DIMAPUR, July 27 � The Government of India had sanctioned the Augmentation of Water Supply to Kohima town Project in January 2004 at an estimated cost of Rs 32.35 crore.
According to the Comptroller and Auditor General (CAG) of India report for the year ending 31st March 2013, which was tabled in the just-concluded Budget session of Nagaland Assembly, the scheme was to tap surplus monsoon run-off of the Dzuna stream by constructing an artificial balancing reservoir.
However, the report said that the project could not take off due to non-availability of land and therefore, the State Government made an alternative proposal to tap the water from elsewhere.
It said that the Centre in July 2011 approved a project for bringing water from Mima village located south of Kohima by two-stage pumping at an approved cost of Rs 46.73 crore. The funds released against the initial projects were to be utilized for the present project which was under implementation, it said. The project was to be implemented by the Public Health Engineering Department (PHED), Urban Division Kohima.
�Scrutiny of records revealed that the GoI released Rs 19.41 crore in two installments (January 2004 and June 2008) out of Rs 32.35 crore sanctioned initially against the project. The Chief Engneer PHED procured (in November 2005), 19741 meters of 250 mm GI pipes from one supplier at a cost of Rs 9.14 crore through the Executive Engineer PHED Store division out of the first installment of Rs. 9.70 crore,� it said.
Again in October 2008, the CE procured 13510 meters of 250 mm GI pipes from two different suppliers (Paul Metha & Sons Kohima � 6755 meters worth Rs. 4.49 crore) and T Sema (6755 mtrs at Rs. 4.49 crore) totaling to Rs. 8.99 crore. The second installment of Rs 9.70 crore was released by the GoI in June 2008.
It said further scrutiny of those supply orders (issued in October 2008) and the suppliers bills revealed that the amount paid to the suppliers were inclusive of Central Excise Duty amounting to Rs. 1.05 crore charged at the rate of 14.42% on the basic cost though pipes of outer diameter exceeding 20 cm attract no Excise Duty as per GoI, Ministry of Finance, Department of Revenue norms.
Nonetheless, the CAG revealed that the Department while admitting that Rs 1.05 crore was paid as excise duty through the EE PHED, Urban Division, the Department stated (October 2013) that it was not aware about the exemption of excise duty on GMS pipes which are an integral part of the water supply project.
The Department had also reportedly claimed that inclusion of Central Excise duty on the cost of GI pipes cannot be reckoned as loss to the Government, rather the Government had earned revenue on account of Central Excise duty. The Department further stated that it did not receive any circular or instruction in this regard either from the GoI or the State government.
The CAG observed that the reply of the Department that it was unaware of exemption of excise duty on pipes was not acceptable as the responsibility for obtaining all the relevant information/date on the relevant rates of various taxes etc., before issuing supply orders, especially in case of huge purchases lies with the procurement authority.
Moreover, it said, the argument of the Department that the Government has earned revenue also does not hold any substance as the procurement was made from a supplier rather than a manufacturer and the claim was not supported by any documentary evidence regarding remittance of excise duty by the supplier.