 23.51 lakh. The dealer went to the JCST, Balasore Range, Balasore.

The JCST confirmed the appeal, but the dealer again went for the 2nd appeal before the Odisha Sales Tax Tribunal which was pending for disposal. The Committee observed that since the matter was sub-judice it was to be settled after the court case was over. 33. Para-2.8.2 Short levy of entry tax due to allowances of excess set-off. The audit observed that as per Section 3 of the OET Act, 1999, scheduled goods those entered into a local area for consumption, use or sale therein are taxable at the rates prescribed in the schedule appended to Act. The AG pointed out that in Angul Circle and Rourkela-I two dealers M/s Inter- continental Tax Refineries and M/s Jagannath Aloys Pvt. Ltd. who were assessed by AAs, for the tax periods between 1st April 2007 and 31st March 2012 and determined the tax liability at ` 44.51 lakh. The audit observed that the AAs had determined the tax-liability at a lower rate of tax assessment which resulted in lower rate of tax.

27 The department submitted that the dealer had paid an amount of ` 76,470/- at the time of 1st Appeal Assessment set aside in appeal case disposed of in 16.08.2018 and fresh assessment proceeding was initiated.

In the 2nd case there was a demand of ` 5,24,809/- as per the AG‟s objection and assessment was made, demand had been made, money had been recovered and adjusted against refund claim of the dealer. The Committee dropped the para. 34. Para-2.8.3 Non-levy of Entry Tax on Minor Minerals. Audit objection pointed out that as per Section 3(I) of the Odisha Entry Tax (OET) Act, 1999, there shall be levied and collected a tax on entry of scheduled goods into the local area for consumption, use or sale therein. The rates at which tax is to be levied are prescribed in the schedule appended to the Act. The dealer is liable to pay such tax while filing return under Section 7 of the Act. Minerals are taxable at the rate of one per cent of purchase value as per entry no. 59 of Part I of schedule of the OET Act. The audit inspected the records in Koraput Range and observed that a dealer had purchased stone chips and sand valued at ` 29.98 crore from unregistered dealers between April 2010 and 31st March 2013 and brought the same to another local area for utilization in various works related to work contracts. The dealer had to pay entry tax of ` 29.98 lakh at the rate of one percent on the said purchase. The audit pointed out that since the AAs failed to assess the tax the department should take steps for levying the tax. The department went through the direction of AG and re-assessed and levied tax on the dealer at ` 29.98 lakh. The CCT submitted that the dealer had went to 1st appellate authority who confirmed the demand. The dealer preferred the 2nd appeal which was pending for disposal. The dealer in the meantime had deposited 12 lakh and the remaining amount had been stayed up by the CCT till the disposal of the pending case before the Tribunal.

28 The Committee went through the submissions of the department as well as the observations of the audit and suggested that since the matter was sub-judiced it was to be settled after finalization of the court case.

*****

29 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2019-20 HELD AT 04:00 P. M. ON 20.03.2020 IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

********* P R E S E N T Shri Pradipta Kumar Naik. CHAIRMAN Leader of Opposition. Shri Mohan Charan Majhi, Hon‟ble Chief Whip, Bharatiya Janta Party Shri Debiprasad Mishra, M. L. A. Shri Jaya Narayan Mishra, M. L. A. MEMBERS Shri Rajendra Dholakia, M. L. A. Shri Ananta Narayan Jena, M. L. A. S E C R E T A R I A T Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE

30 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2020-21 HELD ON 01.10.2020 AT 03:00 P. M. IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

********* P R E S E N T Shri Pradipta Kumar Naik. CHAIRMAN Leader of Opposition. Shri Mohan Charan Majhi, Hon‟ble Chief Whip, Bharatiya Janta Party Shri Narasingha Mishra, M. L. A. MEMBERS Shri Jaya Narayan Mishra, M. L. A. Shri Priti Ranjan Gharai, M. L. A. S E C R E T A R I A T Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE

31 PRESENTED TO THE ODISHA LEGISLATIVE ASSEMBLY ON THE 3RD OCTOBER, 2020

ODISHA LEGISLATIVE ASSEMBLY

PUBLIC ACCOUNTS COMMITTEE

2020-2021 SIXTEENTH ASSEMBLY

3RD REPORT ON C & A. G OF INDIA (GENERAL AND SOCIAL SECTOR) REPORT NO. 4 OF THE YEAR 2016 OF ELECTRONICS AND INFORMATION TECHNOLOGY DEPARTMENT-2014-15

SECRETARIAT OF THE ODISHA LEGISLATIVE ASSEMBLY, BHUBANESWAR-751001

Sl. CONTENTS Page No. 1. Composition of the Public Accounts Committee, 2020-21 i 2. Composition of the Public Accounts Committee, 2019-20 ii 3. Composition of the Public Accounts Committee, 2018-19 iii 4. Composition of the Sub-Committee-V of the Public iv Accounts Committee, 2018-19 5. Introduction v 6. Report 1-26 7. Minutes of the meeting held on 20.03.2020 27 8. Minutes of the meeting held on 01.10.2020 28 (i)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2020-21

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(ii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2019-20

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(iii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N

Shri Narasingha Mishra Leader of Opposition.

M E M B E R S

(iv)

COMPOSITION OF THE SUB-COMMITTEE-V OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N Shri Saroj Kumar Samal, M. L. A. M E M B E R S Shri Pravat Kumar Tripathy, M. L. A. Shri Mahesh Sahoo, M. L. A., S E C R E T A R I A T

Shri Amiya Kumar Sarangi, Secretary. Shri Shishir Kanta Swain, Joint Secretary. Shri M. Dungdung, Under Secretary. Shri Prafulla Kumar Parida, Desk Officer. Smt. Baijayanti Pattnaik, Desk Officer.

(v)

INTRODUCTION

I, the Chairman of the Public Accounts Committee having been authorised by the Committee on their behalf present this 3rd Report of the Public Accounts Committee on the Report of the C & A. G of India (General & Social Sector) for the year 2014-15 relating to Electronics and Information Technology Department.

The Sub-Committee-V of Public Accounts Committee had examined the above subject in its meetings held on 25.06.2018, 24.12.2018 and 28.02.2019. The findings and conclusion which are based on the result of the examination of the Committee are presented herewith.

The Public Accounts Committee, 2019-20, finalized the Report in their sitting held on 20.03.2020 and reapproved by the Public Accounts Committee 2020-21 on 01.10.2020.

The Committee place on record their appreciation of the assistance rendered by the officers of the Departments of Electronics and Information Technology and Finance for their Co-operation.

The Committee further express their thanks to the Officers and Staff of the Office of the Accountant General (General & Social Sector), Odisha and Odisha Legislative Assembly Secretariat for their Secretarial assistance.

Sd/- Bhubaneswar (PRADIPTA KUMAR NAIK) Date: 01.10.2020 C H A I R M A N PUBLIC ACCOUNTS COMMITTEE

REPORT

1. Para-2.2.6 of the Report of the C & A. G of India (G & SSA) for the year 2014-15 Release of payment deviating from Service Level Agreement The implementation of OSWAS in Odisha for making the work flow process of Government automated is an initiative for transparent governance and is a joint effort of user departments and OCAC. It had been a major challenge to make it acceptable to the system. As per Service Level Agreement (SLA) between OCAC and TCS, payments were to be made after successful completion of milestones and submission of deliverables. Ten core applications, 20 common applications and 99 department specific applications for 37 departments and Chief Minister‟s Office were to be developed by January 2010. The common and department specific applications were to be set up on the functionalities of the core applications as per milestones specified in SLA. 2. Para-2.2.6.1 Non-Development of applications under OSWAS. Audit pointed out that:-  One (e-mail) core application out of 10 was not developed as yet.  Out of the 20 common applications, six were not developed and 10 though developed, were found incomplete. The rest were used by some departments.  None of the 99 department specific applications were developed. OCAC stated (May 2016) that all applications had been developed except 50 department specific applications. During Exit conference, Principal Secretary instructed OCAC to show the e-mail module and six common applications to Audit, if developed. Accordingly, Audit re-examined (May 2016) the OSWAS but OCAC could not produce any evidence of development of one core and six common applications. OCAC released (as of March 2016) ` 8.31 crore out of ` 9.74 crore to TCS for software development, despite non-development of all core and common applications and without ensuring inclusion of key features in OSWAS. The Department was of the opinion that:-  The email module of core application had been developed and POC had been done. It was not deployed as mail server was not configured. As eDespatch was successfully implemented in all departments, both applications were integrated to achieve the email functionality.  All common applications had been developed and demonstrated. As the implementation was joint effort of both user departments and OCAC, delay in approval and acceptability of the applications by them delayed the implementation and some of the modules could not be deployed. New 11 common applications were used extensively by the various Departments. There was a technical Committee headed by Director, IIIT and some of the key officers of some Departments were there. They used to evaluate the performance of the system. Basing on the recommendation of the Committee the payment was released. For common applications full payment was not released to TCS. Partly payment was released to TCS. For Departmental specific applications not a single pie was released as it had not been implemented and not in use.  49 Departments specific applications had been developed by TCS for which approval could not be obtained. Regarding the rest 50 applications, the requirements could not be finalized after several reminders. Out of the expenditure of around ` 26 crore made under OSWAS, actual expenditure for OSWAS Application would be ` 9 crore which was payable to TCS. The payment had been released to TCS for the modules which had been implemented as per SLA Besides, though the expenditure incurred for provision of infrastructure like Desktops, UPS, Scanner etc. to users departments (officers and staff of Secretariat) under OSWAS project had been made out of the budgetary sanction of Governments, the same was not being used exclusively for OSWAS. The hardware was also being used for other official works by the Secretariat staff. After a detail deliberation the Committee dropped the para. 3. Para-2.2.6.2 Non-receipt of deliverables. Request for proposal (RFP) and SLA required that OSWAS would support Secure Sockets Layer (SSL), biometric based access, e-mail and fax integration and bilingual interface. It also required that the source code of all applications of OSWAS along with necessary documentations would be shared with OCAC/GoO. Audit pointed out that:- ● In absence of SSL, the password, personal notes, personal information of users and other confidential files were transmitted through the SECLAN in plain text and the transmissions were not secure. ● OSWAS had weak access control due to absence of biometric access control. ● In absence of e-mail and fax integration, the users had to print, scan, sign and send communication separately leading to unnecessary duplication of work and wastage of paper. ● Absence of local language i.e. Odia interface led to reduced user friendliness of OSWAS. It also failed in implementation of official language.

2 ● In absence of delivery of source code along with database and application design documents, Government could not engage other vendors for upgradation or further modification of OSWAS effectively, resulting in vendor lock-in. OCAC released (as of March 2016) ` 8.31 crore out of ` 9.74 crore to TCS for software development, despite non-development of all core and common applications and without ensuring inclusion of key features in OSWAS. The Department while accepting the fact, assured (May 2016) that efforts would be made to receive the deliverables, documentations and source code from the vendor. The Departmental compliance stated that as security audit had been completed, the hosting of application would be done after obtaining SSL Certificate for the desired secured link. POC had already been completed for Biometric based access, eMail and FAX features available in OSWAS Application and these features could be enabled after obtaining the required hardware devices. At present, eMail and FAX support for outward communication were being done through integration with eDispatch as it was successfully implemented across all departments along with line/subordinate offices. As per the “Exit Management” clause in SLA, the exit process was to be intiated for knowledge transfer and submission of deliverables including source code etc. OCAC should ensure receipt of all the deliverable before release of final payments to TCS. The payments that had been released to TCS, as on date, were on completion of milestones as per SLA. ● Odia interface had been incorporated in OSWAS. Users had been trained and were being encouraged to use the official language. ● The agreement (SLA) with TCS for implementation of OSWAS were in force at the time of audit. Transfer of knowledge and the source code of the Application was part of Exit process as per SLA. Hence there were no scope of vendor lock-in. ● Though the project was being executed through TCS, Government of Odisha is the owner of the OSWAS Application, which includes all documentations and source code. A Committee constituted as per orders of Government had evaluated the deliverables and efforts of TCS for release of payments to TCS. After a detail deliberation the Committee dropped the para. 4. Para -2.2.7 Absence of Business Process Reengineering. Audit pointed out that as per RFP, the solution provider was to suggest necessary re-engineering of processes to enable adoption of the OSWAS. Programme 3 Setup Team (PST) was also constituted (December 2008) consisting of officers of various departments to facilitate Business Process Re-engineering (BPR) before finalising the SRS. PST recommended (February 2009) suitable changes in the Odisha Secretariat Instructions as per the systems designed by TCS instead of customising OSWAS to suit prevalent manual system. This recommendation was not carried out and Secretariat Level Implementation Committee (SLIC) decided (January 2013) to constitute a BPR committee comprising of officers from departments along with members from OCAC and TCS to finalise BPR based on the feedback from user departments. The said committee was to meet every fortnight for this. But, the BPR committee was not constituted during 2013-14 to take up the work. Therefore, the Manual for Office Procedure, i.e. OSI was not updated to incorporate the changes in workflow processes suiting to new electronic environment. It was noticed that OSWAS was used without incorporating checks provided in OSI for ensuring accountability. Moreover, it also led to lack of uniformity in handling files across departments. ● OSI required insertion of signatures in file for accountability and authenticity. However, digital signature was not implemented for all file/document users in OSWAS which led to accountability issues. ● Data received from 26 out of 43 Departments/ organisational units, revealed that only Rural Development Department maintained consistency in file keeping as all files were in electronic form. 25 other Departments/units created 1,66,735 manual files and 92,035 electronic files during 2012-15. Departments were also maintaining files partly in manual and partly in electronic form, which resulted in bypassing of OSWAS. ● In absence of changes in business rules, other applications provided in OSWAS like management of Confidential Character Reports/Annual Confidential Reports, process for constitution and monitoring of committees, processing of Public Accounts Committee queries, grievance management system, audit assessment and appeal details system and asset management system were never put to use. The Department stated that initially a PST (Programme setup team) was constituted to facilitate BPR for finalizing the SRS which could not perform due to non-availability of members. The BPR Committee could not meet as committee members from the designated departments were nominated. Later GA Department, being the nodal department for Odisha Secretariat Instructions, was assigned to take up the BPR

4 activity for smooth implementation of OSWAS as per decision taken in the High Level Meetings. OSWAS Application is now DSC enabled. The use of DSC would be made mandatory after acquiring of the same by all users of different Government Departments. As stated earlier, the implementation of OSWAS had been a challenge for the Government. The user‟s acceptance could be achieved after several persuasion and dedicated handholding support. ● GA Department, being the nodal department for Odisha Secretariat Instructions, had initiated steps for necessary changes in the OSI. ● OSWAS Application had been developed based on the existing OSI and checks as per requirement are incorporated to ensure accountability. Common interface of OSWAS Application was used across departments to ensure uniformity in handling files. Now the Chief Secretary office did not receive any manual file, they only allowed the file in OSWAS system. Due to the checking of Chief Secretary Office all the Departments were working through OSWAS system. The Committee instructed to conduct a special meeting with G. A Department for BPR, so that OSI modified and minutes of the meeting should be supplied to Public Accounts Committee and the para was dropped. 5. Para -2.2.8 Inadequate control over Database Administrator. Database Administrator (DBA) is responsible for the performance, integrity and security of a database. DBA has the tools to establish controls over the database and the ability to override these controls. Therefore, Government must exercise close control over database administration through segregation of duties, supervisory review of access logs and activities and detective controls over the use of database tools. Audit pointed out that (a) Segregation of duties is essential to ensure that a single person is not responsible for diverse and critical functions in such a way that errors or misappropriations could occur and not be detected in a timely manner and in the normal course of business processes. Therefore, DBA should not be given other responsibilities like system administrator, help desk and data entry. But it was noticed that even after six years of implementation of OSWAS, the software developer TCS continued both as system administrator and DBA. It was also entrusted with user management, help desk and master data entry roles. Government did not even plan to build capacity to take over the database administration and user management of OSWAS in spite of requests from user departments like Revenue and Disaster Management Department. As a result, OCAC allowed TCS to

5 unauthorisedly access all types of files of Government of Odisha and even manipulate/change notes in critical files. (b) Inadequate compensating controls for DBA activities: Supervisor review of access logs and activities was essential to detect any suspicious activities of DBA or users. However, logs to track activity of Database Administrator of OSWAS were not enabled and any database vault system for OSWAS Oracle database in place to prevent unauthorised activity of data manipulation by DBA could not be activated. Further, OCAC did not conduct any supervisory review of OSWAS. Even third party audit as decided (January 2013) in SLIC meeting, was not conducted. As a result, unauthorised DBA activities remained undetected. Besides, no compensating controls were provided such as DBA access and transaction logs, reconciliation with user department and exception reporting. Audit could not recreate the actual transaction flow from point of origination to its existence on an updated file in absence of audit trail of DBA activities. Further, the logs to capture the activity of the users in OSWAS database were kept in the same server within the control of TCS since a separate remote log server outside the control of the database administrator was not set up. As a result, even user transaction logs were modified. The Department stated that DBA was transitional based and that complete data base administration had not been taken over as there were lot of transitional issues and their PMU was not taken over the control. But to very precisely at the moment they had not taken up all the activities. Because they were continuously holding with the hand holding support provided by the TCS till that project period was there. But as far as DBA was concerned and since transitional issues were there the entire control had not been taken over at the movement. Further the Department stated that the Department had moved to OSWAS-2.0 in November and to had a segregation of duties and control as mentioned by A. G. in their observation. The Department had formed one PMU and they were the Departments staff engaged by OCAC and they were taking control of all the database administration and also control of users creation etc as regards other attributes are concerned the Department also engaged P.W.C. as third party Audit. In third party Audit, the Department did the SLA Audit, ONM Audit, Functional Audit, Infrastructure Audit and Security Audit/DABT, EMS configurations and review of project management etc. The Committee after detailed discussion with the Departmental representatives and A. G officials concluded that in view of the steps taken by the Department for engagement of third party to ensure confidentiality integrity and availability of information in OSWAS the para should be dropped. 6. Para -2.2.9.1 Implementation of digital signature on file notes.

6 Digital signature not made mandatory: Government of Odisha decided (2013) to incorporate digital signature facility in OSWAS from Under Secretary Level and above. Audit pointed out that however, only 242 digital signature certificates (DSCs) were procured against 686 officers of Under Secretary and above level officers. However, only 205 DSCs were issued. As use of digital signature was not made mandatory in OSWAS, even officers who were issued digital signature did not append it on all notes. Since June 2014, out of 9, 22,275 notes created in OSWAS, only 38,387 were digitally signed. Further, 64 digital signature keys issued were not used even once. Thus, non- enforcement of digital signature on note side in OSWAS rendered the electronic files generated open to risk of alterations. Paragraph V-34 of OSI stipulated that when an officer agrees with the preceding note or recommendation he shall append his signature. However, marginal notes or notes to emphasise special points might be made. In such scenario, if changes were made in previous notes by DBA/insider/other elements, the basis of decision taken in succeeding note could not be ensured. Anomalies in notes i.e. deletion of notes, broken chronology, etc., were noticed in audit, confirming the failure of controls in authentication of the users. Thus, the purpose of including digital signature for signing of the approvals on the file noting was defeated. The Department stated that digital signature would be made mandatory to enforce accountability. Repudiation of Digital Signature: Section 3 of IT Act, 2000 stipulated that the authentication of electronic record should be effected through the use of asymmetric crypto system and hash function which enveloped and transformed the initial electronic record into another record. Further, it also stipulated that any person by use of a public key of the subscriber could verify the electronic record. For digital signature on note side, form signer with four licenses was procured from TCS at a cost of ` 12.98 lakh. However, TCS did not incorporate asymmetric crypto system as hashing algorithm was not applied to the note contents. Instead, OSWAS stored the original note details in one table and digitally signed encrypted content in another table, which it verified by decrypting and comparing with the original content. Further, Audit revealed that 38,944 notes had been digitally signed by 141 officers of Secretariat. Test check of 643 OSWAS files revealed that 51 digitally signed notes pertaining to 40 files did not show verified signature on user screen. Further analysis revealed that these notes were modified after digital signature was applied. However, users could not be alerted of broken signature as nothing was displayed on the screen. Besides, there was no other provision through which users 7 could verify the breach of their digital signatures. Thus, the digital signature process followed in OSWAS did not comply with IT Act, 2000. The table containing encrypted noting was tampered as it contained text „null‟ in 35 occasions instead of encrypted value. It appeared that DBA had tested this type of manipulation in the back end in September and October 2014 when they changed four notings of Chief Secretary on 9th September 2014. Subsequently, 31 such notings were manipulated. Database analysis also revealed 22 records containing encrypted value of noting without corresponding noting contents. This occurred because the note details were delinked from encrypted noting in the back end. The integrity of digitally signed documents, thus, became doubtful as DBA log was also not maintained and other transaction logs were tampered with. Admitting the inconsistencies, OCAC stated that TCS had been instructed to verify and rectify the inconsistencies and agreed to explore the possibility of making digital signature compliant with IT Act, 2000. Audit pointed out that in case of providing files to external stakeholders such as judiciary, vigilance, audit, etc., PDF copies of files generated from OSWAS were required to contain digital signatures. But, OSWAS could not generate the PDF files with digital signatures even when the original digitally signed documents were available. OCAC confirmed that PDF version of the file generated through OSWAS did not contain digital signature. The Department stated that there was a provision in OSWAS Application to apply Digital signatures on the PDF documents (letters/correspondence) generated from OSWAS Application after approval. However, this had not been enforced by Government mandate. Though the digital signature was enabled due to the practical difficulties it was not mandatory. Audit objected; as to why the DCS was not made mandatory in OSWAS. In the higher level meeting it was decided that file should go for first level of authentication based on user ID and password. And right now also the file having three more software authentication on was digital signature based in the new OSWAS, E-sign which was Aaddhar based and third was first level of authentication based on OTP. So user ID, password and OTP were used and DSC or E-sign was not mandatory. The PDF copies were scanned copies of the letters signed by issuing authority which had been uploaded in OSWAS. The Committee accepted the reply given by the Department and dropped the para.

8 7. Para -2.2.9.2 Unauthorised access of files and tampering of access logs. The user accounts of Government employees (Users) are created in OSWAS to enable them to function in OSWAS. Login name and passwords are provided to users for securely accessing OSWAS. For monitoring unauthorised access, entry and exit time of each login session in OSWAS, a “transparency log” was displayed on the computer screen of the respective users for monitoring their login activities. Audit found that the user accounts were accessed in 6,110 cases by DBA by passing login authentication without the knowledge of users. Audit analysis revealed that DBA unauthorisedly accessed OSWAS using the accounts of 1,308 users which included accounts of Chief Minister, Ministers, Chief Secretary and other Secretaries. In order to hide this unauthorised access from users, DBA also sanitised the transparency logs in the back end. Further, no system of supervision by Government was in place to detect the unauthorised activities of DBA. The tampering of logs by DBA was a violation under Section 43 of IT Act, 2000. The Department stated (May 2016) that action would be taken to avoid such breach of system in future. The Department stated that TCS helpdesk supported associates access user accounts when any problem was encountered using Helpdesk machines. Also, before handling over the user account to respective owner, a basic testing was performed to validate the credentials and checking for errors (if any). Sometimes, users directly visit TCS helpdesk and login through their machines for troubleshooting. TCS had no role to say as far as file process was concerned. If some reference were there, that might be test data created by, so that they simulate the situation. The Committee directed the Department to provide detail information both to A. G and also to Assembly Secretariat regarding the action taken by the Department. 8. Para -2.2.9.3 Activity deletion from audit trail. In OSWAS, file transactions like file approval, file sending, draft preparing and approving were captured in Audit trail table. Each activity on the file was identified by a consecutive serial number in order of operation carried out and as activity orders were numbered. Analysis of the database revealed gaps between two consecutive activity order numbers in three occasions. The missing activities were due to back end deletion of particular activities since the number of such occurrences were very small to indicate systemic error. Similarly, there were 12 gaps found in the note order indicating deletion of notes in the back end. The Department stated that TCS was never allowed to access files. The user creation and deletion had been made on request of user departments. The gap/discrepancy observed in the database was mostly due to the fact that there was a break in the usage of OSWAS Application after usage started in 2009.

