JOIN USCAG flags improper use of funds collected from cesses, including GST cess
The Centre received nearly Rs 2.75 lakh crore from 35 cesses and levies but put less than 60% to use in 2018-19, with the rest being transferred to the Consolidated Fund of India (CFI) and for meeting general government expenditures. This was flagged by a CAG report, which cautioned that the cess fund is not being utilised for the specific purpose intended by Parliament.
This also includes the GST cess, a revelation which could further strain the Centre-state relations which had soured over the GST compensation.
West Bengal Finance Minister Amit Mitra was quick to latch on to the revelation to target the Centre.
“Modi Government caught red-handed by its own CAG for hiding Rs 47,272 crore from Cess Compensation Fund meant for States! Slyly put into Consolidated Fund of India. Violating GST Act. Why?” he tweeted.
The Centre imposes cesses, levies and other charges to raise funds for specific purposes. Such cesses and levies are required to be first transferred to designated reserve funds and utilised for the specific purposes intended by Parliament.
The audit, however, observed that out of the Rs 2,74,592 crore received from 35 cesses, levies and other charges in 2018-19, only Rs 1,64,322 crore had been transferred to reserve funds during the year and the rest was retained in the CFI.
“Consequently, not only was the revenue/fiscal deficit understated due to the non-transfer of these amounts to reserve funds, but the failure of the ministry to create and operate essential reserve funds made it difficult to ensure that the cesses had been utilised for the specific purposes intended by the Parliament,” the report pointed out.
Major cesses include GST compensation cess, road and infrastructure cess, additional excise duty on high speed diesel and motor spirit, health and education cess.
The audit also found that there was short crediting of GST compensation fund to the tune of Rs 47,272 crore during 2017-18 and 2018-19, which was retained in CFI, thus violating the GST Compensation Cess Act, 2017.
The finance ministry accepted the audit observation and said that the proceeds of cess not transferred to Public Account would be transferred in the subsequent year. But transfer of cess in the subsequent year will become an appropriation from resources of that year and would require parliamentary authorisation.