CAG 2011-14 reports point to misuse of collected tax

Mumbai: The Comptroller and Auditor General (CAG) reports from 2011 to 2014 on cess revenue have pointed out that the Union government has spent only a portion of the cess collected for the sake of the particular utility it was initiated for, while the remaining amount was being used for some other purposes, which is against the very purpose of the act.

According to advocate Satish Talekar, as per article 270 of the Constitution of India, the government is allowed to introduce cess which is over and above the taxes it collects from the public for specific purposes like education, sanitation and welfare of the public, Swachh Bharat, welfare of farmers among others. “We see cess being levied in income tax, custom duty, excise, service and corporate tax. In all, the government collects cess under 100 different heads and the list keeps changing as per the need. However, according to the CAG reports, the same is not being done,” said Mr Talekar.

Referring to the CAG report on collection of research and development cess and its utilisation over a period of 18 years, Mr Talekar said that the cess collected was Rs 4,876.71 crore but only Rs 12,17.77 crore was released by the Technology Development Board (TDB) in the same period. “The CAG report says that while there is a substantial collection of cess, the utilisation of the proceeds is not being done for the intended objectives. On the contrary, they are partly being used to finance the revenue deficit of the government over the years,” said Mr Talekar citing the 2013-14 CAG report.

This, he said was just one of the many faults of the Union government pointed out by CAG. The other faults pointed out in the reports include short transfer of funds and allowing funds to lie idle in the public account and funds lying outside the government account. 

Types to know about

Education Cess: The cess is levied to fund various student welfare schemes and
to encourage higher education.
National Clean Energy Fund: Used for funding research and innovative projects in clean energy technology by levying cess on coal.
Income Tax Welfare Fund: Was created for the promotion of welfare of income tax department officials, providing financial help during contingencies.