CAG Revenue Sector Report Chapter VI Mineral Receipts

Last modified at 20/05/2016 13:58 by Vanijyasachivalaya

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​Report of the
Comptroller and Auditor General of India
on Revenue Sector for the year ended March 2015
Chapter VI - Mineral Receipts
6.1 Tax A​dministration​
​​The responsibility for management of mineral resources is shared between the Central and State Governments. (Entry 54 of Union List (list 1) and entry 23 and 50 of the State List (list II) of the Seventh Schedule of the Constitution of India).  The Mines and Minerals (Development and Regulation) (MMDR) Act, 1957 enacted by the Central Government, lays down the legal framework for regulation of mines and development of minerals.  The Mineral Concession (MC) Rules, 1960, the Mineral Conservation and Development (MCD) Rules, 1988 and the Granite Conservation and Development Rules, 1999 have been framed for conservation and systematic development of minerals and for regulating grant of permits, licences and leases.
Legislation for exploitation of minor minerals have been delegated to the States.  Accordingly, Karnataka Minor Mineral Concession (KMMC) Rules, 1994 were framed by the State Government.

​6.2 Internal Audit
​The Internal Audit Wing (IAW) is functional in the Department of Mines and Geology (DMG) since 1985.  It is headed by an Accounts Officer on deputation from the State Accounts Department under the overall control of the Director.

As per the information furnished by the Department, out of 31 offices due for audit during 2014-15, only one (3.23 percent) was audited.  The shortfall in coverage of offices was attributed to the shortage of staff in the Wing.  Yearwise details of the number of observations raised, settled and pending along with tax effect, as furnished by the Department as under:
​Table 6.1
Yearwise details of observations raised by IAW
​(Rs. in crore)
​Year ​ ​Observation raised ​​Observations settled ​​Observations pending ​
​Number of cases​Amount​Number of cases​Amount​Number of cases​Amount
​Upto 2010-11​1636​334.13​1403​295.67​233​38.46
​2011-12​04​1.56​-​-​04​1.56
​2012-13​02​1.48​-​-​02​1.48
​2013-14​0​-​-​-​-​-
​2014-15​02​-​-​-​-​-
As seen from above, it is clear that the activities of IAW in the Department have reduced to a greater extent after 2010-11 and virtually to nil in the previous two years period.  This indicates that the Department is not according due to importance to internal audit.
It is recommended that due importance may be accorded to strengthen IAW as internal audit is an important mechanism to ensure the compliance of the department with the applicable laws, regulations and approved procedures.
​6.3 Result of the Audit
​Test check of the records of 15 offices of the DMG during 2014-15 revealed non-levy of penalty for removing minerals without Mineral Despatch Permit (MDP), non/short recovery of royalty and other irregularities involving Rs. 206.38 crore in 61 cases, which fall under the following categories.
Table 6.2
Results of Audit
                                                                                                                                                                                 ​(Rs. in crores)
​​Sl No​Category​Number of cases​Amount
​1​Performance Audit Report computerisation of the Department of Mines and Geology​1​0.00
​2​Non-short levy of penalty for transportaiton of minerals without obtaining MDPs​13​196.92
​3​Non/short levy of processing fee​09​2.39
​4​Non-short levy of royalty​11​3.48
​Other irregularities​27​3.59
​Total​61​206.38
During the course of the year, the Department accepted under-assessments and other deficiencies involving Rs.10.11 crore in 11 cases.  An amount of Rs. 8.86 crore was realised in 37 cases pointed out in earlier years.

A few illustrative cases involving Rs. 1.44 crore are mentioned in the following paragraphs

​​ ​​6​.4 Performance Audit Report on "Computerisation of the Department of Mines and Geology - ​Highlights​
​​Paragraph 6.4.2.1​ILMS does not have provision to generate receipts for payments received resulting in continuation of manual processes and duplication of work.
​​Paragraph 6.4.2.2​DMG had failed to re-establish the m-pass service which was disrupted due to technical incompatibility since February 2015 thereby depriving the generation of SMS based tripsheets for the leaseholders, particularly those of minor minerals which are located in remote places.
​​Paragraph 6.4.3.1





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