9 The Department stated that, the system was no more there and they had new platform. As the system was obsolete the Committee dropped the para. 9. Para -2.2.10 Business Continuity and Disaster Management. Business Continuity Plan (BCP) and Disaster Recovery Plan (DRP) are to be implemented to resume the business within defined timeframe in case of disaster. Audit noticed the following deficiencies: ● Absence of BCP: BCP was not framed and adopted for OSWAS even after lapse of more than six years of implementation. In its absence, the staff/ users were unaware of the procedure to be followed in the event of disruption/ disaster. They were also not trained in preventing, mitigating and responding to emergency situations. Thus, emergency response, user recovery, contingency plan and crisis management activities were missing from OSWAS implementation. ● Absence of disaster recovery site: DRP was not in place for the Data Centre hosting OSWAS. Disaster Recovery site or alternate processing facility was not established. Critical Government processes/ functions were at a risk of disruption in the event of a disaster. The system, as a result, was prone to loss of data, applications, systems, documents, etc. Further, the environment controls in the Data Centre were poor as water/ moisture detector, early fire alarm system, smoke detectors, raised floor, adequate fire suppression systems were not found installed making the data center vulnerable to damage. ● Inadequate back-ups and restoration: The system provided a schedule for daily and monthly backups for applications and database. However, it was not produced to Audit. Backups were never tested in scheduled manner for recovery and restoration. ● Inadequate preventive and detective controls for viruses: OCAC did not take adequate preventive and detective controls for computer viruses as servers (Windows) were not found protected by antivirus software. Desktop antivirus system was found to have expired as on January 2016. The Department stated that steps were being taken to setup Disaster recovery facility for OSWAS project. The plan of establishing the BCP at OSDC was being explored. ● New SAN storage system had been installed for OSWAS and regular Backups of OSWAS Database were taken as per schedule. Backup and restore plan using Tivoli Storage Manager would be resumed after installation of new Server hardware.

10 ● As part of preventive control, centralized antivirus software had been installed on all systems. OSWAS had been configured for usage in Intranet environment in the Secretariat LAN and access to this environment was restricted through Firewall. As per the instructions of the Committee Audit examined the sites and test checked the Business continuity plan. Disaster Recovery Plan, backups and restorations and observed as follows (i) the logs of one month generated during synchronization of data of data in May 2019 were checked and noticed that the file system data, database records and application were regularly replicated from DC site to BCP site. However, the BCP did not contain any provision for periodic testing of BCP Site. (ii) the OSWAS did not have DR Policy as such. The Department stated that as the data are replicated from the Primary data center to the BCP site at State Data Centre the disaster recovery plan of the Odisha State Data Centre (OSDC) was applicable. However, OCAC had not ensure testing of disaster recovery plan of OSWAS in OSDC. (iii) As regarding the backups and restoration logs the data of OSWAS were regularly backed up to Tape Library. The restoration check was carried out regularly. (iv) A Third Party Auditor (TPA) was appointed to monitor various aspects of OSWAS which included checking of backup and restore, BCP. The Committee recommended that periodic testing of the BCP site should be made by the Department. Further, OCAC should ensure testing of disaster recovery plan of OSWAS in OSDC.

11 10. Para -2.2.11 Application Controls. Absence of administrative interface. The architectural design of OSWAS provided for master data management, back up operation and maintenance, etc., only through an administrative interface to ensure database security of the system. Accordingly, TCS had developed an Admin user manual defining two types of administrators i.e. Super Admin and Departmental Admin. Super Admin would do jobs like maintaining holiday data, resetting password of users, creation of department, units, designations, etc., whereas Departmental Admin would add/edit employees, maintain hierarchy for file movement and create subjects for indexing files, etc. Since Super Admin had many privileges, it was to be managed by Government. Audit noticed that the Departmental Admin interface was not developed. Instead, Super Admin interface was used by TCS to provide for functions of Departmented Administrative interface. As a result, departments could not add/edit employees, manage hierarchy of file movement and create subjects for file indexing, etc., by themselves. For these basic functions, Departments had to request TCS, leading to unnecessary delays. It was further noticed that due to design flaws in the existing interface, functions like transfers, promotions, retirements, etc., could not be handled properly by OSWAS. TCS often resorted to back-end changes for such functions as DBA, leading to several inconsistencies in the database. Design deficiency in managing Transfer and Postings in OSWAS was as below: ● OSWAS users were mapped to units (posts) and access to files was attached to the same. As a result, on transfer of user to a new post (unit), the user was being mapped with the new unit and accordingly got access to all files attached to new post. If a unit remained unmapped, no one got access to files attached to that unit. Audit analysis revealed that there were 338 records lying with unmapped posts for four months to more than three years without any action in OSWAS. Files were marked to such units (posts) even when there was no user to take action on such files. Similarly, there were 525 employees active in the OSWAS who were not attached to any unit (post).  In reality, there could be no post in a department without a user mapped to it. Even if someone holding the post retires or goes on leave, etc., someone was always given the additional/new charge. Such requirements were not inbuilt into OSWAS. Thus, OSWAS did not ensure seamless transfer of responsibilities and authority when administrative routine events like superannuation, handing over charge, etc., took place.

12 The Department stated that all the data were handed over to the P.M.U and P.M.U would address all these problems. The Committee settled the para. 11. (i) Para -2.2.12 Inefficient sequence management. Para -2.2.12.1 Gaps in inward diary number. In OSWAS, diarist in charge of receiving all dak of the department captured the relevant details into the system viz. letter number, reference number, subject, description, received from, category, priority enclosures, etc., of the dak. Subsequently, the scanned document of the dak is attached and the information is saved. The system automatically generates a unique dak number called diary number for further use in the system. The audit pointed out that data analysis of the inward registry of year 2015 in OSWAS revealed 488 cases of gaps in the diary number related to 43 organisational units (Departments, directorates, etc.). Audit could not ascertain whether diary numbers of the dak were deleted from the database or the serial number skipped due to technical error. Besides, mechanism to follow up the disposal of the dak after marking the same to the user was not in place. The Department agreed with the observation and assured that such deficiencies would be corrected.

The Committee settled the para.

11. (ii) Para -2.2.12.2 Gaps in user activity log sequence. OSWAS had system to capture user logins, logouts and duration of a session in a table for security and accountability. A serial number was assigned to identify unique login session. As per OSWAS database design, the serial number was sequential with an interval of one. Analysis of database in Audit revealed that 9,464 serial numbers were missing in the access logs indicating deletion of unauthorised access. This further indicated unauthorised access to files. The Department accepted the observation and assured to rectify the defects. The Committee dropped the para as that was a minor flaw.

12. Para -2.2.13 Deficient timestamp management. As per Architectural Design of OSWAS, two database servers were provided to function in a cluster for efficient database operations. Timestamp of both the database servers were to be synchronised for generation of various logs and trails in OSWAS. Audit noticed that OSWAS maintained logs to capture login details, and updation of notes, changing or deleting the existing records, access of important files, etc., in order to ensure security and accountability of data transactions. Actions on

13 logins, notes, movement of files, audit trail, etc., were supposed to happen in sequence and chronology as per the time of transactions. Audit noticed inconsistent dates/times in important tables like login track, notes, audit trail and job movement. Audit further noticed that: ● In 24,899 out of 16,81,588 cases in the login access logs, login time was greater than the logout time and ● There were 12,669 notes appeared to had been written before the files used by the concerned users. The deficiencies observed by Audit had been complied with. The clocks of both physical servers had been tuned and synchronized. Network Time Protocol option for timestamp management would be considered in the upgraded version of OSWAS. The Committee dropped the para. 13. Para -2.2.14 Deficient session handling. OSWAS was designed for multiple concurrent logins allowing the users to connect from multiple devices or browsers at the same time. For security, in case of multiple concurrent sessions, features such as notifying user of concurrent sessions, provision for sign out from all active sessions, alert to user for unusual login activity, provision for automatic session timeout were to be provided. However, OSWAS had no such features. Para -2.2.14.1 Inadequate login controls. Audit tested the application in simultaneous sessions and found that single document or draft could be changed even after it had been finalised and had moved to next hierarchy in other session. Similarly, the correspondence attached in file in one session could be deleted or changed in other concurrent sessions. This undermined the integrity of file security and also gave rise to problems of traceability of such unauthorised activities as logs of such activities were not maintained and hence non-repudiation could not be ensured. Para -2.2.14.2 Abnormal concurrent logins. Audit revealed that in 1,420 cases, the users were found operating 2 to 30 sessions simultaneously from same computer (IP). Similarly, users were also found to have concurrent logins from different computers in 86 occasions. Each such occasion had two to three simultaneous logins. As the transactions made in the database were not identified by session identity numbers, accountability could not be enforced on such transactions. Para -2.2.14.3 Incorrect recording of logout time.

14 There were 465 file noting activities in respect of 45 users where the user was not even logged in as per logs. This occurred due to design flaw in the system. In case of user inactivity or abrupt session termination, the system should record log out time to ensure proper session control. But such controls were not properly designed in OSWAS. The Department stated that the suggestions submitted by A.G. had been noted and would be incorporated in the upgraded version of OSWAS to restrict changes triggered by multiple sessions. As per the instruction of the Committee Audit checked the new version of OSWAS and observed that the failures in login controls as pointed out the IT Audit report were not been addressed in the new version of OSWAS. The Committee recommended that the login controls should be introduced in the system to strengthen accountability and security of data of OSWAS. 14. Para -2.2.15 Application design – lack of access control provision. Audit revealed that as per design documents, user could access and work in OSWAS only if eight parameters given in the following diagram, were fulfilled.

However, testing of the application revealed that such access controls were absent. OSWAS users had access to all files in OSWAS irrespective of his or her privilege by simply changing the website address in the browser. For example, dealing assistant of E&IT Department could access files of General Administration department. In addition to unauthorized viewing of files, one could also add or delete correspondence, modify drafts and even delete attached references in the notes in files lying at any level. This occurred due to weak access controls both in database and application level in addition to non-deployment of SSL. Further, no log of such activity was maintained. The Department accepted the design flaw and stated (May 2016) that steps would be taken to correct the deficiencies in the upgrade version of OSWAS. The Department also agreed to add the security feature.

15 As per the instruction of the Committee, Audit verified the application and observed that Secured Socket Layers (SSL) was implemented as suggested in It Audit Report. The Committee dropped the para. 15. Para -2.2.16 Lack of accountability on users. (i) Para -2.2.16.1 Different employees created note and record. OSWAS application was designed to send files from one user to another. In this process, the application created a blank record against a user to whom the file was sent for recording his Notings thereon. Audit noticed that OSWAS failed to account for any new user while transacting in a note created by another user who was already transferred from the Department or unit, thereby weakening the accountability of users. Analysis of database revealed that there were 44,239 notes shown written against the employee who had actually not written those notes. All these instances happened during transfer of employees from one department to another or one post to another. The increasing trend in such discrepancies ranged from 30 in 2009 to 16,750 in 2014. None of the users had noticed this problem because name of user was not displayed against the note. This, further created inconsistencies in reports as detailed below: ● The designation displayed against the employee who created the notes differed from that of the tabular pendency report. ● The name shown in the note side of a note differed from that of the name shown in the graphical pendency report. ● The department shown against names in the tabular report was null in many cases where as the same was available in the notes. The Department accepted the comment and assured rectification of the defect in the upgraded version of OSWAS. The Committee settled the para with the observation that ATN should be submitted for appraisal by the Public Accounts Committee. (ii) Para -2.2.16.2 Notes against employees not available in employee data. Audit revealed that 31,027 notes did not display the name of 256 officers who created the note(s) resulting in lack of accountability. This occurred because the employee details records were deleted/delinked in the back end from employee master table in the process of reconfiguration of those departments. The Department stated that steps would be taken to correct such deficiencies. The Committee dropped the para. 16. Para -2.2.17 Input and validation controls. (i) Para -2.2.17.1 Inconsistent note created time.

16 Audit revealed that there were 934 files where the timestamp of notes in files at more than one level were exactly the same. The number of such notes with same time ranged from 2 to 18. Similar exceptions were noticed in margin notes of 8,663 documents. Further, it was noticed that in 679 files and 6,764 documents, one user was found to have created multiple notes at the same time. This occurred due to defective design and lack of control in OSWAS which allowed such inconsistent data in the database. The Department stated that the observation was based on data analysis by Audit on the complete Database backup. The discrepancy observed is due to presence of some test data as data once created, was not deleted from OSWAS server and assured that the short comings would be corrected. Further the Department stated that there was a cluster of server. The Committee accepted the reply of the Department and dropped the para. (ii) Para -2.2.17.2 Deletion of document metadata. All documents in OSWAS had metadata which is stored in a document master table. The document itself was stored in document container table. Consequently, metadata of all documents in the document container table should be available in the document master table. Audit noticed that there were 563 documents in the document container table without any corresponding record in the document master table. This indicated that the metadata of these documents were deleted from the database which resulted in disintegrated data set. The Department accepted the observation and assured that the system would be strengthened to avoid such inconsistency in future. The Committee dropped the para. (iii) Para -2.2.17.3 Inefficient user management. A separate server named Lightweight Directory Access Protocol (LDAP) server was used in OSWAS for authentication of user‟s login. The server stored username, password, employee ID, etc. Employee master table in OSWAS database had all employee details except password. Whenever a user tried to access OSWAS, the user name was checked in the employee master of OSWAS database for availability and status. If found in service, the user name and password were sent to LDAP for authentication and when login was successful in LDAP server, the user was allowed to access OSWAS and his access control was managed through defined roles. Same users were to be available in OSWAS and LDAP servers since both databases complement the authentication process for the user accessing OSWAS. Audit, however, noticed discrepancies of user data between these two data sets as follows:

17 ● Discrepancy of user data in LDAP and OSWAS database: Audit noticed that OSWAS database contained 7,205 users out of which 5,501 were active and LDAP server contained 5,101 users. Audit compared both the datasets and found that only 4,176 users were common in both. Thus, 2,104 users in OSWAS database were not linked to the LDAP server due to absence of input control. It was found that 925 users created in LDAP were deleted from the OSWAS database and reasons for such deletions were not found on record. ● Same Login issued to two different employees: For accountability of transactions, each user should have a single distinct login name. But analysis revealed that 15 login names were allotted to 30 different users. The Department assured that the deficiencies in the system would be rectified. Ability to login to OSWAS application depends both on availability of LDAP ID and login flag in employee master table (database). A user having its login flag disabled could not access application, even if LDAP ID exists in the system. Similarly, a user cannot access application if its login flag was enable but did not have a LDAP ID. Sometimes, OSWAS database records were created in the database attributable to incorrect data received from department. In those cases, LDAP ID was not created. Similarly, users had been removed, but not the LDAP ID. In those cases, there was variance in figures in both database and LDAP and inconsistency reports are generated. Hence no record had been deleted from OSWAS database in upgraded version of OSWAS. The Committee dropped the para. (iv) Para -2.2.17.4 Incomplete user profile – exposed OSWAS to unauthorised use. As per industry‟s best practice, there should be robust password policy i.e. password expiry, automatic account termination on termination of service, rules for frequent changing of password, complexity of passwords, etc., in order to secure the application usage. Audit revealed that there were 1,723 user accounts where the password expiry date was not available. Thus, password expiry policy was not enforced. Further, the date of birth field was blank in case of 4,041 out of 5,501 active users. Using Date of Birth column, automatic disabling of accounts of the user on retirement was not enforced. It was also noticed that 635 transactions in various tables against 38 users were present in the database after the accounts of these users were deactivated and the passwords expired. The Department accepted the observations and assured that steps would be taken to make good such deficiencies. The Committee dropped the para.

18 17. Para -2.2.18 Database Redundancy. Audit observed that as per the best practice, the databases of IT systems needed to be properly designed to ensure reliability and optimum performance by controlling data redundancy and ensuring consistency. Ideally, there should be one repository of document files/images/PDF files, etc., for easy access by multiple users, using document key identification link namely primary key. But, in OSWAS, this aspect was found absent. This resulted in unnecessary increase of database size providing scope for data inconsistency. The Department assured that the OSWAS Application would be improved accordingly. (i) Para -2.2.18.1 Inefficient document management. Audit revealed that a single document (Dak) marked to more than one seat or department had been stored in multiple records in the database. For instance, letter No. „U.O.I. No 630/ACS Rev. & D.M.‟ dated 21 June 2014 was found marked to various departments/units, stored in 484 locations. This increased the requirement of storage space by 483 times. In respect of 27,376 documents (size of 22.7 GB) (which include 25,670 dak receipts from e-despatch system), data redundancy was noticed 99,197 times resulting in unnecessary increase of storage space by 60 GB. Such inefficient maintenance of storage would adversely impact the performance of database of OSWAS. The Department accepted the observation and assured that alternative solution for better document management should be incorporated in the upgraded OSWAS Application. The Committee dropped the para. (ii) Para -2.2.18.2 Integration of e-Despatch and OSWAS. The OSWAS was developed by OCAC without dak despatch system. However, e-Despatch system, developed on different platforms, was later implemented for dak despatch to field offices in the State. On technical advice of OCAC, E&IT Department decided to integrate e-Despatch with OSWAS. For the said integration, a separate (Intermediary) server was set up to connect both systems with provision to store letters for sharing. Diarists were required to use OSWAS interface to receive and despatch letters through e-Despatch server. Thus, three sets of same data in three different locations i.e. e-Despatch system, intermediary server and OSWAS were generated. Analysis of OSWAS for receipt and despatch of letters through the server revealed the following.

19 ● Receiving of letters: Out of 1,63,106 letters pertaining to 28 departments, only 88,670 letters were received into OSWAS and remaining 74,436 letters were still lying in the intermediary server. ● Despatch of letters: Despatch of letters of OSWAS through e-Despatch was not functional in any of the departments due to lack of support for digital signature in e-Despatch and absence of common system for centralised generation of outward letter numbers as per Odisha Secretariat Instruction Manual. The user departments stated that unprocessed letters lying in intermediary server were already received by post or downloaded from e-Despatch website and processed into OSWAS using manual scanning process. However, for despatch of letters, users had to generate ink signed hardcopy of the letters and send to despatch section where the letters were scanned again into e-Despatch system. Due to lack of manpower, facility of integration of receiving letters remained unused. Thus, integration of systems failed to meet the objective of avoiding duplication of work and redundancy of hardware/software. Further no assurance can be given that all letters had been disposed in a desired manner. The Department stated that in the present integration mechanism of OSWAS and e-Despatch, an intermediate FTP server was being used for sharing of data between both applications. The letter lying in the intermediary server which had not been downloaded after 3 months of the date of letter were being cleansed. The outgoing part of integration modules had not been enforced as the DSC was not available with all the designated officers digitally sign the letters being dispatched. The Departmental representative assured the Committee that the observations were noted and necessary improvements would be made in the integration module to eliminate the issues. Electronic mode of receipt as well as despatch of letters would be enforced to avoid duplication of work and redundancy of hardware/software. The Committee suggested that e-despatch system be developed more effectively and reviewed regularly. 18. Para -2.2.19 Incomplete Leave Processing System. Audit observed that TCS developed an incomplete application without required integration with core applications which gave rise to several deficiencies as discussed below. ● Non-linking of Departmental hierarchy with LPS: Database analysis revealed that 128 employees were not correctly linked to their approving officer, but linked to officers outside their department. Due to that, 13 employees had applied for leave on 43 occasions but their leave application could not be

20 approved in OSWAS. Non-linking of LPS with proper departmental hierarchy resulted in ineffective handling of leave applications. ● Incorrect leave balance: Database analysis revealed inaccuracies in the leave accounts of 813 cases. Therefore, the departments had to depend upon the manual system for approving the leave as usual and had to duplicate their work in feeding the leave data online, thereby defeating the objective to have an efficient and effective common application. ● Incorrect balance closing system: Leaves like casual leave, optional leave, etc., are closed annually, whereas leaves like earned leave, half pay leave, etc., were to be closed every half year with credit of 15 or 10 days respectively, added to closing balances. Database analysis, however, revealed that there was no such provision of preserving half-yearly balance in the database through which leave ledger account of EL and HPL could be generated. ● Lack of Business Process Re-engineering: Like other applications, there was no Business Process Re-engineering done for the Leave Processing System. The Leave Rules of Government of Odisha were not mapped to the Leave Processing System under OSWAS as the leave types defined in LPS did not include leaves like leave not due, special casual leave, child care leave, study leave, special disability leave, quarantine leave, etc. Similarly, rules for proportionate credit of leave in earned leave account in case of employees availing half pay leave/ extra ordinary leave, advance credit of half pay leave/earned leave were not found mapped in the design of LPS. Due to deficiency of LPS, even though deployed and implemented under OSWAS, the departments had to maintain the manual system of leave account, thereby maintaining another set of leave data in electronic form without use. The Department stated that deficient leave processing system was due to inadequate need assessment study and due to absence of BPR. It assured that steps would be taken to design the system as per relevant rules of Government. LPS was not in the main scope of 20 common applications in SLA to be developed by TCS. As implementation of Common applications was delayed due to non-availability of feedback, in a review meeting held under the chairmanship of Secretary, IT on the progress of implementation of OSWAS, it was decided to develop and implement employee specific common applications which would be more easily adoptable. The leave approver for the departmental users is set by the leave admin of the departmental users was set by the leave admin of the department only. Whenever an employee was transferred from one department to another, the approver of that employee was changed accordingly by the leave admin of the department.

21 LPS was developed as a standalone application rather than a workflow based application based on the feedback from users and instructions from authority. The implementation of LPS was introduced in the mid cycle of a year and it was required to manually update current leave balances. An interface was also developed for updating leave balances whose access controls were provided to a department defined leave admin. Finance Department (being custodian of leave rules) was assigned the role of a super admin. The users were being motivated at the Department to use the online system. The deficiencies could be brought into notice with more and more use of the system and those could be rectified to make the system robust. Report on balance leaves could be obtained from OSWAS at any time. The departmental admin could update the leave balance of any employee whenever needed. Even if the leave was not applied in the OSWAS applications and applied manually, the leave admin had the privilege to update the leave balance of the departmental employees. Finance Department being the Nodal Department defining Leave Rules would be moved for necessary BPR for smooth implementation of LPS. The observations had been noted. The users were being motivated at the Department level to use the online system. With more and more use of the system, the application would be rectified based on feedbacks from users. In view of the assurance by the Department, the Committee dropped the para. 19. Para -2.2.20 Monitoring and evaluation. (i) Para -2.2.20.1 Security audit recommendation. Based on a decision in meeting (January 2012) of Secretariat level Implementation Committee on OSWAS for hosting OSWAS in State Data Centre, OCAC conducted (March-June 2015) Security Audit of OSWAS through certain empanelled security auditor. The Security Auditor pointed out that four vulnerabilities viz. (i) User credentials were sent in clear text, (ii) Default credentials for admin accounts, (iii) Insecure Hypertext Transfer Protocol (HTTP) methods enabled and (iv) Information disclosure through HTTP header. The security auditor issued (June 2015) security clearance certificate after re-assessment (June 2015) of OSWAS for the vulnerabilities pointed out earlier and declared the site safe for hosting. The vulnerabilities were fixed only temporarily by TCS and when audit tested OSWAS, all four vulnerabilities still existed. The Department accepted the non-implementation of security audit recommendations and assured that the same would be implemented. The Committee dropped para.

22 (ii) Para -2.2.20.2 Technical obsolescence and poor interface functionality in OSWAS. Applications updated with latest versions of the environments provide security by protection from common vulnerabilities and exposures already detected, besides performance enhancements assurances. ● Older Java version: OSWAS was only compatible with the older version of Java platform as TCS implemented OSWAS by customising the software developed for Government of Gujarat during 2005-07. It did not allow upgradation to latest versions of Java platforms. Older Java had several common vulnerabilities and exposures (CVEs) which made the system prone to attacks as it allowed remote and local attackers to affect confidentiality, integrity and availability. Besides, security benefits associated with subsequent releases could also not be ensured leading OSWAS to technical obsolescence and prone to risks. ● Cross browser compatibility: As per RFP, OSWAS should be based on web based multi-tiered architecture and the end user interface must be browser independent. Request was also made from Departmental heads to make OSWAS browser independent to enable them to use OSWAS on tablets/ ipads, etc. But it was noticed that OSWAS was dependent on one browser (Internet explorer) for its full functionality. Assessment of OSWAS in different popular browsers revealed that due to absence of compatibility features of OSWAS, various features remained non-functional in different browsers. ● Poor navigation features: Audit noticed that there were unnecessary non- functional menu and navigation links in OSWAS. Besides navigations in the OSWAS application which deteriorated user experience as stated below: ▪ In home page, the link “Common Application” directed the screen to another index page (showing horizontal tabbed links to personal, common applications, budget and departmental applications) and not directly to Common Applications. The Index page hosting tabbed links were also not functional. ▪ Excessive use of pop-ups in the application was unnecessary. ▪ Dashboard screen displayed with iconic view contains links like UC monitoring, budget, Court cases and leave which were non-functional. ▪ Link for EDN and Department specific applications were defunct. ▪ Site map was not available for providing the navigation structure guide due to the fact that a consistent pattern was not used in the navigation system of OSWAS.

