Report of the Comptroller and Auditor General of India on Revenue and Social & Economic Sectors (PSUs) for the year ended 31 March 2015 Government of National Capital Territory of Delhi Report No. 1 of the year 2016 Overview Table of Contents Reference to Description Paragraph Page No. Preface v Overview vii-x Chapter-I : Revenue Sector Trend of revenue receipts 1.1.1 1 Analysis of arrears of revenue 1.1.2 3 Arrears in assessments 1.1.3 3 Evasion of tax detected by the department 1.1.4 4 Details of pendency of refund cases 1.1.5 4 Response of the Government/ Departments to 1.1.6 4 Audit Recovery of accepted cases 1.1.7 7 Action taken on the recommendations accepted by 1.1.8 8 the Department/Government Audit Planning 1.1.9 8 Results of Audit 1.1.10 8 Trade and Taxes Department Performance Audit on System of Assessment 1.2 10 under VAT Chapter-II: Functioning of State Public Sector Undertakings Introduction 2.1.1 25 Accountability framework 2.1.2 25 Statutory Audit 2.1.3 26 Role of Government and Legislature 2.1.4 26 Stake of Government of NCT of Delhi 2.1.5 26 Investment in State PSUs 2.1.6 26 Special support and returns during the year 2.1.7 28 Reconciliation with Finance Accounts 2.1.8 28 Arrears in finalisation of accounts of Government 2.1.9 29 Companies i Auditor Report No. 1 – Revenue and Social & Economic Sectors (PSUs) for the year ended 31 March 2015 Reference to Description Paragraph Page No. Placement of Separate Audit Reports of Statutory 2.1.10 30 Corporations Performance of PSUs as per their latest finalized 2.1.11 30 accounts Accounts Comments 2.1.12 32 Response of the Government to Performance 2.1.13 33 Audits and Paragraphs Follow up action on Audit Reports 2.1.14 33 Discussion of Audit Reports by Committee on 2.1.15 34 Government Undertakings (COGU) Compliance to Reports of COGU 2.1.16 34 Disinvestment, Restructuring and Privatisation of 2.1.17 34 PSUs Performance Audit and Transaction Audit Department of Transport Performance Audit on the Working of Delhi 2.2 35 Transport Corporation Department of Power Indraprastha Power Generation Company Limited Excess Deposit of Income Tax resulting in 2.3 60 blockade of funds Delhi Power Company Limited Avoidable interest liability 2.4 61 Delhi Transco Limited Avoidable interest liability 2.5 62 Avoidable payment of interest 2.6 63 Corporate Governance in State Public Sector 2.7 65 Undertakings Department of Urban Development Working of Shahjahanabad Redevelopment 2.8 71 Corporation ii Overview APPENDIX/ANNEXURES Reference to Number Particulars Paragraph Page No. Different types of assessment under DVAT 1 1.2.2 77 and CST Act Details of cases which escaped assessment 1.1 1.2.2.1 78 and became time-barred 1.2.2.2 (i) 1.2 List of pending demand cases 78 and (ii) Outstanding demand against cancelled 1.3 1.2.2.2 (iv) 79 dealers Forms issued to dealers after the 1.4 cancellation of RC without realisation of 1.2.3.1 (iii) 79 demands Allowance of refund to dealers whose 1.5 1.2.3.1 (vi) 80 registration were cancelled Statement showing investments made by 2.1(i) State Government in PSUs whose accounts 2.1.9 81 are in arrears Summarised financial position and working results of Government Companies and 2.1(ii) 2.1.11 82 Statutory Corporations as per their latest finalised financial statements/ accounts Financial position of the Corporation for 2.2.2 and 2.2A 84 the years 2010-11 to 2014-15 2.2.2.2 Working results of the Corporation for the 2.2B 2.2.2 85 period 2010-15 Statement showing operational 2.3 performance of Delhi Transport 2.2.3 87 Corporation Actual consumption, mileage obtained 2.4 per kg and extra expenditure on CNG 2.2.3.8 88 consumption Detail of manpower, its cost and 2.5 2.2.4.5(i) 88 productivity during 2010-11 to 2014-15 iii Auditor Report No. 1 – Revenue and Social & Economic Sectors (PSUs) for the year ended 31 March 2015 Reference to Number Particulars Paragraph Page No. Details of Corporation’s properties lying 2.6 2.2.5.3 89 vacant Short attendance in Board of Directors 2.7 2.7.1.3 90 meetings Irregular attendance in Audit Committee 2.8 2.7.2.2 91 meetings Details of matters not discussed in Audit 2.9 2.7.2.3 92 Committee Meetings Amount not spent on CSR activities by 2.10 2.7.5 93 PSUs (2014-15) iv Overview PREFACE This Report is prepared for submission to the Lieutenant Governor of Delhi and contains two Chapters. Chapter –I of this Report relates to the audit of Revenue Sector departments of the