Sunday, November 21, 2010

Rs57.288 mn irregularities in KP excise dept

Irregularities of Rs.57.288 million have been unearthed in the Excise and Taxation Department, Khyber Pakhtunkhwa in heads of property, hotel, professional, token taxes, vehicle registration fee, annual renewal fee & security from real estate agents/motor bargain centres and to baccl development cess during financial year 2007-08.

The irregularities have been detected in the Audit Report on the Accounts of Revenue Receipts of the Government of Khyber Pakhtunkhwa audit year 2008-09.

The irregularities covers property tax (Rs.39.374 million), hotel tax (Rs.9.415 million), professional tax (Rs.1.872 million), token tax (Rs.0.488 million), motor vehicle registration fee (Rs 0.195 million), annual renewal fee & security from real estate agents/motor bargain centre (Rs.0.575 million) and tobacco development cess (Rs.5.369 million).

The largest irregularity involving an amount of Rs.25.871 million was found due to non/short realization of property tax, which was to be recovered as arrears of land revenue under section 16 of the KP Urban Immovable Property Tax Act, 1958.

This provision of law was enforced by six Excise and Taxation Offices in 529 cases, which caused non/short realization of government revenue amount to Rs.25.980 million during the year 2007-08.

The department also failed in realization of property tax from autonomous bodies like municipal committees, TMAs, Pakistan Tobacco Board and Peshawar Electricity Supply Company (PESCO) incurring a loss of Rs.10.623 million on the revenue receipts of the department.

The lapse was pointed out by Audit during March, 2009 to May, 2009 and the department was requested to convene Departmental Accounts Committee (DAC) meeting, which was not arranged till finalization of the audit report.

In head of the recovery of property tax, the three Excise and Taxation Offices of Peshawar II, Nowshera and Kohat did not recover or less recovered 15 per cent share of the provincial government amounting to Rs.2.880 million from the cantonment boards of Peshawar, Nowshera and Kohat.

The non/short realization of hotel tax, the two Excise & Taxation Offices did not deposit or less deposited hotel tax leviable at the rate of 5 per cent from the management of 17 hotels running under their jurisdiction in Peshawar and Haripur. The non/short realization of the hotel tax caused loss of government revenue of Rs.9.415 million during 2007-08.

The offices of the Excise & Taxation Department also failed in recovery of professional tax of Rs.1.912 million in 277 cases during 2007-08. The tax is required to be levied and recovered from all persons engaged in any profession, trade, calling or employment of different categories at prescribed rates, under section 7 of the KP Finance Act, 1990.

In head of Motor Vehicle Tax another amount of Rs.683 million not-realized in token tax and short realization of motor vehicle registration fee due to miscalculation of value of imported motor vehicles. In first instance token tax amount to Rs.0.488 million was not paid by the owners of 94 vehicles and in second instance resulted in short-realization of government revenue of Rs.0.195 million.

Similarly, in violation of KP Finance Act, 1995, five Excise and Taxation Offices did not realize Rs.0.311 million on account of annual renewal fee in 73 license renewal cases during 2007-08. In head of security deposits from real estate agents and motor vehicles dealers the department did not realize Rs.0.269 million.

The office of the Excise and Taxation Department in Mardan failed to recover or les recovered tobacco development cess and penalty amounting to Rs.5.369 million during 2007-08. The collection of cess was levied under section 11 of Finance Act, 1996 as amended vide KP Finance (Third Amendment) Ordinance 2003 and was to be collected directly from the tobacco factories on the basis of tobacco quota fixed for the factory by the Pakistan Tobacco Board in terms of recovery of Tobacco Cess Rules, 2004. The cess is payable in two equal installments i.e. first on or before December 31 and second on or before May 31 of the financial year concerned. In case of default in payment of cess or any part thereof by May 31, the defaulter shall be liable to pay a penalty @ 25% in addition to the cess due.

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