The Chhattisgarh government has incurred a loss of Rs.1186 crore due to irregular exemption from payment of electricity duty and for non or short levy. The performance audit was conducted during March to June 2012. The Electricity Department has accepted the issues raised by the CAG and issued demand notices to the concerned companies to collect the amount, said the CAG report on the Revenue Sector for the year ended on 31 March, 2012. The report was tabled in the State Assembly on Friday and eventually handed over to the Press by the Accountant General (Audit) P. C. Majhi.

The CAG’s survey has revealed that many captive power companies (CPP) in Chhattisgarh — which produce power for their internal consumption — have violated all kind of power tariff exemption laws to pay lesser duty, resulting in a huge loss. Four companies — Aryan Coal Benefaction, Century Cement, Jai Durga Oil Extraction Limited and Ultratech Limited — have begun commercial production between March 2006 and December 2008. However, they have applied for exemption from payment of duty for five years under the 1992 notification of the government.

The 1992 notification of the State government, in order to promote new industry, introduced a duty exemption scheme. The scheme said: “Any person or undertaking producing electricity from a generating set with a capacity of more than 125 KVA for self-consumption is exempted from payment of electricity duty for five years from the date of commencement of commercial production.”

The notification was withdrawn in December 2008. The CAG says, “Since the notification of 1992 was already withdrawn, these companies were not entitled to exemption.” However, the companies did avail of exemption from electricity duty amounting to a loss of 28.31 crore during the period. Besides, there is a loss of interest of Rs.17 crore. The companies took advantage of multiple duty exemption schemes — overlapping one another — to avoid paying the money that they are supposed to pay. A CAG officer said the Electricity Department was supposed to check the entitlement of schemes, which they did not.

“As a result, companies used various schemes to pay less duty and the Government lost few hundred crores,” said the officer.

However, a senior official of the Chhattisgarh government told The Hindu that there was no “potential loss” in the deal as suggested by the CAG. “There is no question of a loss because the coal that we got in Parsa block is F grade coal only. The agreement was signed assuming we would get F grade only. Hence there is no loss, not even potential,” said the senior official.

There are various other heads under which the government is alleged to have incurred substantial losses amounting to a few hundred crores, says the report. The total loss stands at Rs.1186 crore. The government accepts the figure and “issued demand notices involving Rs.1090 crore” and recovered Rs.12.86 crore in 2012-13, said the CAG report. In addition, performance audit on “Levy and Collection of Electricity Duty” revealed “erroneous provision” in the Chhattisgarh Electricity Duty Act that has led to levy of cess at “two different points” and consequential extra burden of 252.63 crore on consumers.

A senior minister of the BJP-led Chhattisgarh Government, Brijmohan Agrawal, said the party is not going to comment on the report now. “Let the recommendation of the Public Accounts Committee (PAC) come, we will discuss the issue,” he said.

The opposition Congress demanded Chief Minister Raman Singh’s resignation. The report – following its natural course – has gone to PAC, headed by an Opposition legislator. However, the fate of the PAC report is not clear at this point.