23 ● Non-functional editing features in note side text editor: OSWAS provided Rich Text editor on the note side for word processing of the note content of the files/Daks/incoming correspondences with various text editing features including font size, font color, background color, hyper linking, indentations, cut-copy-paste, bulleting/numbering, bold/ italic/ underline, spell check, etc. On assessment of the said feature in OSWAS, it was found that the text editor embedded was functioning improperly and was not user friendly as detailed below. ▪ The font size feature was not working dynamically as per value of the font size and the desired font style was not affected while typing in the editor. ▪ The spell check facility was poorly designed as the word in the pop up was not highlighted in the editor for easy checking and assessment of sentence and there was no provision to add new frequently used words in the dictionary. ▪ Linking facility was not working properly as the same replaced the text selected with the file name and website name in the editor instead of creating a link on them, i.e. a link created on text “ABCD” for www.google.com, deleted the ABCD text and inserted www.google.com. In absence of proper functioning of the features in the said editor, they were not used in OSWAS. Similarly, the Work list rules provided in the menu were found non-functional. OCAC should have ensured the working functionality of these features, before releasing the payments. The Department admitted the technical obsolescence and poor functionality of OSWAS and assured that platforms would be upgraded. The observation on older Java version, cross browser compatibility had already been pointed out by users and steps were being taken for improvement of the Application. OSWAS Application was based on the IDWMS frame work of TCS, implemented in other states and it had been customized for the State of Odisha. The features, as observed, were available as built in features of the product. The Departmental Secretary stated that the observations were noted and TCS would be instructed to inactivate/hide the non-functional menus and options. The recommendations of the Security audit would be implemented with the upgradation of OSWAS. OSWAS Application would be upgraded soon with an improved editor and made browser independent. The Committee dropped the para. (iii) Para -2.2.20.3 Inadequate usage of OSWAS.

24 The key objectives of OSWAS were office Automation, enhancing productivity, using Information Technology as an enabler to help in daily work, an efficient workplace, access controls at all levels and efficient and transparent administration. Audit assessed the usage of OSWAS by 26 out of 43 user departments which furnished data (2012-15). 15 Departments and two offices including E&IT Department had not furnished the information even after repeated persuasion. The audit findings are as follows: ● Creation and movement of manual files: Audit noticed that movement of manual files in 8 out of 26 departments had reduced during 2014-15, but the same was found to have increased during the period in other 11 departments. Audit noticed that creation of manual files in 13 out of 26 departments continued on an increasing trend during 2012-15, despite providing OSWAS login credentials to all users of these departments. During 2015, 81 per cent (21 out of 26) departments created more than 50 per cent of manual files outside OSWAS. Decrease in trend of manual files was noticed only in case of nine departments. Only Rural Development Department and Chief Secretary„s Office did not create any manual file. Some departments stated that handling of confidential files, files processed for referral departments, legal files, etc., would be easy manually. OCAC never assessed the reasons for lack of confidence among the user departments while handling such files. OCAC, the nodal agency itself had bypassed the application as it created 258 (73 per cent) manual files out of total 352 files, created during 2015. ● Poor usage of core and common applications: Out of 28 common applications, only two to six were being used in 26 departments. The most commonly used application was LPS which was also found deficient. Out of 10 core applications, seven to eight are being used in 26 test checked department whereas SMS, time-analysis and appointment scheduler was not being used in any of the departments. ● Inadequate training: As per SLA of OSWAS, OCAC was responsible for identifying the core team and the trainers to be trained and provide the necessary inputs to TCS for preparing the training plan. TCS was entrusted with responsibility of conducting training and also to conduct project specific training for users in the customised software. Audit found that in 26 user departments, 104 out of 260 trainings for core applications and 482 out of 520 trainings for common applications were not provided. Training on customised software was also not conducted.

25 The Department accepted the inadequate usage pattern and assured that steps would be taken for time bound phasing out of physical files. It was agreed that both manual and online system of file processing were being followed by Department users. But, steps were on to move to complete online mode of file processing through OSWAS. It had been planned to focus on those common applications which were in use in the new version of OSWAS. Department further stated that two rounds of comprehensive training to all departmental users had been conducted with 25 participants per batch on computer fundamentals, use of scanner, printer, Internet Basics along with OSWAS. Application including hands on at the training centre of IT centre, Secretariat. Besides refresher trainings were being conducted from time to time as requested by departments at the Department premises. The Committee accepted the Departmental explanation and dropped the para.

*****

26 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2019-20 HELD AT 04:00 P. M. ON 20.03.2020 IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE 27 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2020-21 HELD ON 01.10.2020 AT 03:00 P. M. IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

ODISHA LEGISLATIVE ASSEMBLY

PUBLIC ACCOUNTS COMMITTEE

2020-2021 SIXTEENTH ASSEMBLY

4TH REPORT ON C & A. G OF INDIA (GENERAL AND SOCIAL SECTOR) FOR THE YEAR 2016-17 OF HIGHER EDUCATION DEPARTMENT

SECRETARIAT OF THE ODISHA LEGISLATIVE ASSEMBLY, BHUBANESWAR-751001

Sl. CONTENTS Page No. 1. Composition of the Public Accounts Committee, 2020-21 i 2. Composition of the Public Accounts Committee, 2019-20 ii 3. Composition of the Public Accounts Committee, 2018-19 iii 4. Composition of the Sub-Committee-IV of the Public iv Accounts Committee, 2018-19 5. Introduction v 6. Report 1-4 7. Minutes of the meeting held on 20.03.2020 5 8. Minutes of the meeting held on 01.10.2020 6 (i)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2020-21

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(ii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2019-20

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(iii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N

Shri Narasingha Mishra Leader of Opposition.

M E M B E R S

(iv)

COMPOSITION OF THE SUB-COMMITTEE-IV OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N Shri Debi Prasad Mishra, M. L. A. M E M B E R S Shri Pravat Ranjan Biswal, M. L. A. Shri Samir Ranjan Dash, M. L. A. S E C R E T A R I A T

Shri Amiya Kumar Sarangi, Secretary. Shri Shishir Kanta Swain, Joint Secretary. Shri M. Dungdung, Under Secretary. Shri Prafulla Kumar Parida, Desk Officer. Smt. Baijayanti Pattnaik, Desk Officer.

(v)

INTRODUCTION

I, the Chairman of the Public Accounts Committee having been authorised by the Committee on their behalf present this 4th Report of the C & A. G of India (General & Social Sector) for the year 2016-17 (Report No. 2 of 2018) relating to Higher Education Department.

The Sub-Committee-IV of Public Accounts Committee had examined the above subject in its meeting held on 17.01.2019. The findings and conclusion which are based on the result of the examination of the Committee, presented herewith.

The Public Accounts Committee, 2019-20, finalized the Report in their sittings held on 20.03.2020 and reapproved by the Public Accounts Committee 2020-21 on 01.10.2020.

The Committee place on record their appreciation of the assistance rendered by the officers of the Departments of Higher Education and Finance for their Co-operation. The Committee also place on record their appreciation of the Accountant General (G & SSA), Odisha and their staff for rendering assistance by them to the Committee in examination of the compliance received from the Department.

The Committee further express their thanks to the Officers and Staff of the Odisha Legislative Assembly Secretariat for their Secretarial assistance.

Sd/- Bhubaneswar (PRADIPTA KUMAR NAIK) Date: 01.10.2020 C H A I R M A N

PUBLIC ACCOUNTS COMMITTEE

R E P O R T

Para-3.6 Undue favour to a firm for setting up of Language Laboratories (LLs).

The decision to award the work of setting up of LLs in 108 colleges of the State to a private firm on nomination basis was not in order. Further, there was no enrolment in 42 colleges where LLs were set up at the total cost of ` 8.64 crore.

As per Audit observation, a Committee under the Chairmanship of the then Principal Secretary of the Department decided (November 2012) to award the work on nomination basis to a firm ‘Centre for Advanced Communication (CACM)’. CACM was stated as a unit of Indian Institute of Technology (IIT), Kharagpur which is a reputed technical institute of Government of India (GoI). The Department signed (March 2013) a Memorandum of Understanding (MoU) with CACM with a validity of three years. As per the MoU, the LL was to be set up (at each center) in two rooms to accommodate 24 students at a unit cost of ` 20 lakh per LL. On expiry of the MoU in February 2016. HED renewed (March 2016) the same and approved for setting up of LL in another 20 colleges by February 2017. Subsequently, 108 LLs were completed in 40 Government and 68 Aided colleges of the State between May 2013 and November 2016. An amount of ` 22.88crore had been paid to CACM as of March 2017.

CACM was a single entrepreneur private organization and had no administrative and financial relation with IIT, Kharagpur. Therefore, its selection in the pretext of IIT, Kharagpur was not in accordance with rules. In fact, it was arbitrary and illegal.

Departmental Representative apprised the Committee that an elaborate, fair and absolutely transparent process had been adopted by following all the relevant government and statutory guidelines and the Language Laboratory (LL) work was awarded strictly on the basis of OGFR 2012 vide G.O. No. 4939/F, Dated 13.02.2012 of the Finance Department, CVC guidelines vide letter No. 005/CRD/19, 5th July 2007, Indian Patents Act, 1970 and the Indian Partnership Act, 1932 with the concurrence of the Finance Department and the approval of government. The OGFR and CVC guidelines provide mandate that procurement can be done from a single source if the supplier or contractor has exclusive proprietary rights and patent over the goods and services. CACM had formed administrative and commercial relationship with IIT, Kharagpur and the patent of CACM had been developed in STEP IIT, Kharagpur which was the technology advancement and invention Centre and administrative wing of IIT, Kharagpur. The Chairman of the STEP was Director, IIT, Kharagpur and the members were the representatives of the Department of Science and Technology of Government of India. CACM had signed an MOU with the STEP, IIT Kharagpur and there was a profit-sharing mechanism with the IIT Kharagpur. Since there was an agreement that they were equal partners on the terms and condition they were equally responsible for the thing. Since, IIT Kharagpur was a part of the agreement, it was treated as an entity of IIT Kharagpur. Accordingly, agreement had been made. It was firmly placed that no such software was available during 2011-12.

The Committee desired to know whether IIT, Kharagpur had the proficiency with developed technology and requisite technical advancement to set-up this Language Laboratory.

The Departmental representative apprised the Committee that, in 2012 when the project was started an expert Committee headed by Professor Sanghmitra Mohanty, Ex-Vice Chancellor North Odisha University gone through about 3092 patents which was available in the website and found only 2 patents; one was from USA and another from India i.e(ISILS) of CACM. The reputed technical institution of India had successfully used the CACM (ISILS) Indian School of patent LL technology including IIT, Kharagpur, Indian School of mines, Dhanbad, IIT, Bhubaneswar, IIT, Patna, IIT, Ranchi and polytechnics of the State which strongly established the technical superiority, efficiency and strength of the product. So the Committee recommended for CACM (ISILS) to set-up LL in Higher Education Department.

The Committee desired to know whether any International or Global tender process had been floated by the Higher Education Department for the selection of patent to set-up language laboratories.

In response, the departmental representative apprised that everything was open in the website. There were clear provisions under the OGFR and CVC and the Patents Act to award work to a Patent and proprietary product on nomination and the Patent did not come under the tendering route and the rate was competitive; it was decided to award CACM, which was a proprietary firm to take up the LL work. The Patent is an intellectual property and an exclusive license under the Patents Act, 1970 and the HED, had chosen a Patent out of 3092 empanelled patents, which was an intellectual property empanelled by the Controller of Patent of the Central 2 Government, under the Patents Act. CACM had regularly submitted required information about its Patent product and usage to the Controller of Patent as per the Act. Therefore, the patentee CACM was not arbitrarily or illegally selected. The department strongly denied that any undue favour had been shown to any private firm. A high level Committee was visited Hyderabad and found that no such system was available in the country.

Audit para observed that, the Department did not recover the ` 22.88 lakh as Tax Deducted at Source (TDS) from CACM.

Departmental representative explained that as per agreement hundred per cent payment was made within seven working days after successful test, demonstration and training by the Department from 2013-14 to 2016-17 i.e. during the entire tenure of the scheme ` 22.88 lakh Tax payment had been made by CACM as per the MOU.

Further it was objected that, out of 112 colleges covered under Audit where the LLs were set up, 56 colleges had no student enrolment. In 42 colleges, the LLs were installed one to three years ago at the total cost of ` 8.64 crore. In the remaining 14 colleges, the LLs were installed during the academic year, 2016-17.

Students were reported as enrolled in 46 colleges though 13 of these colleges failed to produce any evidence of enrolment. The Principals of the test-checked colleges attributed the idling of LLs to shortage of teaching staff, non-inclusion of the course in academic calendar and non-provision of power supply.

The Committee observed that, the people of China have difficulty in pronouncing English Language and they have taken English tutors from India. The Committee desired to know the status of functioning of the Language Laboratories.

The Department complied that, the LLs were functioning at present. The district level consultants were visiting LLs and all these programmes were being monitored by Odisha Higher Education Council. Five Regional Directors were deployed for regular review and inspection of the LLs. Spoken English tutorial classes had been started involving IIT, Mumbai in the same LLs.

The Committee observed that out of 46 colleges 13 colleges had not any evidence of enrolment. The Principal-in-Charge of the colleges had attributed that due to lack of infrastructural development i.e. lack of energy facility and absence of professionals it was difficult to manage the system.

3 As regards the observations relating to the availability of attendance registers, the Department complied that since that was a new system, the attendance register in some colleges had not been maintained properly by the Principals at the initial stage. But after continuous and rigorous follow-up all the colleges (including the 56 colleges as observed by the CAG) had maintained the attendance registers for their LLs by October, 2018. The LLs were of late active hubs of language learning in all colleges. Higher Education Department had taken utmost care to train and sensitize the Principals to co-ordinate for effective functioning of LLs at their colleges. Regarding staff shortage, it was stated that all colleges had adequate staff to run the LLs. Any teacher, having good command in English Language could teach this language skill after necessary training. Colleges were also reporting that due to Language Laboratories their NAAC grade had improved and they had given autonomy extension because of Language Laboratories and during the student’s interaction, Students were also saying that they were being benefitted by this Language Laboratories. So, it was fully functional. At the time of examination of audit objection they were maintaining all the registers including attendance registers.

The Committee opined that the introduction of Language Laboratories, a modern educational technology is significant for addressing the English Language skill of the students in the State. A proper monitoring system of the functioning of the LLs should be developed by the HED, so that best results can be achieved. A comprehensive up-to-date report should be submitted containing the outcome of 108 LLs and their further improvement and monitoring system to the Committee and NAAC up-gradation should be one parameter for 108 Colleges.

In view of the above, the Committee settled the para.

*****

4 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2019-20 HELD AT 04:00 P. M. ON 20.03.2020 IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE 5 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2020-21 HELD ON 01.10.2020 AT 03:00 P. M. IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

ODISHA LEGISLATIVE ASSEMBLY

PUBLIC ACCOUNTS COMMITTEE

2020-2021 SIXTEENTH ASSEMBLY

5TH REPORT ON C & A. G OF INDIA (GENERAL AND SOCIAL SECTOR) FOR THE YEAR 2014-15 OF HOME AND WOMEN & CHILD DEVELOPMENT DEPARTMENT

SECRETARIAT OF THE ODISHA LEGISLATIVE ASSEMBLY, BHUBANESWAR-751001

Sl. CONTENTS Page No. 1. Composition of the Public Accounts Committee, 2020-21 i 2. Composition of the Public Accounts Committee, 2019-20 ii 3. Composition of the Public Accounts Committee, 2018-19 iii 4. Composition of the Sub-Committee-IV of the Public iv Accounts Committee, 2018-19 5. Introduction v 6. Report 1-15 7. Minutes of the meeting held on 20.03.2020 16 8. Minutes of the meeting held on 01.10.2020 17 (i)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2020-21

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(ii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2019-20

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(iii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N

Shri Narasingha Mishra Leader of Opposition.

M E M B E R S

(iv)

COMPOSITION OF THE SUB-COMMITTEE-IV OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N Shri Debi Prasad Mishra, M. L. A. M E M B E R S Shri Pravat Ranjan Biswal, M. L. A. Shri Samir Ranjan Dash, M. L. A. S E C R E T A R I A T

Shri Amiya Kumar Sarangi, Secretary. Shri Shishir Kanta Swain, Joint Secretary. Shri M. Dungdung, Under Secretary. Shri Prafulla Kumar Parida, Desk Officer. Smt. Baijayanti Pattnaik, Desk Officer.

(v)

INTRODUCTION

I, the Chairman of the Public Accounts Committee having been authorised by the Committee on their behalf present this 5th Report of the C & A. G of India (General & Social Sector) for the year 2014-15 relating to Home and Women & Child Development Department.

The Sub-Committee-IV of Public Accounts Committee had examined the above subject in its meeting held on 07.08.2018. The findings and conclusion which are based on the result of the examination of the Committee, presented herewith.

The Public Accounts Committee, 2019-20, finalized the Report in their sitting held on 20.03.2020 and reapproved by the Public Accounts Committee 2020-2021 on 01.10.2020.

The Committee place on record their appreciation of the assistance rendered by the officers of the Departments of Home and Women and Child Development and Finance for their Co-operation. The Committee also place on record their appreciation of the Accountant General (G & SSA), Odisha and their staff for rendering assistance by them to the Committee in examination of the compliance received from the Department.

The Committee further express their thanks to the Officers and Staff of the Odisha Legislative Assembly Secretariat for their Secretarial assistance.

Sd/- Bhubaneswar (PRADIPTA KUMAR NAIK) Date: 01.10.2020 C H A I R M A N PUBLIC ACCOUNTS COMMITTEE

R E P O R T

1. Para-3.2 Working of Juvenile Homes in the State of the Report of the C & A. G of India (G & SSA) for the year 2014-15:- Sub-Para-3.2.1 Introduction. The Constitution of India imposes on the State a primary responsibility of ensuring that all the needs of children i.e. aged below 18 years; are met and their basic human rights are fully protected. Accordingly, Government of India (GoI) enacted Juvenile Justice (Care and Protection of Children) Act, 2000 (JJ Act) with the objective of providing proper care, protection and treatment to the juveniles in conflict with law (JCL) and children in need of care and protection (CNCP). The JJ Act was amended in 2006, which, inter alia, provided for constitution of Child Protection Units at both State and District level for implementation of the Act for JCLs and CNCPs. Section 4 (1) of the JJ Act, 2000 provides that one or more Juvenile Justice Boards (JJBs) for a district or a group of districts shall be constituted to adjudicate and dispose of cases of JCLs. Further, Sections 4, 8 and 9 of the Act envisaged establishment of Observation Homes (OH) for retention of JCLs during their adjudication and Special Homes (SH) for their reception and rehabilitation after they are confirmed to be in conflict with law. In case of CNCP, the JJ Act provides for constitution of Child Welfare Committee (CWC) in each district or group of districts which are responsible for necessary care and protection, including immediate shelter by passing necessary directions to parents, guardians or fit persons/ institutions. In pursuance of this, the State Government framed the Juvenile Justice (Care and Protection of Children) Orissa Rules, 2002 which were amended in 2009. The Rules, inter alia, provided for establishment of SHs, OHs, Shelter homes and Child Care Institutions (CCIs) for accommodation of JCLs/CNCPs and to provide mandatory standards of care to juveniles. While, Shelter homes are to act as drop-in- centres for children in urgent support, CCIs are responsible for providing subsequent care, treatment, education, training, development and rehabilitation. Audit observed that four OHs and four SHs were functioning in the State as on 31 March 2015, with total capacity of 290. However, at all four locations, OHs and SHs were functioning in same premises with the name „OH/SH‟. Further, there were six Government run and 86 NGO run CCIs in the State (March 2015). While one OH/SH at Angul was under administrative control of the Home Department, remaining OH/SHs and CCIs were functioning under the W & CD Department. Departmental Representative apprised that in consonance with the provision contained under section 4(1) and 27 (1) of the Juvenile Justice (Care and Protection of Children) Act, 2015 Juvenile Justice Board and Child Welfare Committee had been constituted in respect of each district respectively. There were five observation Homes & Special Homes functioning in the State which were at Angul, Berhampur (one for Boys & one for Girls), Baripada and Rourkela. Proposals were made for three more OHs and SHs at Kalahandi, Boudh and Malkangiri. The Committee opined that as per Law, the Department have to protect the basic human right by providing proper care and treatment to the children and the funds sanctioned for the purpose must be utilized judiciously, effectively and timely. 2. Para-3.2.2 Non segregation of JCLs Section 8(4) of JJ (C&PC) 2000 Act, inter alia, required retaining JCLs in OHs according to their age giving due consideration to the offences committed. During 2012-15, the admitted 2,655 juveniles comprised of 514 JCLs charged with theft, 337 with burglary, 147 with attempt to murder, 212 with murder, 381 with rape and 1,064 with other crimes. Audit pointed out that : i. all four OHs and four SHs were functioning at four locations with common infrastructure and man-power. These homes were using the same dormitory for accommodation of under-trial JCLs and confirmed offenders. The JCLs were not segregated which was in violation of provisions of the JJ Act. As a result, all 2,655 juveniles admitted during the period 2012-15 were kept together without segregation at these four „OHs/SHs‟. As on 31st March 2015, 235 JCLs comprising of 216 under-trial JCLs and 19 confirmed offenders were accommodated together in these homes. The Department assured that segregation of inmates would be ensured after completion of construction of new building at Berhampur and Rourkela. ii. Out of 120 juveniles accommodated in OH Rourkela, 57 Boys were involved in multiple offences and were admitted in same OH more than once. Number of JCLs committing multiple crimes in the State also increased from eight in 2010 to 73 in 2013. Thus, co-inhabitation of under- trials and confirmed offenders acted against the objective of bringing JCLs to the mainstream of the society. iii. Despite instructions of the W & CD Department during September 2013 segregation of JCLs who attained 18 years of age was not ensured as 11

