CAG moots probe over cess accounting dodge

Auditor wants officials investigated for incorrectly recording ₹10,250 cr. of additional duties on fuels as non-tax receipts

The Comptroller and Auditor General (CAG) of India has mooted an investigation against the Central government’s accounting officials for incorrectly recording ₹10,250 crore of cess receipts from additional excise duties on petrol and diesel, as non-tax receipts for the exchequer in 2018-19.

This was done through a journal entry made after the end of the financial year, which the CAG said was done ‘primarily for the purpose of artificially inflating revenue receipts of the year’. The national auditor also dismissed the Finance Ministry’s explanation and rebuttals on the matter as ‘untenable.’


Cess collections from petrol and diesel are to be routed to the Central Road Fund (CRF), created by the Parliament as a dedicated non-lapsable Reserve Fund to be used only for designated purposes. The CRF was replaced with a Central Road and Infrastructure Fund (CRIF) through amendments introduced in the Union Budget for 2018-19.

‘Understating deficit’

“An amount of ₹10,250 crore was transferred from receipts in the Central Road Fund and accounted as non-tax Receipts during 2018-19 through a Journal Entry (JE) after the close of the year,” the CAG noted in its financial audit of the Union government’s accounts for that year. The national auditor termed the journal entry as a violation of accounting procedure.

“This not only had the effect of understating deficit, but also made funds to this extent available for expenditure for other than designated purposes, which was contrary to the will of the Parliament,” the apex auditor observed.


In response to the audit red-flag, the Finance Ministry had argued that the idle balance in the CRF was transferred to the Consolidated Fund of India (CFI) with the approval of the Finance Minister ‘consequent to redesignation of the fund’ from CRF to CRIF. “Such write-backs had been done in the past also, based on recommendations of the Standing Committee on Finance (16th Lok Sabha) for transferring unutilised funds / idle funds in the public account to the CFI,” it said.

Reply ‘untenable’

Terming the Ministry’s reply as ‘untenable’, the CAG asserted that the issue had nothing to do with the redesignation of the Fund and the transfer of balances from the earlier Fund to the newly designated Fund.

Also read | Centre retained ₹1.1 lakh crore of cess receipts, observes CAG

“The reference to precedents is either not relevant or cannot be used to justify wrong practices. The Standing Committee recommendation was in the context of closing idle Funds and transferring unutilised balances back to the CFI. The Central Road Fund/ CRIF is not an idle fund. Further, the stipulated accounting procedure for transferring idle Fund balances back to the CFI does not require inflating the revenue receipts for the year as the JE has done,” the CAG stressed in its audit report.

“It is evident that the purpose of the JE was primarily for the purpose of artificially inflating revenue receipts of the year. This merits further investigation for appropriate action against the concerned accounting authorities who authorised the JE,” the national auditor concluded.

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