Government. The audit of receipts is conducted under Section 16 of the Comptroller & Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971 and is required to be placed before the Legislative Assembly of National Capital Territory of Delhi under Section 48 of the Government of National Capital Territory of Delhi Act, 1991. This Chapter presents the results of audit of receipts such as sales tax/value added tax and taxes on motor vehicles of the Government of NCT of Delhi for the year ended 31 March 2015. Chapter -II of this Report relates to the audit of State Public Sector Undertakings. Audit of accounts of Government Companies is conducted by the CAG under the provisions of Section 619 of the Companies Act, 1956 and Sections 139 and 143 of the Companies Act, 2013 and audit of Statutory Corporations under their respective legislation. The Government is required to submit this portion of the Audit Report to the Legislative Assembly of National Capital Territory of Delhi under Section 19A of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971. The instances mentioned in this Report are those which came to notice in the course of test audit during the year 2014-15 as well as those which had come to notice in earlier years, but could not be dealt with in previous Reports; instances relating to the period subsequent to 2014-15 but pertaining to the year 2014-15 have also been included, wherever necessary. The audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. v Overview Overview This Report comprises of two chapters containing audit findings pertaining to Revenue and Social & Economic Sectors (PSUs). Chapter I relating to Revenue Sector contains one Performance audit involving ` 1.36 crore, relating to underassessment, short payment/loss of revenue, interest and penalty etc. and Chapter II relating to Social and Economic Sectors (PSUs) contains one Performance Audit and six paragraphs involving ` 229.90 crore. The total money value of this Report is ` 231.26 crore. Some of the major findings are mentioned below: Chapter-I: Revenue Sector The total revenue receipts of the Government for the year 2014-15 were ` 29,584.59 crore as compared to ` 27,980.69 crore in the year 2013-14. Out of this, 92 per cent was raised through tax revenue (` 26,603.90 crore) and non- tax revenue (` 632.55 crore). The balance eight per cent was received from the Government of India as grants-in-aid (` 2,348.14 crore). The increase in tax revenue was 2.64 per cent and decrease in non-tax revenue was 4.03 per cent over the previous year. (Paragraph 1.1.1) Test check of the records of 74 units of the Department of Trade and Taxes, State Excise, Transport and Revenue conducted during the year 2014-15 revealed under assessment/short levy/loss of revenue and other irregularities involving ` 159.57 crore in 506 cases. During the course of the year, the concerned Departments accepted under assessment and other deficiencies of ` 1.45 crore and recovered an amount of ` 4.68 lakh which were pointed out in audit during 2014-15. (Paragraph 1.1.10) Trade and Taxes Department Performance Audit on System of Assessment under VAT Performance audit on “System of Assessment under VAT” brought out inter alia, the following; One hundred and eighty one cases, each with annual Gross Turnover of ` five crore and above, (aggregated turnover ` 5,546.61 crore) for the years 2009-10 and 2010-11, were not scrutinised and assessed, and had become time-barred. (Paragraph 1.2.2.1) Ineffective monitoring of demand cases led to non-realisation of government dues worth ` 512.05 crore, including ` 214.98 crore due from dealers whose registrations had been cancelled. (Paragraph 1.2.2.2 (i)&(iv)) vii Auditor Report No. 1 – Revenue and Social & Economic Sectors (PSUs) for the year ended 31 March 2015 Absence of validation checks in the system led to excess issue of statutory forms worth ` 14.49 crore to dealers whose registrations were cancelled. Statutory forms amounting to ` 56.96 crore were issued to the dealers though demands of ` 1.16 crore were outstanding against them. (Paragraph 1.2.3.1 (i & iii)) System checks were not integrated to prevent issue of refunds to the dealers whose registrations have been cancelled and assessments were done subsequently. (Paragraph 1.2.3.1(vi)) Chapter-II: Public Sector Undertakings (PSUs) As on 31 March 2015, there were 17 PSUs which included 15 Government Companies and two Statutory Corporations.