2 JCLs over 18 years of age were retained in three OHs at Angul, Berhampur (Boys) and Rourkela (March 2015). The Department stated December 2015 that number of such JCLs above 18 years came down to three or four. Departmental Representative apprised that, although there was one premise for both OH and SH, there were two separate dormitories, for which CICLs whose cases were under inquiry and CICLs who had been confirmed to be in conflict with law are housed separately. Due to shortage of infrastructure, age-wise segregation of CICLs of OH & SH as per norms, could not be followed in all OHs & SHs. The superintendents and DCPOs had been instructed for ensuring segregation of CICLs. As mentioned in Section 49 (1) of JJ (C&PC) Act, 2015 mandates for setting up of at least one “Place of Safety” so as to place a person above the age of 18 years or CICLs, who is between the age of 16-18 years and is accused of or convicted for committing heinous offence, the Home Department has suggested Sub-jail, Athagarh as place of safety on physical verification by the Department. The Juveniles of Observation Home are staying with the other Juveniles of Special Home. Due to non-availability of proper accommodation and other facilities juveniles of Observation Home could not be segregated from Special Home. Four dormitories along with attached latrines and bathrooms are available for accommodation of Juveniles. At present all the juvenile inmates are accommodated in three dormitories. The rest one dormitory is used for functioning of the office as no separate office building is available there. The total scheduled capacity of the Observation Home & Special Home, Angul is 40. The average juvenile inmates of the Home is around 50. Hence, it is not possible to segregate the J.C.L. under 18 years of age in view of the existing accommodation. The Committee desired to know the present status of the new building of OHs & SHs at Raurkela and Angul since the construction work was likely to be completed shortly. The para was dropped. 3. Para-3.2.3 Delay in finalization of cases of Juveniles. As per Rule 22 (3) of the JJ (C & PC) Orissa Rules, 2009, cases of JCLs are required to be finalized within a maximum period of six months. Audit noticed that there were 76 juveniles in the OHs/SHs of the State as of March 2015, whose cases were pending for disposal for periods ranging from 6 to 24 months and above. The Committee desired to know the status of the cases against 76 juveniles pending more than six months as of March 2015. Departmental representative apprised that, regarding the cases pending more than six months there were three types of offences i.e. Petty, serious and heinous. So, wherever pretty offences were there, the Department had taken-up a drive, so 750 3 odd cases had been identified. Out of which 518 have been terminated. Regarding the serious and heinous offences like rape, dacoit and other things. There was the Principal Magistrate of JJBs, were little reluctant to terminate because of the seriousness of the offences. So these cases were pursued to be disposed of early. The District Magistrates/District Child Protection Officers had been requested for coordination with JJBs to facilitate expeditious disposal of cases of CICLs. The Committee directed to furnish case wise position of the pending cases to be disposed off. 4. Para-3.2.4 Deficiencies in functioning of JJBs i. Para-3.2.4.1 Non-termination of proceeding by JJBs in non-serious cases. As per Rule 22 (3) of the JJ (C&PC) Orissa Amendment Rules, 2009, every enquiry should be completed within four months after the first summary enquiry and in exceptional cases, such period might be extended by two months. Delay beyond four to six months shall lead to termination of the proceeding of cases except where the nature of alleged offence is serious. Test check of four DCPUs revealed by Audit that 1051 non-serious cases were pending for completion of inquiry beyond six months in four JJBs. Despite that, the proceedings were not terminated. As a result, JCLs were retained in OHs for longer periods denying them timely justice besides overcrowding in OHs. Departmental representative stated that it was resolved in the meetings of the Juvenile Justice Committee of the Hon‟ble High Court, Orissa, held on 30.09.2015 and 30.11.2015 for issue of instruction to the JJBs to strictly adhere to the mandatory provisions of Law. Principal Magistrates were not engaged exclusively for functioning of JJBs. Due to their workload they were not able to conduct hearing every day. The Committee were of the view that JJBS should be strengthened to clear the back log and the Department must have to protect the rights of the juveniles at any cost. However the Committee settled the para with the instruction that the 257 pending cases be cleared within two months and compliance be reported to the Public Accounts Committee for appraisal. ii. Para-3.2.4.2 Inadequate number of JJB sittings. Rule 3(1) of the JJ (C&PC) Orissa 2002, inter alia, envisaged that JJB shall meet on all working days of a week, unless pendency of the case is less in a particular district. As per Rule 22 (3)(b) of JJ (C&PC) Orissa Rules, 2002 read with Section 14 of the Act, the JJB would complete every inquiry within a period of four months, which may be extended by two months, on recording of the reasons thereof by the Board. 4 Audit para revealed that JJB meetings were not conducted on every working day despite large pendency. JJB, Khurda held only 203 sittings against requirement of 720 sittings during 2012-2014. Similarly, JJBs in Ganjam and Sundargarh districts held only 274 and 109 sittings respectively against required 720 sittings. Though JJBs had to conduct the meetings in the premises of OHs, the same were not conducted in OHs at Berhampur (boys and girls). The Departmental representative apprised that there was no separate Magistrates engaged for conducting JJBs meetings. So they were also engaged in the additional charges. In the State Level Seminar conducted by this Department on 29th to 30th April, 2017 in the Odisha Judicial Academy, the Hon‟ble Judges of the Juvenile Justice Committee of the Hon‟ble High Court, Odisha impressed upon the Principal Magistrates of the JJBs to hold adequate number of sittings so as to expedite disposal of cases. The Committee opined that where large number of cases were pending for disposal the Department should have taken necessary steps to increase the dates of hearing for disposal of the cases at least from two to three days a week. However the para was dropped. iii. Para-3.2.4.3 Delay in production of JCLs before JJB. Audit noticed that 137 JCLs out of 216 in OHs as of March 2015 were produced before concerned JJBs after one and a half to 28 months from the date of their last production. Further, in two test checked JJBs (Khurda and Sundargarh), it was noticed that 135 out of 1208 JCLs were not produced before concerned JJBs since their first appearance before JJBs even after four months. Superintendent of OH/SH (girls), Berhampur attributed the delay in production of JCLs before JJBs to non-arrival of police escort party. The Department stated that directions had already been issued to reduce the pendency by 31st December 2015. The Departmental representative stated that children were produced easily before the JJBs through video conferencing through skype. Their statements were recorded and after obtaining their signature it was sent to the Magistrate through E- mail or through speed post. The Committee settled the para with the observation that the W & CD Department should follow the modalities adopted by the Home Department in conducting video conferencing in various jails without delaying the process. 5. Para-3.2.5 Deficiencies in CWC sittings. Section 29(1) of the JJ Act provided for constitution of Child Welfare Committee (CWC) in each district or group of districts for CNCP. As per Rule 27 (3) CWC must complete the inquiry within four months. Section 25 (1) provides that the Committee shall hold its sittings in the premises of the children‟s home and shall 5 meet on at least three days a week i.e. at least 156 sittings per year. Further, as per Section 18 (3) of JJ Act 2006, the State Government shall review the pendency of cases of the Committee at every six months and shall direct the Committee to increase the frequency of its sittings or may cause the constitution of additional Committee. In five test checked open shelters, the period of stay in case of 70 out of 406 children (17 per cent) was more than four months as of March 2015. Test check of three DCPUs revealed that during 2012-15, the shortfall in sittings ranged from six to 156 in Ganjam and Sundargarh districts as against the required 156 sittings per year of CWCs. Thus, due to less number of sittings of CWC, cases were pending for disposal beyond the prescribed limit of four months. Moreover, test check of 11 CCIs in three sampled districts revealed that CWCs conducted their sittings only in the district headquarters in contravention to the above Rules. The Departmental representative stated that as per new Act CWC sittings would be conducted more than 20 days in a month. In 2016-17, 6133 sittings and in 2017-18, almost all the sittings 100% sittings had been conducted. Now CWC had been constituted in 23 districts. In the year 2017-18, 15,600 cases had been disposed of and the Department had taken keen interest for disposal of more number of cases by conducting more number of CWC sittings. The Committee observed that due to short fall of sittings cases were pending years together and directed the Department to be more vigilant for disposal of the cases by conducting more number of CWC sittings. However the para was settled. 6. Para-3.2.6 Availability of required infrastructure facilities Para-3.2.6.1 Availability of physical infrastructure in OH & SH and CCIs Rules 8 and 9 of JJ (C&PC) Rules, 2002, inter alia, stipulate that each OH/SH/CCI shall have dormitory (40 sft. per juvenile), bathrooms (at least one bathroom for ten children and one latrine for seven children), fly-proof kitchen and sufficient playground according to the number of juveniles. Joint Physical Inspection (JPI) was conducted in all OHs/SHs by Superintendent and in 11 CCIs by staff of CCIs with concerned DCPUs in presence of Audit.  One out of three dormitories at Angul was in dilapidated condition and water was leaking. Though ` 6 lakh was placed (2014-15) with the Executive Engineer (R & B) Division, Angul for repair of the existing building, the same could not be completed. The Superintendent stated (March 2015) that the Executive Engineer (R & B Division) expressed his inability to complete the renovation work due to insufficient funds. The Department stated (December

6 2015) that it had proposed for ` 56.27 lakh under ICPS in the Programme Implementation Plan of 2015-16 for improvement works of OH/SH, Angul.  For renovation of existing structures available in the campus of Central home for Women, Berhampur and improving/converting the same to OH/SH for boys as well as girls, two estimates of ` 55.65 lakh and ` 50 lakh were approved by W & CD Department in July 2011 and December 2014 respectively. The entire amount was placed with the Executive Engineer, R & B Division, Ganjam for execution of the work. Though civil works were completed, those were not made functional due to non-completion of electrical works. W & CD Department stated (December 2015) that the work of OH/SH, Berhampur was nearing completion and inmates would be shifted to the new building soon.  Similarly, to shift the OH/SH Rourkela functioning in special jail premises to another site, W & CD Department accorded (July 2011) administrative approval for ` 3.77 crore and released (October 2010) ` 59.73 lakh. The balance of ` 3.17 crore was released between December 2014 and February 2015. As of 30 September 2015, only ` 1.09 crore was utilised by the Executive Engineer and the work remained incomplete. W & CD Department stated December 2015 that the matter was being expedited. Thus, the basic infrastructure required as per the guidelines of the Government and ICPS at OHs/SHs could not be ensured despite availability of adequate funds. The Departmental representative stated that, there were 20 bathrooms available in OH and SH, Berhampur (Boys), 8 bathrooms in OH and SH, Berhampur (Girls) and 09 bathrooms in OH and SH, Rourkela. Treated Drinking Water facilities were also available in the OH and SH Rourkela. All the superintendents of the OHs and SHs had been directed to have fly-proof kitchens in the said institutions. Playgrounds were available in all the OHs and SHs with space for physical exercise of the CICLs. For renovation of OH and SH, Angul, ` 56.25 Lakh was proposed under ICPS head 2015-16 ` 46.78 lakh had been sanctioned under ICPS. Construction work at OH and SH, Berhampur (Boys) had been completed and the OH and SH was functioning in the new building. ` 3.77 crore was released to OH and SH, Rourkela out of which an amount of ` 1.77 crore was utilized for the construction work/civil work till date and as the work was under process it was reported that the work would be completed before 31st Dec, 2017. 7 The Committee observed that the Department should ensure minimum 40 sqft. space to accommodate a juvenile. The Department should take expeditious steps to improve the infrastructure for accommodation of the juveniles as per guide line of the Act and submit the report to the Committee for consideration. 7. Para-3.2.7 Non-transfer of OH and SH Angul to WCD Department Project Approval Board under ICPS directed (September 2011) the transfer of OH/SH, Angul from Home Department to W & CD Department. However, the same was not transferred as of December 2015. Audit noticed that in respect of three OHs/SHs run under W & CD Department, maintenance charges were allowed at ` 750 per child per month up to September 2014 and ` 2,000 thereafter as per funds received under ICPS where as in respect of OH/SH at Angul, which is run by Home Department, the maintenance cost was ` 1,350 per child per month (` 45 per day) up to September 2013 and ` 1800 per child per month (` 60 per day) thereafter. Thus, there were differential maintenance charges for the inmates of OHs/SHs of the State. W & CD Department stated (December 2015) that action for transfer of the OH/SH at Angul to W&CD Department and ensuring equal diet, bedding and clothing cost had been initiated. The Departmental representative apprised that the Home Department vide Notification No. 23788 dated. 11.07.2016 had transferred Administrative control of OH and SH, Angul to Department of W & CD and MS. Home Department had been intimated that allotment had been placed under ICPs for maintenance of the CICLs as per ICPS norm so as to remove the anomaly. Government of Odisha vide Home Department Notification No.35203 dt. 21.09.2013 declared the Probation Hostel and Special Home, Angul as Observation Home for the under-trial Juveniles within the Jurisdiction covering Ten Districts. Considering the proposal of the I.G. of Prisons, Home Department had prescribed new diet scale for the prisoners during the year 2006 and the said provision was extended to the inmates of Probation Hostel, Angul and others under the Prisons Organisation vide Home Department letter No.18243 dt. 7.4.2008. The diet scale fixed for the prisoner was the maximum amount that could be incurred as per prescribed norms.In view of the above, the inmates of the said institution were provided maintenance cost of diet at par with the prisoners confined in the different Jails of Odisha. No funds received from the I.C.P.S. during the year 2013-14 and 2014-15 by the Superintendent of Probation Hostel-Cum-Observation Home and Special Home, 8 Angul. Funds were met from Home Department Budget. Home Department had enhanced/revised the cost of diet from time to time basing on the consumer price index. Therefore, maintenance cost of diet of inmates in respect of three Observation Home and Special Home under the W & CD Department differs from the Observation Home and Special Home, Angul under the Administrative control of the Home Department. Now the Observation Home and Special Home, Angul had been transferred to W & CD Department vide Home Department Notification No.23788 dt.11.07.2016. The Committee recommended that the Department should submit the status report of the ongoing construction works clearly mentioning the time line to complete for consideration of the Committee. 8. Para-3.2.8 Human Resource. i. Para-3.2.8.1 Non availability of adequate Man power. Rule 48 (5) of JJ (C&PC) Rules, 2002 required deployment of 20 whole time and five part time staff for an institution with a capacity of 100 juveniles/children. Requirement as well as availability of manpower in the two test checked OH/SH {(Rourkela, Berhampur (boys)} as on March 2015 are indicated in Table below Type of Norm (for Requirement Posts Actual Shortage manpower 100 children) as per norm sanctioned availability against norm Superintendent 1 2 2 2 0 Doctor 1(Part time) 2 2 2 0 Para medical 1 2 2 1 1 staff Probation 3 6 0 0 6 Officer Cook 2 4 2 2 2 House 4 8 0 0 8 father/mother Counsellor 2 4 0 0 4 Educator 2 (Part time) 4 2 2 2 Vocational 1 2 0 0 2 Instructor Store keeper 1 2 2 2 0 cum accountant Helper 2 4 2 2 2

9 Art & craft 1 (part time) 2 0 0 2 cum music teacher Gardener 1 (part time) 2 0 0 2 Peon/sweeper 2 4 3 3 1 Driver 1 2 0 0 2 Total 25 50 17 16 34 Only 17 posts (34 per cent) were sanctioned by Government and 16 posted against the required 50 as per norm. The shortage of critical staff such as Counsellor, Vocational trainer, Educator and Helper affected counselling service, vocational training and periodic health check-ups as discussed below:  Absence of counselling facility: Counselling facility, though crucial for correcting JCLs, was not available in any of the OH/SH in the State. Out of 11 sampled CCIs, Counsellors were available only in four CCIs. No organisations or agencies were deployed in remaining CCIs for counselling the inmates in absence of Counsellors. W & CD Department assured in December 2015 that it would make provision for Counsellors in Programme Implementation Plan 2016-17 under ICPS.  Vocational training: In six out of eleven test checked CCIs, vocational training was not conducted as the posts of vocational instructors were not filled up. W & CD Department assured in December 2015 that it would extend vocational training to CCIs. Audit also noticed the following deficiencies in rendering health service to juveniles, though doctors and paramedical staff were available:  Medical check-up at the time of admission: Rule 10(2) of JJ(C&PC) Rule, 2000 required examination of each JCL by the Medical Officer within 24 hours of admission to OH in normal cases and within 48 hours in special cases. JCLs transferred to SHs were also to be examined within such time. However, in none of the test checked homes, were the juveniles admitted and transferred to OH/SHs, were medically examined at the time of admission. W & CD Department assured that it would take appropriate action in the matter.  Quarterly health check-up: The health of juveniles was not checked quarterly in any of the test checked OH/SHs. Similarly, in 11 test checked CCIs, though medical register was maintained, neither any monthly medical check-up nor any Health Card was maintained. W & CD Department assured that it would enquire into the matter and take appropriate action. 10  Non-availability of specialised medical care: As per Section 48 (2) of JJ Act, 2000, juveniles suffering from sexual disease, tuberculosis, etc. shall have to be kept separately. On examination of records of OH/SHs, Audit noticed that two juveniles, though suffering from Abdomen Tuberculosis with HIV positive at Berhampur and at Rourkela, they were kept with other juveniles. In OH/SH Rourkela, no provision of bed was made for the HIV affected juvenile. Besides, 17 JCLs, affected with scabies, were kept along with other juveniles in same room and special medical care was absent for them. W & CD Department assured to ensure availability of specialised medical care in such OHs & SHs. Regarding the non-availability of manpower the departmental representative stated that staff such as Superintendent, Accountant, Clerk and Guard were deputed from Home Department for OHs and SHs. Director of Directorate of Health Services had been requested for providing counseling support to Children of Observation Homes, Special Homes, Child Care Institutions and SAA. The DCPOs concerned had been instructed to ensure counselling services through their Counselors for all inmates of OH & SH. The Committee observed that counselling support to the children is very important ant it must be done adhering to the norms specified for the purpose and the Department should form an expert group having proficiencies in monitoring the counseling activities who can visit different locations and upgrade the performance of the counselling. Regarding Vocational training the Committee opined that the Department should take the advice of skilled development authorities of the State to identify the skills and models suitable for juveniles for imparting proper skill training. The Departmental representatives stated that Superintendents and DCPOs of OH and SH had been instructed for ensuring medical check-up of all inmates at the time of admission. No regular Doctor or Pharmacist were available in the Observation Home for Medical Check-up of the juveniles. In emergency cases the concerned juveniles were sent to the District Head Quarters Hospital for check-up and treatment. The Doctor of Angul Jail visited the Juvenile Home at Angul as and when required. Regular health checkup of all the CICLs were being made by the local Doctors of the District Headquarters Hospitals. The Committee opined that inmates suffering from cases like HIV positive, infection of Tuberculosis or any infectious diseases should be immediately shifted to local district headquarter hospitals. The para was dropped. 9. Para-3.2.9 Safety & Security at OH &SH

11 As per Rule 17 (2) of State JJ Rules, 2002, in the event of escape of juvenile, the parents/guardians shall be informed immediately about such escape. Audit revealed that :  Escape of JCLs: As per the records produced and information furnished by the Superintendents, during 2010-15, 36 JCLs escaped from OH/SH, Berhampur (Boys) and Rourkela (Boys) out of which 24 JCLs were recaptured and remaining 12 JCLs were not recaptured (September 2015). Out of 27 JCLs of Berhampur, only 21 were recaptured. However, the parents of all these escaped JCLs were not intimated of the fact, as required. The Department stated that Superintendents of Police of both Berhampur and Rourkela were instructed to deploy six additional guards at each such OH/SH to ensure more security.  Non-conducting regular checking of JCLs: Regular checking of JCLs to detect possession of any intoxicating/prohibited material was not conducted by either the Superintendents of the Police despite knowing the fact that four JCLs had brought intoxicating materials to OH Rourkela at the time of admission. W & CD Department assured that it would look into the matter. The Departmental representative stated that, Superintendent and other Staff of the Observation Home and Special Home, Angul were residing in their residential quarters just by the side of the perimeter wall and they kept proper watch over the Home. The Committee recommended that every OHs and SHs should be put under CCTV surveillance for security and safety point of view. One Additional SP of each district should remain in-charge to watch the safety aspect and lapses of security for these OHs and SHs. The Department should be more vigilant on supply of intoxicating material for the inmates in every OHs and SHs. 10. Para-3.2.10 Rehabilitation and Resettlement i. Para-3.2.10.1 Absence of mechanism to track JCLs during Post release period As per Rule 36 of JJ Rules, 2002, there shall be an aftercare organisation to organise programmes for the children after leaving SH/OH to integrate them with the mainstream of the society. During 2012-15, 82 confirmed juveniles in conflict with law were released from four SHs. However, information regarding JCLs corrected, rehabilitated and integrated with mainstream after their release was not available as there was no mechanism in Home/W & CD Departments to track their activities after release from SHs. In absence of any such tracking mechanism, the Government could not even confirm mainstreaming of Juveniles.

12 The Departmental representative stated that, District Magistrate-cum- Collectors and DCPOs had been instructed for ensuring Post Release follow up of CICLs released form OH and SH. Further the Department stated that CICLs released from OH and SH perceived to be CNCP were having linkages with CWC and other Departments for the purpose of rehabilitation. Skill Development Authority, Panchayati Raj Dept. and SDTE Dept. had been requested to provide Skill Development Training and Placement Linked Employability Training for their rehabilitation and reintegration. The Social Worker of the DCPU would prepare Post release plan for due follow up action. The CICL placed in aftercare programme would be provided with financial assistance by the Department. The Committee accepted the explanation and dropped the para. ii. Para-3.2.10.2 Non establishment of aftercare organization Rule 38 of Central Rules as well as Rule 36 of State Rules provides that the State Government shall set up an aftercare organisation for care of juveniles or children, after they leave special/children homes, to facilitate their transition from an institution-based life to mainstream society, for social re-integration. Audit noticed that though 82 JCLs were released from four SHs and 414 children were released from 11 test checked CCIs during 2012-15, they were not provided aftercare due to absence of any such organisations. However, one CCI (Utkal Balashram, Berhampur), despite non-availability of aftercare organisation, arranged training for 14 children in painting in Government Industrial Training Institute, Berhampur out of which five children were placed after completion of training. The Departmental representative stated that establishment of After-care organization was under process. Rule 25(7) of the Model Rules, 2016 provided for the After-care Programme. DCPOs had been instructed to take up appropriate follow up action in consultation with the DPM of Odisha Livelihood Mission, DDU-GKY in the DRDA of the concerned districts. The Committee observed that after care concept is most important to imparting education, vocational training and technical education to a children to become self-dependent in future and would be an asset to the society. The committee settled the para with the recommendation that Department should provide required funds in consultation with Director, Technical Education to impart proper training so that they can be back to the main stream by earning their livelihood. 11. Para-3.2.11 Inspection and Monitoring i. Para-3.2.11.1 Non-constitution of Management Committee

13 Rule 22 of the JJ (C&PC) Orissa Amendment Rules, 2009 provides that every institution shall have a Management Committee comprising of District Child Protection Officer as the Chairperson, Officer-in-Charge as Member-Secretary and six other members for management of the institution and monitoring the progress of every juvenile and child. The Committee was to meet every month to consider and review custodial care, individual problems of juveniles, vocational training and education, guidance and counselling, planning of post release rehabilitation programme, etc. Audit revealed that no such Committee was constituted for effective functioning of the OH/SHs, Angul and Berhampur (boys and girls) while the same for Rourkela, though constituted and met only thrice. Due to non-constitution of the Committee and non-convening of meetings regularly, progress on care of juveniles could not be monitored. W & CD Department assured that it would issue suitable instructions for ensuring constitution of Management Committees and their regular meeting. The Department stated that Superintendents of Observation Homes and Special Homes had been instructed for ensuring constitution of Management Committees and Children‟s Committees in the CCIs, hold its meeting regularly. As a result, the Management Committees and Children‟s Committees had been formed and functioning in all OHs & SHs. ii. Para-3.2.11.2 Deficiency in inspection. Rule 21 of the JJ (C&PC) Orissa Amendment Rules, 2009 provided that Government shall constitute State/District Inspection Committee which shall visit and oversee the conditions in the institutions and appropriateness of the processes for safety, wellbeing, permanence, etc. and review the standards of care and protection being followed by the institutions. The inspection shall be carried out once in every three months. Audit revealed that the OH/SH at Angul, Berhampur (Girls) and Rourkela were never inspected by the State/District Committee during 2012-15. However, the OH/SH (Boys) Berhampur was inspected twice (October 2013 and September 2014) by the State Committee. The District Committee inspected the home on 27 May 2014, only after the escape of JCLs on 26 May 2014. The Departmental representative stated that, OHs and SHs were regularly visited by the Hon‟ble Judges of the High Court, District and Sessions Court, JJBs, CWCs and officers from districts as well as from the State Government. The Committee recommended that the State inspection Committee should conduct random inspection and issue appropriate instruction for ensuring

14 constitution of District Management Committees and their regular meeting for effective functioning of OHs and SHs in the State.

*****

15 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2019-20 HELD AT 04:00 P. M. ON 20.03.2020 IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE 16 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2020-21 HELD ON 01.10.2020 AT 03:00 P. M. IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

ODISHA LEGISLATIVE ASSEMBLY

PUBLIC ACCOUNTS COMMITTEE

2020-2021 SIXTEENTH ASSEMBLY

6TH REPORT ON C & A. G OF INDIA (GENERAL AND SOCIAL SECTOR) FOR THE YEAR 2013-14 OF RURAL DEVELOPMENT DEPARTMENT

SECRETARIAT OF THE ODISHA LEGISLATIVE ASSEMBLY, BHUBANESWAR-751001

Sl. CONTENTS Page No. 1. Composition of the Public Accounts Committee, 2020-21 i 2. Composition of the Public Accounts Committee, 2019-20 ii 3. Composition of the Public Accounts Committee, 2018-19 iii 4. Composition of the Sub-Committee-V of the Public iv Accounts Committee, 2018-19 5. Introduction v 6. Report 1-10 7. Minutes of the meeting held on 20.03.2020 11 8. Minutes of the meeting held on 20.03.2020 12 (i)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2020-21

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(ii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2019-20

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(iii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N

Shri Narasingha Mishra Leader of Opposition.

M E M B E R S

(iv)

COMPOSITION OF THE SUB-COMMITTEE-V OF PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N Shri Saroj Kumar Samal, M. L. A. M E M B E R S Shri Pravat Kumar Tripathy, M. L. A. Shri Mahesh Sahoo, M. L. A., M. L. A. S E C R E T A R I A T

Shri Amiya Kumar Sarangi, Secretary. Shri Shishir Kanta Swain, Joint Secretary. Shri M. Dungdung, Under Secretary. Shri Prafulla Kumar Parida, Desk Officer. Smt. Baijayanti Pattnaik, Desk Officer.

