Kerala CAG report flags revenue gaps in liquor, transport sectors

New Delhi/Thiruvananthapuram: The CAG has identified revenue shortfalls and compliance issues in Kerala's liquor and transport sectors, among other departments, in its report on state revenues for the year ended March 2024 that was tabled in the state legislature on Tuesday.

According to it, Kerala's revenue receipts for 2023-24 stood at Rs 1,24,486.15 crore, comprising Rs 90,674.97 crore in the state's own revenue and Rs 33,811.18 crore received from the central government.

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The CAG also reported revenue arrears of Rs 30,308.52 crore, equivalent to 24.35 percent of the state's total revenue, and noted that audit observations involving Rs 4,978.61 crore remained outstanding as of June 2024.

The report, covering taxes on vehicles, excise duty, stamp duty and registration fees, and other receipts, contains 11 audit observations and two subject-specific compliance audits with a combined revenue impact of Rs 603.53 crore.

In its review of the manufacture and sale of foreign liquor, the CAG said a distillery in Thiruvalla had not recovered losses arising from a shortage of Extra Neutral Alcohol (ENA) in stock, leaving Rs 51.88 crore unrecovered.

The audit also said cross-verification of transit permits for liquor imported into Mahe found 22 permits involving 1,10,720 bulk litres of Indian Made Foreign Liquor (IMFL) without corresponding exit records at check-posts, indicating possible diversion into the Kerala market and an estimated revenue loss of Rs 5.10 crore.

According to the report, shortcomings in tax assessments, including failure to include sales tax while computing turnover tax, irregular exemption on beer sales to a brewery in Kanjikode and inadequate verification of tax returns, resulted in short levy or non-levy of taxes amounting to Rs 19.17 crore.

Separately, the Comptroller and Auditor General's audit of the functioning of Regional Transport Offices (RTOs) and the State Transport Authority found that despite an expenditure of Rs 37.48 crore on nine Automated Driving Test Tracks (ADTTs) and nine Automated Testing Stations (ATSs), only two ADTTs were operational while none of the ATSs had become functional.

The report said analysis of VAHAN data showed 91,477 vehicles were operating with expired Certificates of Fitness or Registration Certificates without action by authorities, resulting in non-collection of penalties, renewal fees and compounding charges estimated at Rs 47.69 crore.

It added that police accident data showed 344 such vehicles were involved in road accidents that caused 32 fatalities.

The audit further found 47 unlicensed vehicle aggregators operating in the state, leading to non-collection of licence fees of Rs 2.35 crore.

It also noted that while GST data showed 461 agencies providing rent-a-cab services, only nine licences had been issued, resulting in unrealised fees of Rs 0.23 crore.

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In addition, 1,620 contract carriage and goods carriage vehicles were found operating without valid permits despite paying motor vehicle tax.

The report said enforcement authorities did not initiate action against several vehicles with expired fitness or registration certificates, resulting in non-collection of compounding fees estimated at Rs 12.18 crore.

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