(v)

INTRODUCTION

I, the Chairman of the Public Accounts Committee having been authorised by the Committee on their behalf present this 6th Report of the C & A. G of India (General & Social Sector) for the year 2013-14 relating to Rural Development Department.

The Public Accounts Committee had examined the above subject in its meeting held on 11.10.2019. The findings and conclusion which are based on the result of the examination of the Committee, presented herewith.

The Public Accounts Committee, 2019-20, finalized the Report in their sitting held on 20.03.2020 and reapproved by the Public Accounts Committee 2020-21 on 01.10.2020.

The Committee place on record their appreciation of the assistance rendered by the officers of the Departments of Rural Development and Finance for their Co-operation. The Committee also place on the record their appreciation for Co-operation rendered by Accountant General (G & SSA), Odisha.

The Committee further express their thanks to the Officers and Staff of the Odisha Legislative Assembly Secretariat for their Secretarial assistance.

Sd/- Bhubaneswar (PRADIPTA KUMAR NAIK) Date: 01.10.2020 C H A I R M A N PUBLIC ACCOUNTS COMMITTEE

R E P O R T

Report of the C & A. G. of India (General & Social Sector) Report No.4 of the year 2015 of Rural Development Department-2013-14

Para-3.5 Implementation of Biju Setu Yojana.

1. Para-3.5.2.1 Selection of sites in deviation from guidelines.

Biju Setu Yojana guidelines provide that bridges should be constructed on such sites of the river/nallah where no other bridge is existing within 10km upstream or downstream of the proposed site and length of bridge should not be less than 25 meters. It has been pointed out by Audit that selection of sites for construction of 13 bridges with estimated cost of ` 20.62 Cr. were made violating the above guidelines and ` 10.58 Cr. were expended as of January 2015. Audit further noticed that construction of 12 bridges, which were earlier, proposed under other plan scheme including there under PMGSY and not taken up for execution were included without examining their eligibility under BSY guidelines. The Department stated that Biju Setu Yojana had been embarked upon by the Govt. when the existing schemes are unable to cater to the requirement of the state to bridge all the missing links on roads of R. D. Departments and some important Panchayat Samiti roads. Although, one of the selection criteria stipulates that the bridges beyond length of 25m are to be taken up on BSY scheme, that some of the identified bridges could not be taken up under any other scheme. Hence, the said bridge works were taken up under BSY to provide all weather communication to the villagers of tribal area, so as to bridge the missing link. The existing guidelines will be reviewed to address such issues. The Department also stated that out of three bridges as pointed out regarding non- adherence to the selection criteria under Biju Setu Yojana, the proposed bridges in Baragarh and Rourkela RW Division i.e. 1) Pathurimunda and 2) Turturi bridges were both on RD roads. These projects were taken up under Plan Scheme during 2010-11 with a view to provide all weather connectivity to the large no of population deprived of such basic facility. Subsequently, after implementation of Biju Setu Yojana on 9th Oct‟ 2011, the above said bridge projects under plan scheme were included under Biju Setu Yojana during 2011-12. Thus the selection of the above said two projects were based on the total population served by providing all weather road connectivity. Similarly, bridge over river Bhaskel of R.W. Division-II, Nawarangapur was identified under Biju Setu Yojana to provide all weather connectivity to the people of Dhodra Adivasi GP & Gobari NK GP to Jharigaon Block headquarters which will improve the socio - economic condition of the tribal locals deprived of basic amenities due to want of an all-weather road connectivity .As such the selection of bridge over river Bhaskel under Biju Setu Yojana was made with the object of serving the tribal people of remote interior pocket which was cut off from the mainstream due to want of all-weather communication facility. Also, there was traffic disruption during heavy rain/high flood on the vented cause ways. The very objective of BSY is to provide an effective all weather road network across the length and breadth of the State. The Committee discussed in detail and dropped the para. 2. Para-3.5.2.2 Award of work without acquisition of land/ improper site survey. Audit noticed that the works were awarded without acquisition of land, site verification, improper site investigation and OPWD code was not followed. In R.W Division, Rourkela, the work of “Construction of small bridge over Jamsara Nallah at 3.700 km on Bandhamunda-Jhirpani Road” was awarded (June

2012) at ` 1.22 Cr. with stipulation to complete the work by May 2013. However, the work could not be commenced due to non-availability of land. As a result, the contract was terminated (January 2015) on the request of the contractor. Further, the estimate was prepared after conducting preliminary site survey and investigation, but the survey report did not indicate non-availability of land.

Four works were awarded at an agreement value of ` 7.68 Cr. for completion during October 2012 to December 2014. However, GAD of the bridge were revised 2 requiring change of foundation from isolated footing to combined footing, open foundation to raft foundation due to poor soil strata and different soil conditions encountered during execution. This resulted in midway change in design and the works were under progress even after 2 to 26 months from the stipulated date of completion. The work of „Construction of Bridge over Dolposh on Jhiripani- Dolposh Road‟ under R.W. Division, Rourkela was awarded (March 2014) at an agreed cost of ` 5.31 Cr. with stipulation to complete the work by September 2015. During execution of work, existence of high tension electricity line on the bridge site was noticed. However, the survey report did not indicate existence of such line. As a result, the GAD was revised (December 2014) reducing the length of the bridge. Thus, due to deficient survey report, the GAD of the bridge which is required to be finalized prior to award of work was finalized after nine months of award of work. The Department stated that the work “construction of S.B. over Jamsara Nallah at 3/700 Km on Bandhamunda-Jhirpani Road” was awarded as the local people had initially agreed to part with their land during the survey for construction of the bridge. But when the bridge layout was given, the locals formed two groups i. e. for and against construction of the bridge. Many a round of discussions were held with them in coordination with revenue authorities to resolve the matter, but of no avail and eventually apprehending law and order problem, the closure proposal of the same was approved by the S.E.R.W Circle, Sundargarh. The bridge was required at that location and it was expected that in due course of time the attitude of the local people might get changed and the bridge might be constructed in future. The preliminary soil investigation was done by drilling holes of diameter about 75 to 100 mm only which was indicative of soil/rock strata at tentative 2 or 3 locations which was analyzed for preparation of GAD. However, the exact strata at the specified foundation locations were assessed by conducting confirmative soil exploration at the time of execution by the agency. In case of all four nos of bridges, the foundations were revised from open to raft, based on confirmative soil exploration data which was inevitable.

3 While preparing the GAD for the work “Construction of bridge over Dolposh nallah on Jhiripani Dolposh road all aspects including the existence of high tension electricity line of PGCIL was taken into consideration. The Electricity Department was previously contacted, but shifting of High Tension line was time consuming and of high cost. Hence it was reconsidered to change the bridge site. Such instance is rare one and beyond control. The bridge work had already been completed. The Committee went through the compliance had a detailed discussion on the para and dropped the para. 3. Para-3.5.3 Preparation of estimate. (a) Excess provision of cement. According to Audit observation preparation of estimate was not accurate due to various deficiencies like excess provision of cement inclusion of unwarranted items, provision of wider carriage way etc. Audit pointed out that due to adoption of State analysis of rates as regards consumption of cement instead of IRC-21-2000 resulted in extra expenditure of `

12.68 lakh which was not justified.

The department explained that the State scheduled of rates and State analysis of rates were the sources to arrive at the rates of various items of work for Govt. work, which was mandatory for all Departments to adopt. Accordingly, the estimates for R.D. Department works had been framed. As regards execution of works, the specifications provided in IRC were to be followed. In the specification, it might be seen that there was provision of minimum quantity of cement to be used in the work in a particular grade of concrete. The actual quantity of cement to be used in the work was decided as per mixed design done in the laboratories by utilizing local sand, stone products and cement to fulfil the requirement/specifications stipulated in the agreement. The contractor quoted the rates for execution of the works as per his mixed design. Hence it could not be concluded that extra expenditure had been incurred by adopting the quantity of cement on the basis of State Analysis of Rates which was for estimate purpose. Since estimate had been prepared as per State S/R

4 and analysis of rates and work executed as per specification, there was no violation of OPWD code. (b) Preparation of estimate for bridges with wider carriageway. The Audit pointed out that estimates for three bridges under three RW

Divisions were prepared for ` 9.63 Cr. considering the carriage way width of 7.5 meter instead of 5.5 meter though the formation width of the roads was 7.5 meter.

Accordingly, expenditure of ` 5.10 Cr. was incurred as of December 2014. Thus, the bridge was constructed with excess width of two meter which was not required as per the IRC standards of specification. The department stated that As per IRC: SP-20-2002, the overall width of small bridge on rural roads with road way width 7.5m should be 6m having carriageway width 5.5m. But it is a fact that after improvement of roads and bridges, the traffic in the roads had increased considerably for which carriage way of 5.5m was not sufficient. After improvement of roads and bridges, many roads are being transferred to P.W.D for further up grading. If the bridge is of 5.5m carriageway, it cannot be further widened to 7.5m. Anticipating steep rise in vehicular traffic after improvement of road, bridge and future up gradation, the carriageway width of 7.5m in GAD has been done. While approving GAD by competent authority all such facts were taken into consideration pragmatically in addition to the provision made in SP- 20-2002. (c) Construction of a bridge with reduced length. The Audit pointed out that as per hydraulic particulars of the bridge over Banjari Nallah on Nileswarpur to NH-6 via Pathanla Road the line are waterway at high flood level was required to be minimum 86.79 meter which was also proposed by the E. E. RW. Division Bargarh to the CE. However the CE prepared and approved (February 2012) GAD for 53.85 meter length which was not in conformity with specification as prescribed by the Ministry of Road Transport and Highways (MORTH), Gol. In response the Department explained that though the Executive Engineer, Rural Works Division, Baragarh proposed a span of 86.79m for preparation of GAD, 5 the design data submitted to the E.I.C office were scrutinized and GAD for 53.85m span was approved to satisfy the discharge and other criteria. (d) Inclusion of unwarranted items. The Audit pointed out that in RW Division Angul, estimates of four bridges included provision of ` 7.58 lakh for construction of diversion roads which were of temporary nature despite the fact that the cost of such diversion road was to be borne by the contractor as per Clause 16 of the contract. This resulted in extension of undue favour to the contractors. The Department stated that the contractor‟s liabilities to construct temporary works requisite which were proper for execution of the work at his cost, as per Clause-16 of contract documents, included construction of mixing platform, vat, barricading, temporary store room, lighting arrangements during night etc. The construction of diversion road though temporary in nature; is an integral part of the bridge work during construction period covering more than one year/one rainy season in most cases. Provision for construction of Diversion Roads had been kept in the estimates as the contractor had to spend money to construct such diversion road. The Department could not impose on the contractor to execute diversion road free of cost. Diversion roads were also used during bridge construction work for smooth movement of the vehicular traffic of general public otherwise the connectivity of the road/ village would have been cut off. The same should not be treated as an inadmissible item in the estimate. Moreover, this item was not covered under Clause -16 of the contract document. After a detailed deliberation, the Committee dropped the para. 4. Para-3.5.4.1 Delay in finalization of tender

It has been pointed out by the Audit that CE, RW, Bhubaneswar invited tender for the work of “Construction of HL bridge over River Devi near Dahanikhia on

Machhagaon-Asilo Road” with an estimated cost of ` 22.73 Cr. in July 2011. After evaluation (August 2011) of the tender, the CE sought (September 2011) approval of

Government which was accorded in July 2012 for ` 25.19 Cr., after nine months.

6 Due to delay in approval of tender, the price validity of the tender had expired (November 2011) and the lowest bidder did not turn up to sign the agreement. As a result, the work was re-tendered (March 2013) and awarded at ` 28.23 Cr. leading to avoidable expenditure of ` 3.04 Cr. Thus delay on approval of tender by the

Government after lapse of validity of tender led to avoidable expenditure. The departmental compliance stated that there had been inadvertent delay in approval of tender by Govt. in R.D. Department as the tender was also to be got approved from Finance Department, tender premium being 12.89% excess over the corresponding estimated cost of SoR-2010 and 1st time tender. Such a decision cannot always be taken within the prescribed time schedule as the justification of higher rate need to be thoroughly examined at different level. In the meantime, the SoR-2012 came into force with effect from12.06.2012. The bidder, after receipt of acceptance offer from the Department, requested to award the work at 12.89% excess over the SoR-2012. This was not permissible as per codal provision. Hence, Department had no alternative but to go for retender. After retender the work was awarded at 11.70% excess on SoR-2012. This tender premium was less than the corresponding previous tender premium. Even if the work could have been started after 1st time tender, the cost of the project would have escalated on account of revision of price of labour, material, POL etc due to change in the SoR. The Committee after detailed discussion with the departmental representatives and officials of the Office of the Accountant General dropped the para with the recommendation that adequate steps should be taken for improvement in the system to avoid delays. 5. Para-3.5.4.2 Bridge remained incomplete due to invitation of part tender

As per audit observation the E.E RW Division, Raygada proposed (June 2013) to take up five Steel Decking Bridge with estimated cost of ` 9.72 Cr. to provide connectivity in hilly terrain and inaccessible areas. The work involved construction of civil structure (foundation and substructure) and Steel deck span (Super structure). The EIC instructed (October 2013) EE to invite tender for civil structure only

7 excluding construction of steel structure. Accordingly, the civil works were awarded

(January-February 2014) for ` 4.14 Cr. with stipulation to complete the work by

April –May 2014. Out of five bridges, civil works for three bridges were completed by June 2014 and in two other cases, the works were completed by December 2014. Though, civil works for all the five bridges were completed, tender for super structure was not finalized due to which the bridges could not be completed. The Department stated (May, 2015) that the steel super structure works were awarded to a Central Public Sector Undertaking after completion of civil works. The fact, however, remained that the tender was finalized only in February 2015 after a delay ranging from two to eight months from completion of civil works which ultimately delayed completion of the bridges. The Departmental compliance stated that earlier, the department was executing conventional R.C.C bridges. But it was observed that in remote areas of some of the difficult IAP districts, many big contractors were not interested to take up R.C.C bridges. To tide over such problems, it was decided that at some of such locations, construction of bailey bridges would be tried out. In bailey bridges, it was decided to take up steel superstructure through CPSUs who had the expertise. Hence, tender of civil works involving less amount were invited and awarded. The construction of civil structure in respect of all the five cases had been completed since December 2014. The superstructure work had been awarded to CPSU after obtaining the offer on completion of civil works. This was the normal practice where 2 agencies were involved. All the bridges had been completed since March 2016. The Committee accepted the explanation and settled the para. 6. Para-3.5.4.3 Delay in execution of agreement

As per Paragraph 3.5.18 (vii) of OPWD Code, volume-I and instruction of RD Department (July 2010) agreement should be executed within 15 days of approval of tender. Audit noticed that in two out of eight R.W. Division (Angul and Rayagada), tenders for five works were accepted during March 2012 to October 2013, but the

8 concerned EEs executed agreement between July 2012 and January 2014 i.e with a delay ranging from 85 to 250 days. Thus, delay in execution of agreement contributed to delay in commencement of work. The Departmental representative in their explanation stated that as per codal provision agreements were to be drawn within 15 days from finalization of tender. However, due to some inevitable reasons the agreements could not be executed in time. Such instances were rare ones. All the Executive Engineers had been instructed to draw the agreements in time and avoid delay. The Committee expressed its displeasure over delay in commencement of work with the assurance of Secretary, Rural Development Department that the mistake would not be repeated in future, the Committee settled the para. 7. Para-3.5.4.4 Idle expenditure due to non-construction of approach road

Audit pointed out that in RW Division, Rourkela, Construction of the bridge over Turture Nallah including approach road was awarded (November 2011) at `

1.28 Cr.. Although the Construction of bridge was completed in December 2012 at an expenditure of ` 1.23 Cr., due to non-construction of approach road by EE, the bridge could not be made trafficable rendering the entire expenditure idle. The Department stated that the construction of bridge over Turturi Nallah was taken up by R.W. Division, Rourkela under BSY. But the approaches were already taken up under other scheme. Hence the provision of approaches was not included in bridge project. However, in the meantime the bridge approaches had already been completed. The Committee dropped the para. 8. Para-3.5.5 Monitoring and supervision

Audit noticed that Paragraph 7 of BSY Guidelines prescribes two tier quality assurance mechanisms for bridge. The field officers form the first-tier and independent State Quality Monitors (SQMs) who form the second tier were to be appointed by the Government to ensure quality. Though the scheme was 9 implemented in October 2011, the Department initiated the process of engaging independent SQM only during 2013-14 which was not finalized till January 2015 due to which no inspection was done by SQM. Though EEs were required to conduct minimum prescribed 10 per cent check measurement, no such check measurement was done in eight test checked divisions. The Department explained that Third Party Independent Quality Monitoring System for non-PMGSY work had been established. This will ensure quality monitoring of bridge work and other major works taken up under Rural Works organization. There was no provision of SQM for inspection of non-PMGSY works in the OPWD code. The departmental engineers such as J.E., A.E. A.E.E & E.E. were supervising all the projects. Superintending Engineer of the concerned Circle were also regularly visiting the bridge sites. Besides, the Chief Engineer/Engineer-in- Chief was also visiting the sites as and when required. The Executive Engineer was required to check measure 10% of the measurements of important items in respect of work costing more than ` 2.00 lakh.

The Executive Engineers had been instructed to adhere to the provision strictly. The Committee accepted the departmental explanation and discussed in detail the paragraph 3.5 of C & A. G (For the year 2013-14) on implementation of Biju Setu Yojana. The Committee recommended that the paragraph be dropped with the observation that in future whatever objections raised by C & A. G. should be taken into account. At the same time, the Committee desired that the guidelines for taking-up BSY for the year 2019 should be immediately prepared and the copy of the same be sent to the Odisha Legislative Assembly Secretariat for information of the Committee members at the earliest.

*****

10 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2019-20 HELD AT 04:00 P. M. ON 20.03.2020 IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE

11 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2020-21 HELD ON 01.10.2020 AT 03:00 P. M. IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE

12 PRESENTED TO THE ODISHA LEGISLATIVE ASSEMBLY ON THE 3RD OCTOBER, 2020

ODISHA LEGISLATIVE ASSEMBLY

PUBLIC ACCOUNTS COMMITTEE

2020-2021 SIXTEENTH ASSEMBLY

7TH REPORT ON C & A. G OF INDIA (GENERAL AND SOCIAL SECTOR) FOR THE YEAR 2013-14 OF RURAL DEVELOPMENT DEPARTMENT

SECRETARIAT OF THE ODISHA LEGISLATIVE ASSEMBLY, BHUBANESWAR-751001

Sl. CONTENTS Page No. 1. Composition of the Public Accounts Committee, 2020-21 i 2. Composition of the Public Accounts Committee, 2019-20 ii 3. Composition of the Public Accounts Committee, 2018-19 iii 4. Composition of the Sub-Committee-V of the Public iv Accounts Committee, 2018-19 5. Introduction v 6. Report 1-11 7. Minutes of the meeting held on 20.03.2020 12 8. Minutes of the meeting held on 01.10.2020 13 (i)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2020-21

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(ii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2019-20

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(iii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N

Shri Narasingha Mishra Leader of Opposition.

M E M B E R S

(iv)

COMPOSITION OF THE SUB-COMMITTEE-V OF PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N Shri Saroj Kumar Samal, M. L. A. M E M B E R S Shri Pravat Kumar Tripathy, M. L. A. Shri Mahesh Sahoo, M. L. A. S E C R E T A R I A T

Shri Amiya Kumar Sarangi, Secretary. Shri Shishir Kanta Swain, Joint Secretary. Shri M. Dungdung, Under Secretary. Shri Prafulla Kumar Parida, Desk Officer. Smt. Baijayanti Pattnaik, Desk Officer.

(v)

INTRODUCTION

I, the Chairman of the Public Accounts Committee having been authorised by the Committee on their behalf present this 7th Report of the C & A. G of India for 2013-14 (General & Social Sector) Report No. 7 of the year 2014 relating to Rural Development Department.

The Sub-Committee-V of Public Accounts Committee had examined the above subject in its meetings held on 07.06.2018 and 09.07.2018. The findings and conclusion which are based on the result of the examination of the Committee, presented herewith.

The Public Accounts Committee, 2019-20, finalized the Report in their sitting held on 20.03.2020 and reapproved by the Public Accounts Committee 2020-21 on 01.10.2020.

The Committee place on record their appreciation of the assistance rendered by the officers of the Departments of Rural Development and Finance for their Co-operation. The Committee also place on record their appreciation of the Accountant General (G & SSA), Odisha and their staff for rendering assistance by them to the Committee in examination of the compliance received from the Department.

The Committee further express their thanks to the Officers and Staff of the Odisha Legislative Assembly Secretariat for their Secretarial assistance.

Sd/- Bhubaneswar (PRADIPTA KUMAR NAIK) Date: 01.10.2020 C H A I R M A N PUBLIC ACCOUNTS COMMITTEE

R E P O R T

Para-3.2.3 Contract Management. 1. Para-3.2.3.1 Execution of work without prior acquisition of land According to Audit observation four Executive Engineers (Baripada, Ganjam- II, Jajpur-I and Jajpur-II, Jaraka) entered into agreement for construction of five works worth ` 16.55 crore without prior acquisition of land. As a result, the works could not be completed within the stipulated time. Three works were completed with an additional cost of ` 1.62 crore and other two works remained incomplete even after incurring expenditure of ` 1.59 crore. (a) RW Division, Jajpur-II at Jaraka In response the Department explained that work was a PMGSY Road. There is no provision of land acquisition in PMGSY Road. The local villagers had consented to spare their land for improvement of the road in respect of package OR- 13-117 when the DPR was prepared. But, during executing of work some people did not stick to their earlier commitment and did not allow the agency to execute further work prior to closure of the contract, 400mtrs of C. C road was constructed. In the meantime, the land dispute had been resolved and balance work was awarded to another agency with stipulation to complete the work by December, 2015 and the work was completed and opened for traffic from December, 2016. According to Audit para the original work was approved for closure in September, 2012 and in the next month the MOU was signed by the AE with land owners. Due to execution of work without physical possession of land, the state exchequer suffered an extra liability of ` 35.51 lakh in the form of cost escalation and time escalation of more than four years. The Committee went through the compliance and considering the statement of the Departmental representative during discussion dropped the para with recommendation for formation of district wise committee to sort out land problem of PMGSY. (b) RW Division, Jajpur-I As per Audit para though the work (package No. OR-13-44) was scheduled to be completed on 11.04.2008, it was extended upto July, 2010 for which the state exchequer suffered an extra expenditure of ` 17.38 lakh. Further, the work was taken-up knowing the fact that the existing road was running on land owned by East Coast Railway. The Department could not produce the DPR of the project to the audit. On their reply the Department stated that after completing the C. C. road for a length of 3,650 Km. against packages No. OR-13-44, the contract was closed due to non-availability of adequate land for road. After resolving the land problem, the balance work for 1 KM. had been awarded to another agency and the work had been completed since April, 2015. Regarding DPR the Department replied that since 2014-15, 100% funding was from Government of India. Everything had been approved by them. What were changed in the DPR everything had been approved by them? The Committee went through the compliance, had a detailed discussion on para and asked the Department to supply the original and revised estimate of 1 Km. road. Further the Department was directed contain to the East Coast Railway to be careful in future on such cases. (c) RW Division, Baripada As per Audit the land acquisition for the project (construction of High Level Bridge over river Budhabalanga at 11th Km. on Kuchilakhunta Pratappur Road under PMGSY) was made by the Executive Engineer after 18 months of award of the work which resulted in cost overrun by ` 1.09 crore and time overrun by 29 months. The Department stated that construction of High Level Bridge over river Budhabalanga at 11th Km. on Kuchilakhunta Pratappur Road under PMGSY had been completed in March 2013 against stipulated date of completion of December 2011. The delay in completion of work was due to some unavailable hindrances for which E. O. T. had been granted considering the same. After discussion the Committee asked the Department to clarify on the cost overrun and time over run on construction of approach road. (d) RW Division, Ganjam-II According to Audit observation non-acquisition of land before award of work for the package No. OR-11-150/VIII, under R. W. Division, Ganjam/VII resulted the extra liability of ` 30.16 lakh and the audit suggested for fixing responsibility on the officer responsible for such extra liability. The Department stated that it was also a PMGSY road and completed on 30.08.2013. The Committee accepted the Departmental explanation and dropped the para. (e) High Level Bridge over river Sono According to Audit observation, the proposal for land acquisition for High Level Bridge over river Sono on Kaptipada-mankadpada road was made by the Executive Engineer after 16 months of award of the work for which connectivity could not be established till December 2015 which incurred the expenditure of more than ` 128.74 lakh.

2 The Department stated that the construction work of High Level Bridge over River Sono on Kaptipada-mankadpada road was delayed due to land acquisition problem. It had been completed in March, 2018 and opened for traffic. The Committee considered the explanation and dropped the para. 2. Para-3.2.3.2 Award of work without proper survey and investigation It had been observed by Audit that the work of High Level Bridge over Kelua on Udayanagar-Kadampal Road was awarded with an agreement value of ` 13.45 crore which was revised twice with a final value of ` 14.09 crore but remained incomplete till May 2014. The Department stated that basing on the preliminary survey & investigation. GAD was prepared with provision of 11×30.63 mtr span and 400 mtr approach road for High Level Bridge over River Keluo on Udayanagar-kadampal road in the district of Jajpur, which was tentative. During execution of work, the GAD was finally revised to 9×30.63 mtr plus and span of 18 mtr. There is a reduction of overall span of bridge by 43.26 mtr. In the revised GAD the depth of foundation of all wells had been increased from 28.80 mtr to 45.20 mtr for which the cost of the project had been increased from 28.80 mtr to 45.20 mtr for which the cost of the project had been increased by ` 63.22 lakh. During DPR preparation, soil investigation was done at one or two locations. But, during execution, design was done based on soil investigation on each foundation location. Hence, deviations as well as extra out lay of fund were unavoidable. Considering the compliance the Committee dropped the para with the recommendation that full soil testing should be taken up before the tender. Testing should be made at each foundation location. 3. Para-3.2.3.3 Invitation of tender and award of work without physical existence of work site The Audit pointed out that the construction of bridge over “Local nullah at 2 Km on Mangalpur-Bhimakunda road” was awarded at ` 1.38 crore. However, the Superintendent Engineer who had approved the estimate subsequently intimated to Chief Engineer that no such nullah was physically available. Audit suggested to fix accountability on concerned Executive Engineer and Superintendent Engineer for their gross negligence due to which the construction of bridge was delayed for more than two and half years. Besides, the cost escalation of the project for such delay could not be ruled out. The Department stated that basing on the survey & investigation conducted for the proposed bridge over local nallah at 2nd Km on Mangalpur-Bhimkund road in the district of Keonjhar, design and estimate were prepared and work awarded. During execution stage it was noticed that the chainage of the proposed bridge was at 12th 3 Km instead of 2nd Km on Mangalpur-Bhimkund road. The contractor pleaded for not taking up the work at 12 km chainage. Due to the above the contract was closed. The work was taken up after fresh tender and had been completed since March 2016. Committee was dis-satisfied with the explanation given by the Department and instructed to Secretary, Rural Development to take appropriate action as deemed fit. 4. Para-3.2.3.4 Unfruitful expenditure due to execution of work without coordination with railways The audit pointed out that “improvement of the road Salapada to Enderpada extended to NH-5” was completed in June 2009 with an expenditure of ` 2.17 crore but could not be made open to traffic for non-provision of a level crossing as the roads passed through a railway line. Permission from the railways could not be obtained before taking up the work. The Department stated that basing on the actual requirement and for greater interest of the local people, it was proposed to provide a manned level crossing gate at 6th km of Bandalo-Endarpada road at Km 380/19-21 between Dhanamandai-Byree station after due consultation with the Railways Authorities. The fund as demanded by the railways about ` 67.15 lakh was deposited in February 2010 for a level crossing. Instead of construction and maintaining the level crossing, the Railway authorities imposed a number of conditions which involved extra financial burden for which construction of level crossing work delayed. A joint inspection was conducted in January 2014 by the Engineers of Railways, Officers of R.D. Department and Works Department. The Railway authorities had completed a manned level crossing in September 2014. Considering the explanation the Committee dropped the para and advised the Department to be careful in future for this type of expenditure. 5. Para-3.2.3.5 Non-retention of valid performance security from the contractors The General Conditions of Contract (GCC) of PMGSY stipulates that the successful bidder shall provide performance security of five per cent of the contract price which shall be valid for period of 45 days from the date of completion of construction and maintenance work. If the performance security is in the form of bank guarantee, which has one year validity initially, the validity periods required to be extended for the required period otherwise the employer would recover the same from any dues payable to the contractor. As per para 3.2.2.1 of the SBD, the contractor shall do routine maintenance of roads and keep the entire road surface and structure in defect free condition during the entire maintenance period which begins at completion and ends after five years. Further, Government instructed (March 2007) that contractors furnishing false document for consideration of tenders are to 4 be blacklisted by the Chief Engineer with the approval of concerned Administrative Department. The Audit pointed out that is 10 RW Division contractors did not turn up for maintenance of roads during the five year maintenance period in 118 works completed with expenditure of ` 240.58 crore. But the EEs did not take any action to forfeit the performance security or get the repair works done charging the expenditure against the performance security of the contractors. In eight RW divisions, the validity period of bank guarantees worth ` 5.23 crore towards performance security for 61 works had been expired since one to 35 months. In Cuttack-I Division, one agency submitted fake fixed deposit of ` 6.44 lakh and two agencies under EE, RW Division, Ganjam-I furnished fake bank guarantees. The Department stated that SD of 5% and Performance Security of 2½ % of the contract price was obtained through unconditional bank guarantee. But, due maintenance work had been done through the agencies except one package work of RW Division-II, Jajpur. In case of RW Division-II, Jajpur, the performance security had been forfeited. The routine maintenance cost was also borne by the State Government and not by the agencies. The contractor Sri Bijaya Kumar Swain (RW Division, Cuttack-I) had signed the agreement after furnishing required amount of EMD afresh. So far as fake bank guarantees of RW Division, Ganjam-I are concerned, the bank guarantees submitted by M/s Mubarak Buildcon Pvt. Ltd. and M/s Tabraj Ahmad had been replaced. However, the field functionaries had been instructed to exercise due care in verifying securities/bank guarantee before entering into agreement. Committee was dis-satisfied with the explanation and directed that the Department should take a strict view and a policy guide line or executive guide line should be given to the Executive Engineers so that they would be vigilant and after that the para would be dropped. 6. Para-3.2.3.6 Grant of extension of time to the contractors The Audit observed that the provision of para 3.5.30 of OPWD code Vol-I for grant of EOT for completion of a work had not been followed strictly. Out of eleven test checked divisions extension of time were applied by the contractors after one to 16 months of completion of work and in 42 cases after one to 48 months of actual occurrence of hindrances instead of within 30 days of occurrence of hindrances. In four cases, through application for EOT was submitted within the prescribed period, the same was forwarded for sanction after four to six months of receipt of application.

5 The Department stated that the contractors were always encouraged to complete the work within the stipulated period, time was deemed to be essence of contract on the part of the contractor. If, however, the contractor could not complete the work due to unavoidable hindrances in execution thereof or on any other ground, he could apply for extension of time. Although the contractor was required to apply for extension within 30 days of occurrence of hindrance for which extension was sought for, it did not debar grant of extension sought later as it was always competent to a promise to waive delay and accept performance, after the stipulated time. Where there was a land problem or forest clearance, in that case the Department did not levy compensation. At the time of negotiation regarding forest land clearance/land problem takes longer time. In that case, if the Department closed the work then the work would not be completed. Always the Department hoped that the problem would be solved, if the work was closed. After that the forest clearance would be given or the land then retendered would demand extra cost. In that case, the Department became lenient and wanted to complete the work with the same contractor with penalty which led to the delay. After a detailed deliberation the Committee dropped the para. 7. Para-3.2.3.7 Non-withholding of amount towards differential cost of estimated cost and quoted amount The Audit observed that the work of “Construction of HL Bridge over river Kukarkata nullah on Ghatagaon-Chinamaliposi road” was put to tender by Executive Engineer RW Division, Keonjhar-I, While accepting the tender of the lowest bidder of ` 4.31 crore, the CE instructed (July 2011) Executive Engineer to draw the agreement and to withhold ` 48.00 lakh from the running bills till satisfactory completion of one item (earth work in all kinds of soil in approve borrow areas including leads and lifts and carriage with manual means) as the rate quoted for that item by the contractor was abnormally less (94.85 per cent) than the estimated cost Accordingly, Executive Engineer executed (November 2011) the agreement to complete the work by February 2013. Further, scrutiny revealed that the contractor did not execute that item of work. But, the Executive Engineer did not take any step to withhold the amount although ` 3.62 crore was already paid in 13 running account bills by February 2014. As such, undue favour was extended by the Executive Engineer to the contractor by not withholding the amount as instructed by Chief Engineer. The Department stated that Due to oversight, the differential amount of ` 48.00 lakh could not be withheld from running bills of the contractor as reported by the concerned Executive Engineer. Subsequently, the quantity of the said item was reduced to 11681.20 cum as against 52176 cum for which the differential cost 6 recoverable had been worked out to ` 10, 74,670/- out of this ` 5.00 lakh had already been withheld by Executive Engineer, R.W. Division, Keonjhar. The balance differential amount had been settled at the time of final bill. The work had been opened to traffic since 18.02.2016. The Committee accepted the Department al compliance and settled the para. 8. Para-3.2.3.8 Short recovery of penalty after rescission of agreement The Audit observed that in four test checked Divisions (Cuttack-I, Ganjam-I, Ganjam-II, Jajpur-I) contracts for four works of ` 11.88 crore were rescinded and against the recoverable penalty of ` 2.57 crore, Executive Engineers recovered with hold only ` 0.50 crore leading to short recovery and extension of undue benefit of ` 2.07 crore to the contractors. The Department stated that the balance amount otherwise payable to the contractor had been withheld by the concerned Divisions. Further stated that the shortfall should be recovered by issue of notice to the contractor by requiring other Divisions/Departments. If all the above said efforts proved futile, as a measure to last resort, money suit would be filled against the defaulting contractors. Necessary instruction in this respect had been communicated to the concerned Executive Engineers. The Department stated that notice had been issued to the contractors for recovery of the amount. Security deposit of ` 7.72 lakhs and miscellaneous deposit of ` 5.5 lakh had already been forfeited. The contractors who failed to deposit the recovery amount were debarred from taking part in tender. The Committee recommended to furnish the detail compliance regarding action taken by the Department to recover the amount from the contractor and then the matter would be dropped. 9. Para-3.2.3.9 Non-renewal of insurance coverage of PMGSY roads Clause 13 of General Condition of Contract (GCC) for PMGSY works stipulated that the contractor at his cost, is required to provide insurance cover from the date of commencement to the date of completion of the works, plant, materials and other loss or damage to the property personal injury or death and the currency of the insurance should be kept valid till actual completion of work. As per clause 52 of GCC, it is a fundamental breach of the contract if the contractor fails to provide insurance coverage. Audit pointed out that 106 PMGSY works with contract value of ` 267.64 crore under execution during 2010-13 in respect of 10 RW Divisions continued beyond the stipulated date of completion for a period ranging from one month to five 7 years. The contractor neither furnished the requisite insurance cover for the extended period nor did the EEs insisted on the same. The Department stated that the 106 PMGSY works had already been completed without any accident and the contractors would be instructed to extend the insurance coverage for the extended period. An advisory had already been issued to all EE. The Committee recommended that EIC should issue an order to all Executive Engineers and he should ensure that the insurance coverage for the further period is taken. If not, no EOT will be considered. Further the Committee suggested that Accountant should also be careful before passing the RA bill on giving EOT. He had to see what the deviation, whatever it might be. He has to see whether the procedural aspects have been taken or not. And then only that will be checked by the Executive Engineer. Executive Engineer is not supposed to see all these things, because he has to look into the work in the field. Further the Committee expressed their opinion that AG should give instructions to their officer and in that way they will also be responsible for the work. The Committee settled the para with this suggestion. 10. Para-3.2.3.10 Avoidable expenditure on state Highways Audit pointed out that Executive Engineer, RW Division, Deogarh awarded (between November 2011 and June 2012) construction work of three roads for execution with an agreed cost of ` 10.46 crore though the same Executive Engineer had written to the Executive Engineer, R & B Division, Sambalpur to take possession of these roads as per the decision of Works Department. Executive Engineer, Deogarh instructed (July 2012) stopping of the works of these packages after an expenditure of ` 4.38 crore after being pointed out to him in July 2012. Thus, execution of these works under PMGSY despite the fact that these roads were under State Highways as not in conformity with the instruction issued by the department and this led to avoidable expenditure of ` 4.38 crore. The Department stated that though, the Works Department declared 3 roads namely NaktideulaBatagaon-Nuapada upto the Aunli River (46km), Aunli River- Chandipada (12.50 km) and TaktapositChhak-Deogarh (57.50 km) as State Highway during June 2005 for improvement as “Ranchi-Vijaywada Corridor”, the same could not be taken over by Executive Engineer, R & B Division. Sambalpur till April’ 2012. The development of road cannot be left for years together anticipating that the road will be developed under some other scheme. Corridor Project included the road “Nuapatna to Tungamai” (taken in OR-08- 44) for a length of 12.06 Km and road “Sunamunda to Chhalipali” (taken in OR-08- 37) for a length of 10.05 km from a part of Naktideula-Batagaon-Nuapadaup to Aunli

8 River and Taptaposi Chhak to Deogarh stretch respectively. The 3rd road namely “RD road to Kuasapnga (taken in OR-08-60) for a length of 4.22 km, is an independent road and does not overlap with the corridor project, the said has been completed in July 2013. The improvement of work in package No. OR-08-37 and OR-08-44 were taken up under PMGSY in phase-VII under new connectivity. After achieving progress of 79.40% and 40.87 % against package No. OR-08-37 and OR-08-44 respectively, the works were stopped immediately by foreclosing contract for handing over the said stretch to R & B Division, Sambalpur on receipt of information from Works Department to transfer. The local people had been benefitted by all-weather road which had been improved partly upto BT/CC & metalling standard. The above improvement portion could also serve at the time of upgrading of the road to 2 lane standard under Vijayawada-Ranchi corridor. Presently the stretch of road included above 2 no of packages which were being improved under Vijaywada-Ranchi corridor. The Committee recommended that the work had been done for public interest and there was no double payment for the work and therefore the para should be dropped. 11. Para-3.2.3.11 Delay in payment of final bills after completion of works Clause 50.1 of the Contract Agreement of PMGSY provides that the Contractor shall submit detailed account of the total amount payable within 21 days of the issue of certificate on completion of work. The Engineer shall certify any payment due to the contractor within 42 days of receiving the detailed account. The payment of final bill for execution of works will be made within 14 days thereafter. The Department also instructed (November 2010) that in no case the bills of the executants should be kept pending beyond three months. Audit para revealed that in 161 cases there was inordinate delay in making final payment to the contractors. In 80 cases the delay ranged up to 200 days in 63 cases the delay was between 200 and 500 days, in 16 cases between 501 and 1000 days and in two cases beyond 1000 days. This was indicative of poor management of contract as the dues of the contractors were paid much after the stipulated period of 90 days. The Department stated that as per MORD guidelines the finalization of the works executed was taken up after final inspection of the work by SQM/NQM and issue of final completion certificate with due compliance of all outstanding ATRs. After accomplishment of all these formalities, final bills were considered for effecting pass and payment. Such process took time depending upon the inspection of SQM/NQM. The delay in passing of final bill was not intentional but due to circumstances beyond the control of Departmental officers. Sometimes the

9 contractors were not available to participate in final measurement because of their involvement in other works. Final payments were released after sanction of EOT, extra items, deviations etc. In some cases, the delay might be due to litigation by the contractors, court cases, disputes raised by the contractor and vigilance cases etc. The cases of delay were negligible compared to the total no. of contracts executed under PMGSY. However, the matter was being pursued for timely finalization of bills. This was also being monitored regularly by higher officers. The Committee discussed the matter and decided to drop the para. 12. Para-3.2.3.12 Non-recovery of mobilization advance Clause 45 of the GCC stipulates that employer will provide mobilization advance to the contractor for new equipment brought to the site against submission of unconditional bank guarantee for the amount equal to the advance payment which shall remain effective till recovery of such advance. The advance payment shall be repaid by deducting proportionate amounts from payment to the contractor following the schedule of completed percentage of works. The Audit observed that Executive Engineer, RW Division, Cuttack-I paid (January 2012) mobilization advance of ` 50 lakh to contractor for a work (package OR-07-100) against submission of bank guarantee for ` 50 lakh which was valid up to 31st March 2012. The Executive Engineer recovered ` 39 lakh from the contractor as of April 2013 and the balance amount of ` 11 lakh was yet to be recovered and the validity of the bank guarantee against which advance was given had expired since March 2012. The Departmental compliance stated that as indicated by the Audit, the balance advance of ` 11.00 lakh out of ` 50.00 lakh had been recovered from the 12th RA and final bill of the work OR-07-100/Ph-VII against Vr No. 42 dt. 31.08.2013 of R.W. Division Cuttack-I. Similarly, mobilization advance of ` 6.80 lakh paid (August 2012) by the Executive Engineer, RW Division, Deogarh to contractor against a work (Package No. OR-0/8-57) was not recovered, though he had already been paid (May 2013) an amount of ` 54.80 lakh. The Executive Engineer, RW Division, Deogarh had already recovered the outstanding mobilization advance of ` 6.80 lakhs vide Vr. No. 15 dt 30.05.2015. It was stated that advances were granted against unconditional bank guarantees and in the event of non-recovery the said bank guarantees could be encashed securing the interest of the Department. This was the normal procedure. 10 The Committee discussed and advised to make a mobilization advance procedural guide line and instruct the Executive Engineer and Divisional Accountant to recover the mobilization advance at the time of final running advance bill. The para was settled. 13. Para-3.2.3.13 Sub-standard execution of road work Clause 52.2 of SED of PMGSY provided that failure to complete the work as per the specifications and failure on the part of the contractor to rectify the defects within a reasonable period of time as determined by the engineer is a fundamental breach of contract and the agreements are to be terminated with imposition of penalty of 20 per cent of the value of the leftover works as provided in the contract data. The Audit pointed out that Executive Engineer, RW Division, Jajpur-I revealed that the work (PMGSY package No. OR-13-136/VIII) was awarded (July 2009) to a contractor at ` 3.72 crore for completion by July 2010. As reported by the State level Quality Monitor (SQM) and Divisional Officer, the work executed by the contractor was substandard due to defects like inappropriate compaction, low cement content in cross drainage work, non-maintenance of proper slopes, etc. The agency was issued (February 2010 to August 2013) show cause notices to rectify the defects. But the agency did not rectify them and left the work incomplete. The Executive Engineer neither rescinded the agreement imposing penalty nor got the balance works executed through other agency as of June 2014. The Department declared that the work “Improvement to Barundei Mukunapur road” in PMGSY package No. OR-13-136(A) under phase-VIII was entrusted to M/s Haraparbati Construction vide agreement No. 05 PMGSY of 2009-10. The work was completed in all respect on 07.05.2014. So far rectification of defects were concerned, it was stated that the defects had been rectified by the contractor at his own cost before the concerned State Quality Monitor had inspected the said road and finally regarded the work as “Satisfactory” on 26.07.2014. The Committee discussed and instructed the Department to submit the State Quality Monitor Reports for settlement of the para. 14. Para-3.2.4 Monitoring and Supervision. Para 2.2.55 of OPWD Code, Volume I provides that Executive Engineer should inspect every important work under his jurisdiction at least once a year and furnish a report on its condition to the SE with suggestions for improvement, repair or otherwise as specified in the statutory or executive instructions issued by the Department. The audit revealed that no Registers of inspection were maintained at Division level as required under Appendix-II of OPWD Code Volume-II. In absence of these, the number of roads inspected by the Executive Engineer and

11 remarks/recommendation made could not be ascertained by Audit. Quality Control test of PMGSY works and major bridge works were conducted at Government approved laboratory. But, quality control test was not conducted for construction of building and maintenance and repair works of roads either at Divisional level or at Government approved laboratories. a. The Departmental compliance stated that the Divisional Officers had been instructed to maintain the “Register of Inspection” at their level for recording number of works inspected by them with remarks/recommendations, if any; and b. Steps had been taken for quality assurance of major building, road and bridge projects (Non-PMGSY) through Independent Quality Monitoring system in addition to supervision and quality control by departmental engineers. The Committee advised to issue a guide line for proper supervision and dropped the para.

*****

12 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2019-20 HELD AT 04:00 P. M. ON 20.03.2020 IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE

13 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2020-21 HELD ON 01.10.2020 AT 03:00 P. M. IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE

14 PRESENTED TO THE ODISHA LEGISLATIVE ASSEMBLY ON THE 3RD OCTOBER, 2020

ODISHA LEGISLATIVE ASSEMBLY

PUBLIC ACCOUNTS COMMITTEE

2020-2021 SIXTEENTH ASSEMBLY

8TH REPORT ON C & A. G OF INDIA (GENERAL AND SOCIAL SECTOR) FOR THE YEAR 2014-15 OF SCHOOL AND MASS EDUCATION DEPARTMENT

SECRETARIAT OF THE ODISHA LEGISLATIVE ASSEMBLY, BHUBANESWAR-751001

Sl. CONTENTS Page No. 1. Composition of the Public Accounts Committee, 2020-21 i 2. Composition of the Public Accounts Committee, 2019-20 ii 3. Composition of the Public Accounts Committee, 2018-19 iii 4. Composition of the Sub-Committee-V of the Public iv Accounts Committee, 2018-19 5. Introduction v 6. Report 1-23 7. Minutes of the meeting held on 20.03.2020 24 8. Minutes of the meeting held on 01.10.2020 25 (i)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2020-21

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(ii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2019-20

Shri Dasharathi Satapathy, I. A. S., Secretary. Smt. Sushila Mallick, Deputy Secretary. Smt. Baijayanti Pattanayak, Under Secretary. Shri Partha Sarathi Das, Section Officer.

(iii)

COMPOSITION OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N

Shri Narasingha Mishra Leader of Opposition.

M E M B E R S

(iv)

COMPOSITION OF THE SUB-COMMITTEE-V OF THE PUBLIC ACCOUNTS COMMITTEE, 2018-19

C H A I R M A N Shri Saroj Kumar Samal, M. L. A. M E M B E R S Shri Pravat Kumar Tripathy, M. L. A. Shri Mahesh Sahoo, M. L. A., S E C R E T A R I A T

Shri Amiya Kumar Sarangi, Secretary. Shri Shishir Kanta Swain, Joint Secretary. Shri M. Dungdung, Under Secretary. Shri Prafulla Kumar Parida, Desk Officer. Smt. Baijayanti Pattnaik, Desk Officer.

(v)

INTRODUCTION

I, the Chairman of the Public Accounts Committee having been authorised by the Committee on their behalf present this 8th Report of the C & A. G of India (General & Social Sector) for the year 2014-15 relating to School and Mass Education Department.

The Sub-Committee-V of Public Accounts Committee, 2018-19 had examined the above subject in its meetings held on 13.06.2018, 26.07.2018, 21.01.2019 and 21.02.2019. The findings and conclusion based on the result of the examination of the Committee are presented herewith.

The Public Accounts Committee, 2019-20, finalized the Report in their sitting held on 20.03.2020 and reapproved by the Public Accounts Committee 2020-21 on 01.10.2020.

The Committee place on record their appreciation of the assistance rendered by the officers of the Departments of School and Mass Education and Finance for their Co-operation and Office of the Accountant General (General & Social Sector), Odisha.

The Committee further express their thanks to the Officers and Staff of the Odisha Legislative Assembly Secretariat for their Secretarial assistance.

Sd/- Bhubaneswar (PRADIPTA KUMAR NAIK) Date: 01.10.2020 C H A I R M A N PUBLIC ACCOUNTS COMMITTEE

R E P O R T

1. Para-2.1.6.1 Habitation without access to secondary school It was revealed from Audit para that the framework for implementation of RMSA, inter alia, provides for a secondary school within a reasonable distance of five kilometers from each habitation. As per the Perspective Plan prepared by the Department, 1,535 secondary schools (new and upgraded) were to be established during 2009 to cover all eligible habitations. The coverage of habitations by secondary schools increased by 2.58% between 2009-10 and 2014-15 but the uncovered eligible habitations to total habitations increased from 1.42 per cent in 2009-10 to 3.54 per cent in 2014-15. Audit observed that only 773 schools were established as of March 2015 due to delay/non-commencement of construction of new buildings in upgraded schools. However, no Perspective Plan was prepared beyond 2012. As of March 2015, out of 89,341 habitations in the State, 3,167 habitations (3.54 per cent) did not have a secondary school within the prescribed distance which included 1,195 eligible habitations in eight sample districts. During survey conducted by departmental officials in presence of Audit, 120 out of 649 students stated that they had to cover more than five kms to reach the school. The Department assured (May 2016) that the matter would be looked into. In the explanatory note the Department stated that the Perspective Plan was prepared during 2009 on the basis of the projected figures/information. Out of the 1535 new high schools targeted to be opened, 773 new schools had been opened by means of up-gradation till 2014-15 under RMSA. The no. of habitation was increased from 87095 during 2009-10 to 89341 during 2014-15 i.e., increase of 2.58%. However, the number of un-served habitations of 3167 in 2014-15 was as per the mapping report collected from the Districts. Out of the 90,731 habitations during 2016-17, secondary schooling facilities had been provided in 87,208 habitations leaving the no. of uncovered habitations at 3523. These habitations were mostly ineligible for opening of new secondary schools as per RMSA norm. Till date, 864 schools had been opened under RMSA by means of up-gradation. It had been reported by Audit that 120 students had to cover more than 5 kms to reach their school which might be true in case of some sparsely populated habitations. The Committee directed the Department to give details of habitation that had not been covered and steps taken by the Department in this regard and settled the para. 2. Para-2.1.6.2 Non-formation of Core Group and non-preparation of Perspective Plan at school level. The Audit para stated that as per RMSA framework, a Core Group was to be formed at district level comprising governmental and non-governmental persons who would undertake an extensive visit of the district, by interacting with each household to ascertain the educational status and need. Further, a School Management Committee (SMC) was to be formed at each school level who would prepare a school level Perspective Plan and Annual Plan. Annual Work Plans were prepared by the DPC based on the data available in Unified District Information System for Education (UDISE) as well as Census data and not on the basis of actual household and school surveys. Audit noticed that: . OMSM did not maintain any data on the availability of classrooms for secondary level to assess additional requirement for maintaining classroom- pupil ratio at 1:40 as per RMSA guidelines. Similarly, critical infrastructure like laboratories, libraries, drinking water facilities etc. was not assessed. . Though SMCs were formed in all 50 sample schools, no Perspective or Annual Plan was prepared at school level. Committees like Building Committee and Academic Committee were not constituted to oversee construction of infrastructure and conduct of proper academic activities. Thus, the planning process was not conducted as envisaged in the framework. The Department while admitting the fact stated that the district functionaries of RMSA were being strengthened. The Departmental compliance note stated that it was a fact that there was no core group at district level but there existed District Level Planning Committee for preparation of consolidated plan. Besides, District Level Monitoring Committee has also been formed comprising of functionaries of Education Department, NGO representatives, representatives of all other line Departments chaired by the senior most Hon'ble Member of Lok Sabha for better monitoring and supervision of activities implemented under RMSA. It is pertinent to mention here that MHRD, Govt. of India, prescribed in their guideline to prepare the Annual Plans only on the basis of UDISE database. The plans are being appraised by the TSG, MHRD, New Delhi on the basis of the guidelines issued by MHRD from time to time. Likewise, SMCs/SMDCs are in place in all the high schools as per RMSA guidelines, who are also involved in the process of preparation plans, since the Headmasters are submitting the UDISE in DCF from the school level to the block level as well as district level. The MHRD, Govt. of India only approves infrastructural facilities for the schools as per UDISE database and RMSA norms.

2 It is a fact that perspective plan was not prepared at the level of the schools so also the fact that there is no adequate man power to do the work at the level of DPC(RMSA). Therefore, the Planning and MIS Coordinators working under SSA were involved in preparation of perspective plan. However, it is very difficult to monitor the entire planning exercise at state level since the problem of shortage of manpower also lies there. It had been decided that all intervention heads of SSA working in the office of the DPC, SSA at district level would also coordinate the work of RMSA and instructions in this regard had already been issued from Govt. The Committee directed the Department to address the issue on guidance given by the Accountant General in future and drop the para. 3. Para-2.1.6.3 Absence of plan for Vocational Education and IEDSS. The Audit para revealed that the Vocationalisation of Secondary Education scheme was subsumed in RMSA during 2013-14. GoI sanctioned ` 9.41 crore and released (March 2014) ` 4.70 crore. In addition, the State Government also released (March 2014) ` 43.80 lakh. Audit noticed that the Department decided only in May 2015 to open two trades i. e. Information Technology/Information Technology Enabled Services and Automobile from the academic year 2015-16 in 30 schools for 1,500 students. However, the trades were not opened in any of the schools as of December 2015 due to absence of plan. Further, GoI launched IEDSS (Inclusive Education for Disabled at Secondary Stage) scheme with the objective of ensuring retention of all disabled children passing out of Class VIII by creating easily accessible appropriate environment in secondary schools. The scheme was implemented in the State through NGOs. Due to non-preparation of plan and proposal for the period 2012-15 by the Department, the scheme could not be implemented in the State. As a result, disabled students were deprived of the benefits of the scheme, The Departmental compliance note explained that the PAB approved an amount of ` 535.35 lakhs as total outlay with a central share of ` 401.51 lakhs for two trades in 30 schools. The scheme was not implemented since all the required preparatory activities could not be completed by May, 2015. Moreover, many preparatory activities were completed by March, 2016 and therefore, despite of non-implementation of the scheme in 30 selected schools, the PAB, Govt. of India approved 208 schools with 4 trades under Vocational Education. In the present context, the Vocational Education Scheme has been rolled out successfully with 4 trades in all the 208 selected schools. A detailed note on the status of Vocational Education (as on January 2017) in the State is given below for ready reference. 3 Status of Vocational Education under RMSA Odisha Action Taken:  The State has rolled out the NSQF (National Skills Qualification Framework) programme in four trades i.e, 1. IT & ITeS, 2. Retail, 3. Travel & Tourism, 4. Banking Financial Services and Insurance (BFSI) in 208 selected approved schools from 1st December, 2016.  Capacity building of all field functionaries like 30 DEOs, 30 GM (DICs) & Headmasters of 208 secondary schools held on 06th June,16 with the active guidance of Wadhwani Foundation.  MoU had been signed with Wadhwani Foundation on 26.08.2016 at Bangalore for extending technical assistance in implementation of Vocational Education in schools.  State had included the trade subjects with the six compulsory subjects at secondary level. The vocational subject shall find place along with the 3rd languages at secondary curriculum. Notification has been issued by the Govt. vide No. 19724/SME dated 28.09.2016.  Notification on the inclusion of the vocational subject in the secondary curriculum in 2016-17 issued by the Board of Secondary Education, Cuttack vide notification no. 498/ Syllabus/date 30.11.2016.  The printing of Students Handbooks for Level-1 for all the trades (as per PSSCIVE) in Odia language had been completed & distributed to concerned 208 schools.  Selection of Vocational Training Partners (VTPs) completed & a tripartite agreement had been made with 07 selected VTPs on 24th October, 2016.  Collaboration made with the National Skill Development Corporation (NSDC), New Delhi & accordingly agreement made with Sector Skill Councils (SSCs).  Orientation programme of Headmaster & one Assistant Teacher (the in-charge teacher of vocational education) held from 25th-28th October, 2016 at Bhubaneswar.  All Vocational trainers had been deployed at schools by 5th December, 2016 through the VTPs.  One day induction training of all VTs had been completed between 26-30th November, 2016 by the concerned VTPs.  DVDs (E-Contents of IT & ITeS Trade) had been provided & used in all 208 schools. Besides, voice over of E-Contents of WF-SDN is under process & would be provided to students in the month of February, 2016.  Process for establishment of lab was under progress at state level & expected to have been be completed by end of March, 2017.  Besides, one day orientation of all VTs had been held at XIMB, on 17th Dec, 2016 where the DC-cum-Addl. Chief Secretary addressed to the VTs.

4  State Level Steering Committee had been constituted for better monitoring of the programme implementation. Monitoring mechanism (Online) was being developed for the programme at state level. Proposals for reimbursement of expenditure incurred by the NGOs implementing the IEDSS Schemes in Odisha had been submitted to GOI for the year 2012-13, 2013-14 and 2014-15 vide Letter No. 13910/SME, dated 29.05.2012, No.7901/SME, dated 26.03.2013 and No. 1973/SME, dated 31.01.2014 respectively. As against the total reimbursement proposal (claim) of ` 21,33,79,663/- submitted during 2013-14, only ` 1,48,30,200.00 had been sanctioned by GoI and correspondences were being made with GoI for release of funds under IEDSS for the year, 2012-13 and 2014-15. The Committee was not satisfied with the Departmental compliance and directed to submit a detailed note in the matter. 4. Para-2.1.6.4 Non-posting of teaching and non-teaching staff. It was revealed from Audit para that the PAB, while approving the upgradation of new schools and strengthening of existing schools, also approved new teaching and non-teaching posts to these schools from 2009-10 onwards. As against approval of 6,184 teachers, only 1,394 teachers (22.54 per cent) were appointed. In 2012-13 and 2014-15, no teachers were appointed though 5,654 and 1,499 teachers respectively were approved by PAB. In respect of non-teaching staff, no recruitments were made though PAB approved 1,394 posts. In this context, Audit noticed the following: . In all 50 sampled Government schools, teachers were not available for five subjects as of March 2015 and in 13 schools, Teacher-Pupil ratio registered was 1:31 to 1:56 as of March 2015 against norm of 1:30. . In 240 schools, as against requirement of 1,821 teachers, there were 2,359 teachers, resulting in excess of 538 teachers. At the same time, in 974 schools, there were 4,256 teachers against requirement of 7,202, resulting in shortage of 2,946 teachers. In Rayagada district, in three high schools, there were two Physical Education Teachers (PETs) in each school, whereas in 52 schools in the same district did not have a single PET. The Department in their compliance note explained that the PAB had not approved any teaching posts in 2012-13 but approved 152 no. of posts of teachers against which no appointment could be made. The Govt. of Odisha had opened/upgraded 1062 no. of UP (ME) Schools to High Schools, out of which 580 no of schools were covered under RMSA fulfilling the norms for opening of schools.

5 The Director Secondary Education, Odisha was the appointing authority of Secondary School Teachers and steps were being taken to fill up the district-wise vacancies, gradually. There was also a provision for sanction of subject teachers and Head Teachers against the new schools sanctioned under RMSA which was an additional support from MHRD to the State for strengthening the secondary education. Accordingly, PAB had approved 5170 No. of teachers (up to 2013-14) and 754 No. of Head Teachers in different years. The process of rationalization of teachers is also undertaken every year at district level to address the issue of  Posting of required no. of teachers in different schools ; and  Adjustment of surplus teachers in other needy schools. The Committee directed the Department to give compliance note on sub-para on Rayagada district and other points of Sub-paras are dropped. 5. Para-2.1.7 Financial Management. As per Audit observation to achieve the intended objectives of the programme, the GoI and GoO released their share of funds to OMSM for further release to the DPCs for implementation of the programme. During 2009-15, OMSM received ` 1,321.31 crore and utilised only ` 560.76 crore (42.44 per cent). The year wise sanction and receipt of funds is detailed in Appendix 2.1.1. Except, 2014-15, the percentage of shortfall in utilisation of funds in the State during 2009-14 ranged from 51.27 (2009-10) to 94.13 (2010-11). The non-utilisation of funds was due to non- completion of construction of 414 schools, non-conducting of training programmes, non-implementation of VE scheme, etc., as discussed in Paragraphs 2.1.6.3, 2.1.8.1 and 2.1.9.1. Due to slow progress in implementation of the schemes, the State Government could avail of only ` 977.76 crore as against ` 1,752.44 crore approved by the GoI. Audit also noticed the following irregularities: . Advances amounting to ` 516.98 crore, sanctioned in favour of 30 DPCs, 30 DEOs of the Department and three Inspectors of Schools of SC&ST Department, were lying unadjusted, which included ` 58.24 crore in eight sampled districts as of March 2015. The Department assured (May 2016) to initiate a drive to adjust the outstanding advances. . OMSM advanced ` 1.10 crore to 12 institutions ` 96.67 lakh and eight employees ` 13.22 lakh during December 2011 to March 2015 for office contingency, training, renovation work, procurement of teaching kits, etc., which remained unadjusted as of December 2015. Out of them, six employees 6 who took advance of ` 13.17 lakh had already been transferred out of the administrative control of OMSM as of December 2015 and no action was taken to recover the outstanding advances. The Department stated that major amount of advances related to National Council for Educational Research and Training towards purchase of books. . In three, out of eight sample districts, ` 88.43 lakh was diverted for other purposes under the orders of SPD, OMSM and ` 5.13 lakh was diverted for ‘distribution of bicycle’ to students by the DEO, Kendrapara, which is a State sponsored scheme. . Out of ` 21.87 crore released by GoI during 2009-12 under IEDSS scheme, the Department deducted ` 21.87 lakh towards Audit Fee, despite absence of any such provision in the scheme. However, no Audit was conducted and no expenditure was incurred in this regard, as of August 2015. Despite this, the Department furnished full utilisation certificate to GoI. The Department has stated that Govt. of India approves the minutes of the PAB in the month of March/April every year i.e. in the beginning of the Financial Year and the minutes of the meeting are generally issued 1 or 2 months after that. Non-release of first instalment of grant by GoI in time, delayed the process of expenditure. (Instances are there when the first instalment of grant had been released at the fag end of the year and 2nd instalment of grant of a FY had not been released within that financial year.) So, delay in release of funds was partly attributable for slow progress and availing of fewer amounts against approval of PAB. Adjustment of advances in favour of 30 DPCs, 30 DEOs & 3 Inspector of Schools.  Out of the advances amounting to ` 516.98 crore, sanctioned in favour of 30 DPCs, 30 DEOs and 3 Inspector of Schools, a sum of ` 358.53 crore had been adjusted as on 31st December, 2016. Further, UC collection drive was being organized at sub-district level to adjust the outstanding advances.  Outstanding advance of ` 1.10 crore sanctioned to 12 institutions and 18 personnel during Dec, 2011 to March, 2015 had been regularly monitored at State Level. As a result, a sum of ` 0.81 crore had been adjusted till date.  Out of the advances of ` 13.17 lakhs taken by six employees, a sum of ` 12.25 Lakh had been adjusted in the meantime. Further, letters were being issued to their corresponding employer to recover balance advance amount

7 from their salary in case they failed to submit vouchers within the prescribed time.  Diversion of Funds for other purposes- Instruction was being issued to concerned DEOs to recoup the diverted amount. As regard deduction of Audit cost out of the Grants released under IEDSS Scheme during 2009-12, it may be submitted here that previously when the scheme was administered by Director TE & SCERT and implemented through NGOs such deductions were effected, so when that scheme was brought to the umbrella of RMSA the same practice was followed on the reasoning that grant-in-aid salary was being paid out of this grant. Later, the provision of deduction of Audit cost from GIA payments had been stopped as it had been challenged in different legal forums. Accordingly, no Audit cost was deducted from IEDSS grant after 2011-12. The Committee dropped the para and directed the Department to be carefully in future on procedural mistake. 6. Para-2.1.8.1 Shortfall in construction of new school. Audit para observed that as per the school mapping exercise conducted by OMSM, out of 87,095 habitations, 7,761 (8.91 per cent) had no secondary school within a radius of five km. This required establishment of 1,535 new secondary schools. Due to non-construction of schools, the targets for completion of 1,535 schools by the end of 2011-12 as per the Perspective Plan could not be achieved, leading to extension of construction plan beyond 2011-12. Audit noticed that: . Though the Department constructed/upgraded 773 existing upper primary schools to secondary schools, it failed to create necessary infrastructure for 414 schools (53.56 per cent) as of March 2015. . The executing agencies did not take up the works in 190 schools even after lapse of one to six years due to non-handing over of land (25), unsuitable locations (18), non-completion of tendering process by the executing agencies (88) and reasons for delay not found on record (59). . Out of 50 test checked schools, construction of additional class rooms was not done in 10 schools upgraded during 2009-11 and in case of three schools, students of class IX and X were sitting together due to dearth of classrooms. The Department in their compliance stated that the total number of Secondary schools sanctioned by PAB during the period from 2009-10 to 2014-15 was 773. Out of 773 New Schools, construction of 359 school buildings had been completed which was 46.5% of the target and rest were in progress. Funds for all the 773 schools had been released in phased manner. Late release of funds by GoI, led to less achievement of target within the specific period as per PAB. As regards to delay in construction works by the executing agencies i.e. RD Department, steps had already been taken up by this Department for regular joint 8 review meeting of Executive Engineers and District Education Officers as a result 471 buildings had been completed which were being taken up individually at district level. The Schools upgraded under RMSA scheme were only eligible to receive grants for construction work and other upgraded schools not satisfying RMSA norms were not taken into consideration. The Committee accepted the Departmental reply and dropped the para subject to submission of up to date status of 38 Schools including those the Schools where students of 2 classes were sitting together.

9 7. Para-2.1.8.2 Shortfall in strengthening of existing school. It has been observed by the Audit that the infrastructural constraints of existing 4,594 secondary schools, RMSA scheme envisaged construction of additional classrooms to maintain classroom-pupil ratio at 1:40. Further, the scheme also envisaged to convert the existing school buildings to all weather resilient buildings, construction of headmaster’s rooms, library, laboratory, toilets, etc. Accordingly, the Department prepared Annual Work Plan & Budget (AWP&B) for each year for the period 2009-15, indicating number of units (i.e. class room, laboratory, etc.) to be strengthened. Audit noticed following deficiencies: . OMSM had neither maintained year-wise achievement against targets nor put in place a monitoring mechanism to watch execution of works. . In the State, 685 schools did not have all weather buildings; 2,468 schools did not have headmaster’s room, six secondary schools were housed in tents, 59 schools did not have blackboard, 1,452 and 802 schools did not have boys’ and girls’ toilets respectively. Further, 1,114 schools did not have electricity connections. . Out of 50 sample Government schools, 27 schools did not have sufficient classrooms, resulting in classroom-pupil ratio as high as 1:52 to 1:135. Further, 38 schools had no laboratory and in 21 schools, required equipment were not available in laboratories. . As per RMSA, the School Management and Development Committees (SMDC) were empowered to execute works up to the value of ` 30 lakh. But in 50 sampled schools, it was noticed that these SMDCs were not involved in any of the construction works and these works were executed through Rural Development and Public Works Departments. The Departmental compliance note explained that a policy decision had been taken by the Department to execute the construction work of secondary school buildings through R.D./P.W. Department. Earlier, up to 2013-14, there was no technical staff/officer to look after the civil works wing at OMSM, RMSA and it was simply managed by some other interventions. Therefore, year wise project wise information could not be available up to 2015. The mechanism had been strengthened afterward and monthly progress reports were being collected from RD by OMSM regularly. Two Technical persons had been engaged in SPO, OMSM to look after the civil works. MHRD, GoI approved the name and number of schools to be taken up under the scheme of strengthening of existing infrastructure on the basis of RMSA norms in phase by phase as per U-DISE data. Therefore, there was no scope of OMSM to go beyond the approval of PAB, MHRD Govt. of India.

10 The Committee observed that Department was taking adequate steps for speedy programme implementation status on completion of additional construction of classroom pending electrification be submitted. 8. Para-2.1.8.3 Implementation of ICT@School. The Audit para stated that the objective of ICT @ Schools was to provide computer aided education in all secondary and higher secondary schools. The GoI approved implementation of the scheme in 6,000 schools in the State. The State Technical Committee recommended (December 2012) engagement of a technical consultant for implementation of the scheme through open selection process. However, the Department engaged (February 2013) Odisha Knowledge Corporation Limited (OKCL), a Special Purpose Vehicle formed (July 2011) by the State Government in collaboration with Maharashtra Knowledge Corporation Limited to provide IT enabled education and IT enabled services in the State, as the technical consultant on nomination basis to implement the scheme of ICT@Schools in 4,000 schools for a total cost of ` 790.12 crore. The scope of work included procurement of hardware and physical infrastructure on behalf of the Department, inspection and monitoring of implementation of the scheme, conducting initial teachers’ training for ICT, procurement and development of software application, e- content, etc. Apart from this, OKCL had to supply tablets with pre-installed e-content, give web-based training and provide e-books based on NCERT syllabus to all the teachers. As of 31 March 2016, OMSM paid a sum of ` 204.30 crore towards non-recurring expenditure to OKCL. In addition, accrued interest of ` 3.97 crore was also advanced to OKCL. Audit noticed the following: . Deficient e-Content: As per the agreement, OKCL would develop e-contents for Class IX and X of 4,000 schools at unit cost of ` 45,000 per school aggregating to ` 18 crore. Further, the e-contents would be approved by the Department before installation in the master computers of the schools. However, OKCL installed the e-contents in all the schools without the approval of the Department. The Executive Committee (March 2015) of OMSM observed that the e-contents were deficient and decided to explore the possibility of procurement of e-contents from other reputed organisations. However, no further action was taken by the Department. . Supply of inferior quality computer tables: The computer tables (44,317) valuing ` 8.34 crore provided by OKCL did not conform to the prescribed specifications, as reported (June 2015) by the Technical Committee of OMSM. The Committee opined either to reject all the tables and replace them or to impose penalty on OKCL. Despite this, the tables were being utilised in the schools without any replacement. 11 . Ineffective ICT training: As per the training module prescribed by the GoI, web based induction training in ICT was to be given once to the teachers for a period of 80 hours followed by refresher course of 40 hours each in succeeding years i. e. 240 hours in total. However, agreement with OKCL, provided only for induction training of 132 hours without provision for any refresher course. OKCL trained only 4,935 out of 24,555 teachers as of March 2016. . Non-supply of tablets to the teachers: The agreement envisaged that OKCL would supply tablets to 40,000 teachers of 4,000 schools with pre-installed e-content and train them on its use. Since no timeframe was fixed for supply, OKCL was yet to supply the tablets as of March 2016 on the plea that the training was not fully completed. Audit also observed that OMSM had ordered 40,000 tablets when the number of teachers on roll was only 24,555. Thus the Department failed to project the actual requirement. The Department while admitting the facts, stated that the matter would be looked into. Deficiencies in the agreement: Audit noticed the following deficiencies in the agreement entered by OMSM with OKCL.  There was no specific timeframe specified in the agreement for deliverables like completion of teachers training, supply of hardware and software, supply of tablets to the teachers, etc. As a result, all teachers were not trained in ICT programme and were not provided any tablets with built-in contents.  There were no penal clauses in the agreement for delay in supply and installation of hardware, software, maintenance of quality in e-content, failure to achieve the target of training of teachers, etc., by OKCL. Due to this, no penal action could be taken by OMSM.  As per the agreement, OKCL had to develop a monitoring and inspection system for efficient functioning of the scheme like provision of first level supervision at schools, monitoring the schools through helpdesk to the users, learners, etc. But there was no role for OMSM or the Department to monitor the implementation of the scheme by OKCL. Due to these deficiencies in the agreement, the interest of the State was not protected. The Departmental compliance explained that as per the agreement, OKCL had developed the e-content for class IX & X of 4000 Secondary Schools where e-Vidyalaya project under ICT@school scheme was being implemented. The executive committee suggested that OKCL should develop the curriculum wise multimedia interactive e-content for the CWSN (Children with special need) children both in Odia and English language. Before preparation of the multimedia interactive e-content according to the state syllabus class wise, OKCL should consult with the pedagogy committee formed under the chairmanship of Director, TE and SCERT.

12 Accordingly, as per the decision of the executive committee, OKCL was entrusted as technical consultant by executing an agreement between OMSM and OKCL. OMSM vide the letter No 2363/15 dated 02/07/2015 approved and issued instruction to supply and install the e-content at the school point. The experts from RIE, Bhubaneswar and ELTI, Bhubaneswar on different subjects selected by OMSM had certified and verified the e-content under the supervision of Director, TE & SCERT, Bhubaneswar. Regarding supply of inferior quality of computer tables, as per the decision of the state level technical committee, a testing report on the table had been received by OMSM from Director, Export Promotion & Marketing Bhubaneswar and the penalty as deemed fit would be imposed as per the decision to be taken in the subsequent meeting of the SLTC. As per GOI, guidelines the following trainings are to be imparted to the teachers on ICT 1. Pre Service Training (55 hours): OKCL had imparted program i.e. AAMASCHOOL.com through DOORDARSHAN of 125 episodes for awareness of all teachers. 2. In-Service Training [(Induction) (80 hours)]: The OKCL had been imparting this training to the teachers at school point. The details were as follows: a) No. of teachers have registered for training - 29539 b) No. of teachers completed their training - 10401 c) No. of teachers continuing the training programme - 19973 3. In-Service Training (Refresher Training) (40 hours): The training had to be imparted to the teachers every year. For the year 2015-16 the said training had been completed and for the year 2016-17 the training module had been prepared by the vendors and soon after approval of the same training would be imparted during the month of Feb-Mar' 2017. As per the agreement, 40,000 tablets were to be supplied to 4,000 Secondary Schools @ 10 teachers per school but as per Sub-para 17 of Para 5 of the Extended Agreement dated 06.12.2015, such supply might be subject to approval of OMSM, since it had clearly been mentioned in the Sub-para that "decision by OMSM or of the Committee like Executive Committee (EC), State Level Purchase Committee (SLPC), State Level Technical Committee (SLTC), Negotiation Committee and Demonstration Committee etc. of OMSM should strictly be adhered to by OKCL. No tablet had so far been procured for distribution to teachers. However, the observations of Audit in this regard would definitely be looked into.  In addendum agreement at clause no. 4 (Implementation Schedule) the time frame was given in the table 3 i. e. 30 days for site readiness and 120 days for Procurement and Installation of Hardware and Software but, no time frame was given for supply of tablets to the teachers because the tablets were to be supplied after development of e-content and completion of teachers training. 13 There was a penalty clause in the agreement executed between OKCL and the Vendors. An amount of ` 2,000/- per school per day for the delay in supply and installation of hardware was to be deducted from the claims of the OKCL/vendors. During the contract period, if the complaint was not attended or resolved issue then an amount of ` 250/- per working day would be calculated as penalty and deducted from their dues.  There was also a penalty of Rs.300/- per day for non-attendance of School Coordinators more than 2 days per month. The copies of the agreement were enclosed as Appendix-A. The Evaluation, Monitoring and Management of ICT@School Scheme had been done by OMSM. The Third Party Evaluation work had been awarded to School of Rural Management, KIIT University, Bhubaneswar. As per the agreement, OKCL had developed the e-content for class IX & X of 4000 Secondary Schools where e-Vidyalaya project under ICT@Sschool implemented scheme was there. The Executive Committee suggested that OKCL should develop the curriculum wise multimedia interactive e-content for the CWSN children both in Odia and English language. Before preparation of the multimedia interactive e-content according to the state syllabus class wise, OKCL should consult with the pedagogy committee formed under the chairmanship of Director, TE & SCERT. Accordingly, as per the decision of the executive committee, OKCL was entrusted as technical consultant by executing an agreement between OMSM and OKCL. The experts from RTE, Bhubaneswar and ELTI, Bhubaneswar on different subjects selected by OMSM had certified and verified the e-content under the supervision of Director, TE & SCERT, and Bhubaneswar. OMSM vide letter No. 2363/15 dated 02/07/2015 approved the issued instruction to supply and install the e content at the school point. Regarding supply of inferior quality of computer tables, as per the decision of the state level technical committee held under the chairmanship of the Principal Secretary to Government, S & ME Deptt. on 08.12.2017, a testing report of the Testing Laboratory, Cuttack, Director, EPM on the differential weight analysis between the leg frames vide their letter no. 412© Dt. 15.01.2018 an amount of ` 31,47,380.00 had been imposed as penalty towards supply of computer table deviating the specification mentioned in the RFP. The OMSM letter no. 389 Dt. 12.02.2018 had been communicated to Accountant General (G & SSA), Odisha, Bhubaneswar in this respect. As per GOI guidelines, the following training were to be imparted to the teachers on ICT.

14 Hon’ble Committee asked the departmental secretary to clarify the following points,  Why the Department had not gone for calling Request for Proposal from other firms requiring the essentials of the scheme as per the recommendation of State Technical Committee and adhering to the Codal Provisions under OGFR?  Why OKCL installed the e-contents in the master computers of schools without the approval of the Government?  Why the Department did not examine the observations of the Ex. Committee of OMSM that the e-contents were deficient and to procure the same from other reputed organization like NUEPA, Azim Premji Foundation, Vedanta Foundation and CAN Foundation etc.?  Copy of the letter No.2363/15 dated 02.07.2015 to be submitted to the Committee for perusal.  What action had been taken by the Department against the OKCL for failure to provide services as per the agreement and responsibility be fixed on those officers in this regard?  A copy of the decision taken by the Department on 08.12.2017 with the testing report of the Testing Laboratory, Cuttack, Director, EPM on the differential weight analysis between the leg frames vide their letter no. 412© Dt. 15.01.2018 on which penalty amounting of `31,47,380.00 imposing towards supply of computer table deviating the specification mentioned in the RFP to be submitted.  Whether penalty as imposed by the Department on OKCL had been realized fully? If so, when?  The reasons for providing web based training in ICT for 132 hrs against the prescribed limit of 160 hrs for two years by OKCL be submitted.  Whether the back log training for 2016-17 was included for the year 2017-18?  What was the present position of trainings imparted and whether the targets by the end of this education year would be fulfilled?  Whether the Department was planning to procure required tablets during this year or during 2019-20 for the benefit of the teachers to impart computer educations to the students of the State?  The reasons for non-inclusion of clause for providing specific timeframe for training to teachers, supply of hardware and software etc and non-inclusion of training to all teachers in the programme with supply of tablets may be furnished.  Was it not one of the lapses of the Department not to include such an important clause in the agreement between the Department and OKCL?

15  What action had been taken by the Department against the responsible officers for failure in inclusion of such important clause in the agreement owing to which the Company got the benefits.  Why OKCL had not earlier developed any monitoring and inspection system as per the agreement?  Whether OKCL had developed the Asset monitoring software (WORM) to capture all the detailed configurations as per the agreement or by the Department suo motu?  Whether the Third Party Evaluation Work awarded by the Department to the School of Rural Management, KIIT University, Bhubaneswar as complied during July 2017 has not been carried out? If not, the reasons thereon be submitted.  When did the Department conduct the Third Party Evaluation on Rapid assessment in 400 schools through PPOMU, Finance Department?  What was the outcome noticed on Third Party Evaluation? A copy of the Third Party Evaluation report be submitted to the Committee.  Similarly, a copy of the agreement between OMSM and OKCL to implement the Third Party Evaluation in 3600 schools may also be submitted. By what time the evaluation was expected to be completed. 1. Pre Service Training (55 hours: OKCL has imparted program i.e. AAMASCHOOL com through DOORDARSHAN of 125 episodes for awareness of all teachers. 2. In-Service Training (Induction)(80 hours): The OKCL had been imparting this training to the teachers at school point, the details were as follows. (a) No. of teachers have registered for training- 29539 (b) No. of teachers completed their training-13651 (c) No. of teachers continuing the training programme-15888 3. In-Service Training (Refresher Training) (40 hours) : This training had to be imparted to the teachers every year. For the year 2015-16 the said training had been completed. For the year 2016-17 the training module was prepared by the vendors but due to some issues regarding engagement of OKCL as technical consultant the refresher training was not conducted. The same training for the year 2017-18 had already been approved and the teachers training was implemented at school point during the month of August 2018. As per the agreement, 40000 tablets were to be supplied to 4000 Secondary Schools@10 teachers per school but as per Sub Para 17 of 5 of the Extended Agreement dated 06.12.2015, such supply might be subject to approval of OMSM, since it was clearly mentioned in the Sub-Para that “decision by OMSM or of the Committee like Executive Committee (EC), State Level Purchase Committee (SLPC), State Level Technical Committee (SLTC), Negotiation Committee and

16 Demonstration Committee etc. of OMSM should strictly be adhered to by the OKCL. No tablet had so far been procured for distribution to teachers.  In addendum agreement at clause no. 4 (Implementation Schedule) the time frame was given in the table 3 i.e. 30 days for the site readiness and 120 days for Procurement and Installation of Hardware and Software but, no time frame was given for supply of tablets to the teachers because the tablets were to be supplied after development of e-content and completion of teachers training.  There was a penalty clause in the agreement executed between OKCL and the Vendors. An amount of ` 2000.00 per school per day for the delay and installation of hardware is to be deducted from the claims of the OKCL/Vendors. During the contract period, if the complainant was not attended or resolved then an amount of ` 250.00 per working day would be calculated as penalty and deducted from their dues.  There was also a penalty of ` 300.00 per day for non-attendance of School for Coordinators for more than 2 days per month. Accordingly the penalties were being imposed on the vendors. For smooth and proper implementation of the e-vidyalaya project the Quality check process was carried out in following ways:  The vendors had submitted the Installation and Commissioning Report which was cross examined and signed by School Head Master.  Demonstrate about the usage of the ICT equipment installed at the school was made by the Original Equipment Manufacturers. A demonstration report signed by the teachers attended was also presented by the bidders.  For effective maintenance of the ICT labs, School Coordinators were deployed whose joining report were also submitted by the implementing partners.  OKCL representatives visited each school and prepared a check list as well as equipment-wise report regarding installation. The earthling and the functioning of electrical equipments were verified by certified Electrical contractors.  As Asset monitoring software (WORM) had been designed to capture all the detailed configurations such as size of Hard disk and type of operating system installed. All the details were uploaded from ground level and compared with the required configuration and got approved. Reports were also submitted by OKCL representatives who were deployed for survey at the schools every month.  After installation of ICT lab, the monitoring information such as the school information, the photographs of ICT lab, its equipment and assets were uploaded though the GPS enabled tablets to be web portal. The surveyors captured the monitoring information about the ICT lab assets; photographic testimonials in High-end GPS enabled tablets. 17 A. Output based monitoring mechanism introduced by Govt.:  Support System Portal: To know the hardware downtime and complaint log in process OKCL had introduced Support System to complaints through various mode and issue ticket to the implementing agencies to resolve the issues in time.  Inspection and Validation: In course of implementation of the project in several phases the ICT labs had been set up and as per the specifications, delivery and installation of hardware had been completed in all implemented schools. Thereafter, the Installation and Commissioning Reports were signed by the Headmasters of the schools and it was validated by the District Lead Centre (DLCs) and ICT Coordinators deployed by OKCL. Third Party validation of electrical wiring had been done by different empanelled electrical engineers. Technical specification had been validated through WORD, by means of monthly visit by the ICT Coordinators and Tab upload from the school point.  ICT Coordinator: ICT Coordinators had been deployed by OKCL to visit the schools and supervise the functionality of the ICT labs in their jurisdiction i.e. one ICT Coordinator per 60 schools (65 in Total) and upload the photographs and other sources of information through geographical positioning system (GPS) enabled Tab. Each ICT Coordinators visit each school at least once in a month to ensure the functionality of lab and providing adequate support and training if required.  GPS Based Tab: The GPS enabled Tab was a portable device which had been provided to all ICT Coordinators by OKCL to ascertain their visit to schools and tracking of the particular location of the schools and his movement for smooth coordination of the project by receiving geographical positioning information. It was used to upload all photographs of lab and other required information through pictorial shape to know the status of the Lab equipment and observe the functionality of the ICT labs. B. e Vidyalaya Web Portal: The web based portal viz: www.evidyalaya.org had been hoisted to publish and uploading of information for monitoring the project and to make the project activities more transparent. Using www.support.eviddyalaya.org all stakeholders of the project were lodging the issues which were resolved by implementing agency. C. Daily activities for Monitoring:  Call centre executives were working under the project who call the School Coordinators and cross check the activities done by the School Coordinator in the schools.

18  The Call centre executives of the implementing agencies were making telephonic calls in each day according to the calling script and as per the requirement of the project.  They conducted a meeting before starting of the work in each day and made compilation of data collected from schools, School Coordinators and District Coordinators to support the smooth Project monitoring system.  OKCL had introduced SMS and missed call system to receive information and complaints from schools to resolve the issues.  Random Visit of Project Monitoring Team: The Project Monitoring members were making unscheduled visits to the Schools and Districts to know the status of the project activities in their respective areas and prepare consolidated reports for necessary support to monitor the project.  E Vidyalaya Attendance System: Online and offline based attendance system had been introduced by OKCL for all the school coordinators under the project to monitor their attendance in the schools on daily basis which was also reached through SMS to various stakeholders. The Evaluation, Monitoring and Management of ICT@School Scheme OMSM had been done by the Third Party Evaluation on Rapid assessment basis in 400 schools through PPOMU, Finance Department and the report had been sent to MoHRD. Besides, the PPOMU had also been awarded to implement the Third Party Evaluation in 3600 schools. The Committee directed to submit the latest status. 9. Para-2.1.8.4 Extra expenditure in construction of Girls’ Hostel. The GoI introduced (2009-10) Girls’ Hostel Scheme for setting up of hostels with lodging and boarding facilities in the Educationally Backward Blocks (EBBs) and areas near to the habitation of the target groups so that the girl students are not denied the opportunity of continuing their study due to societal factors. The GoI granted in-principle approval for construction of 130 girls’ hostels during the period 2009-11 at unit cost of ` 1.71 crore. The approval was subject to condition that Central share should be released on submission of drawing/design and estimate of the hostels in conformity with scheme guidelines. Audit noticed that the drawing/design and estimates furnished by the State Government were not as per the scheme guidelines. GoI while approving (April 2014) the drawing/design and estimates stipulated that the Central share should be limited to the cost of construction as per the Schedule of Rates (SOR) of 2010-11 and any extra cost should be borne by the State Government. GoI released ` 87.94 crore in July 2014 as first installment. The State Government also released ` 9.77 crore. The Department executed the works through Rural Development (RD) Department at

19 unit cost of ` 2.28 crore based on SOR 2013-14. Thus, due to preparation of improper drawing/design and estimates, the State Government would have to bear an extra financial burden of ` 74.10 crore in construction of 130 hostels. The Department in his compliance note stated that 130 Girls' Hostels in 130 EBBs had been approved by MHRD, GoI during 2009-10 and 2010-11. Initially, the scheme of construction of Girls' Hostel was being taken up by the Department from its own budgetary allocations, which was later subsumed under integrated schemes of RMSA from the year 2013-14. The cost of construction of Girl’s Hostel had increased as GoI had approved the estimates of the hostel buildings in the PAB for 2014-15 as per the schedule of rates (SOR) of 2010-11 and accordingly they released ` 8,793.98 lakhs as central share, which was received during the month of August, 2014. The Committee instructed to submit the status of all Girls hostels. 10. Para-2.1.9.1 Training to teachers and management personnel. It had been observed by the Audit that the RMSA emphasised the necessity of continuously upgrading the quality of teachers through in-service education programmes. Accordingly, GoO prepared a subject-wise training module called ‘SAMARTHYA’ for teachers. Besides, RMSA also envisaged to sponsor other training programmes like induction training to newly recruited teachers, training to Headmasters, etc. The PAB approved 2,68,495 training slots for teaching staff and 1,68,936 training slots for management personnel during 2010-15. Audit noticed the following: . Test check at sample schools revealed that training of ‘SAMARTHYA’ was imparted to only 299 teachers in 531 slots against allotted 1,389 slots. . In 2010-11 and 2013-14, training slots for 60,689 and 4,612 respectively for teachers were not utilised. . Similarly, 1,68,936 training slots for management personnel were not utilised. OMSM stated (February 2016) that inadequate training of teachers was due to shortage of manpower, lack of monitoring, inadequate expertise in assistances and improper dissemination in districts. The Department compliance note stated that the total numbers of training slots are actually 2,48,293 not 2,68,495 as stated in the report. Total approved phases of training @ 5 days per phase are 49659. In 2010-11, training slots for 60,689 for teachers were not utilized, due to shortage of man power, lack of expertise (in imparting training and subsequent monitoring), training facilities etc. at district level. In 2013-14, 45563 slots had been used. Rest 4612 slots remained unutilized which were approved for 2082 HMS, 1640 newly recruited teachers, 540 MRPS and

20 350 KRPS. The training slots could not be utilized due to shortage of man power and lack of appropriate monitoring and management. In 2010-11 60,689 training slots for teachers were not utilized, due to shortage of man power, lack of expertise and monitoring, improper training facilities etc. at district level. Only 13836 training slots had been approved for management personnel's out of which 60 slots had been utilized for educational administrators. Different Training Programmes had also been arranged for these Educational Administrators under SIEMAT programme directly administered by the Department. The Committee accepted the Departmental compliance note and dropped the para. 11. Para-2.1.10 Slow pace in achievement of targets. The Visions of RMSA included universal access of secondary education by 2017 (Gross Enrolment Ratio (GER) of 100 per cent) and universal retention by 2020. The broad indicators of secondary education in the State before launching of RMSA and at the end of academic year 2014-15GER, at the beginning of the implementation of RMSA (2009-10) was 59.89 which increased to 75.43 in 2014-15. However, three sample districts registered GER ranging from 53.23 to 74, which were below the State average. (Koraput, Rayagada and Sundargarh) . Though NER increased from 40.39 in 2009-10 to 64.86 in 2014-15, there was a decreasing trend in last three years and four sample districts were found below the State average in 2014-15. Similarly, the retention rate increased by 15.46 per cent during 2009-15 i.e. from 79.03 per cent in 2009-10 to 85.64 per cent in 2014-15 and the same was also inconsistent. Retention rates in five sample districts ranged from 74.63 to 84.60 per cent which were below the State average. Referring to the above observation the Department stated that although the GER has increased from 59.89 in 2009-10 to 75.43 in 2014-15, there were some districts which were having GER below the State average. However, the GER was in an increasing trend in that particular district. Therefore, special attention is required in those districts under different interventions of RMSA, where indicators like GER, NER and Retention Rate are below the state average. The Committee accepted the Departmental compliance note and dropped the para. 12. Para-2.1.11 Monitoring and supervision. It had been observed by the Audit that the following were deficiencies in monitoring and supervision of implementation of RMSA and other subsumed schemes in the State: . Inadequate review by Governing Council and Executive Council: As per the charter of OMSM, the Governing Council (GC) and the Executive Council 21 (EC) were required to conduct minimum one and four meetings per annum respectively. During 2011-15, GC and EC conducted only two and four meetings respectively. In absence of regular meetings of GC, monitoring of various activities was not adequate. . Non-constitution of District Level Committees: In seven out of eight sample districts, District Level Committees were not constituted though required under the provisions of Financial Management and Procurement Manual of RMSA. In absence of committees, the intended objective of monitoring progress in implementation of various measures under RMSA, efficient utilisation of funds, etc., could not be ensured. . Inadequate inspection by district/block level officials: Clause 9.2.3 of RMSA framework emphasised regular field visits/ inspections to ensure comprehensive and continuous assessment of the scheme. The S&ME Department spelt out (July 2013) job specifications of DEOs and BEOs as per which, a DEO was to inspect at least 10 schools per month, while BEO was to inspect all high schools within his jurisdiction. However, DEOs of eight sample districts conducted 979 inspections against requirement of 1,600 during 2013-15. Further, DEOs had no information about number of inspections conducted by BEOs. . Inadequate functioning of School Management Development Committee (SMDC): As per provisions of RMSA guidelines, meeting of SMDC should be held frequently but not less than once in a fortnight. In 70 sample schools, 939 meetings (11 per cent) were conducted by SMDC as against requirement of 8,400 during 2010-15. Besides, sub-committees like, School Building Committee to monitor infrastructure and accounts matters and School Academic Committee to monitor academic activities were not constituted in any of the sampled schools. . Inadequate Parent Teacher Association (PTA) meeting: Out of 1,400 secondary schools in eight sample districts, PTA was not constituted in 317 schools as of August 2015. In 70 test checked schools, PTA was constituted in 39 schools who met only 334 times during 2010-15 against requirement of 4,200 meetings. Thus, effectiveness of deliveries of the scheme was not assessed. . Non-constitution of Grievance redressal cell: As per RMSA guidelines, the State Government was required to set up Grievance Redressal mechanism at State, district and school levels. However, no such cell was set up at any level as of March 2015. No records relating to receipt/disposal of grievances were maintained. The Department in its compliance stated that the convening of Governing Council (GC) and Executive Committee (EC) meetings were not held as per the

22 framework due to less manpower engaged in the project Office of OMSM up to 2014-15. However, steps were being taken to strengthen the OMSM society by providing additional manpower and the lapses in conduct of GC and EC meetings in future. In the meanwhile, 6th meeting of EC of OMSM had already been convened. District Level Planning Committee was in place for better preparation of plan and in a consolidated manner. Besides, District Level Monitoring Committee had also been formed comprising of functionaries of Education Department, NGO representatives, representatives of all other line Departments chaired by the senior most Hon'ble Member of Lok Sabha for better monitoring and supervision of activities implemented under RMSA. Steps had been taken to strengthen the DEO-cum-DPC, RMSA office. One DSS is in charge of implementation of RMSA activities supported by 2 Data Entry Operators. 02 Additional DEOs were there to support the DEO in the District office. The Nodal Officers for each districts fixed by Govt. were also frequently visiting to districts. However, the monitoring mechanisms need to be strengthened for effective implementation of the RMSA activities. As per provision of RMSA, meeting of the SMDC should be held frequently but in fact it was not possible to hold the meeting so frequently because most of the parents and other members were preoccupied with their profession/ occupation and hence they were unable to spare time. In fact, the urgent decisions taken by the President of SMDC are generally ratified in the next meeting of SMDC. However, action was being taken to convene the meeting more frequently. Necessary instruction was being issued to the district to constitute PTA in High School and hold the meetings regularly. The Committee accepted the Departmental compliance and dropped the para. 13. Para-3.6 Non-recovery and remittance of Employees’ Provident Fund contribution. It is revealed by the Audit that as per the Employees’ Provident Fund and Miscellaneous Provisions (EPF & MP) Act 1952, every employer should contribute to the fund at the rate of 12 per cent of the pay of the eligible employee and administrative charges at 1.61 per cent up to December 2014 and 1.36 per cent from January 2015. The contribution of the employee should be equal to the contribution of the employer. As per Paragraph 30 of EPF Scheme, 1952, the employer should in the first instance remit both his contribution and employees’ share without any delay. Paragraph 32A of the above Scheme stated that if the employer commits any default in depositing the contribution with the Employees’ Provident Fund Organisation (EPFO), he is liable to pay damages by way of penalty at the rate ranging from 17 to 37 per cent of arrears per annum for period of default ranging from less than two months to six months and above. 23 Audit noticed that the District Education Officers (DEOs) appointed 3672 (teaching: 3,637 and non-teaching: 35) contractual staff in different categories of high schools eligible to be covered under EPF Scheme in eight test checked districts. Though they were paid ` 71.64 crore towards their remuneration between January 2011 and December 2015, the DEOs had neither recovered employees’ contribution of ` 8.60 crore (at 12 per cent) from those contractual staff nor remitted the same along with employers’ share including administrative charges to the extent of ` 9.62 crore totaling ` 18.22 crore with the EPFO Commissioner since their appointment. The Department did not instruct the DEOs to deduct the EPF contribution in respect of these eligible contractual employees in compliance with the provisions of the Act. However, the Odisha Primary Education Programme Authority, implementing the Sarva Shiksha Abhiyan functioning under the same administrative Department had already issued instructions to its field offices (July 2007) in the districts to deduct and remit the EPF dues in respect of contractual staff of Primary and Upper Primary Schools. Thus, failure of the DEOs to adhere to the provisions of the EPF&MP Act, 1952 had resulted in non-remittance of EPF contribution of ` 18.22 crore. Besides, penalty of ` 3.10 crore (at 17 per cent per annum) was also payable. DEOs of test checked districts assured that necessary deduction towards EPF contribution would be made soon after receipt of instruction from the Department. Responding to Audit findings the Department stated in his compliance that the proposal for recovery and remittance of EPF contributions (of both Employees’ and Employer’s Share) of contractual staff engaged in High Schools had been referred to Labour and ESI Department for their considerate views. It was learnt from the concerned section of the Labour and ESI Department that certain clarifications with regard to the above issues had been sought for by them from EPF authorities, which had not been received at their end, by the time of submission of compliance Departmental Secretary assured the Committee that soon after receipt of the views of L&ESI Department, appropriate action would be taken by the Department. The Committee settled the para with the recommendation that action taken report should be furnished to the Public Accounts Committee for appraisal.

*****

24 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2019-20 HELD AT 04:00 P. M. ON 20.03.2020 IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE

25 MINUTES OF THE TENTH MEETING OF PUBLIC ACCOUNTS COMMITTEE, 2020-21 HELD ON 01.10.2020 AT 03:00 P. M. IN ROOM NO. 54 OF THE ODISHA LEGISLATIVE ASSEMBLY BUILDINGS, BHUBANESWAR.

Sd/- PRADIPTA KUMAR NAIK CHAIRMAN PUBLIC ACCOUNTS COMMITTEE