Deficiencies in assessment, collection, accounting of revenue: CAG report

Illegal mining during the period 2006 to 2011 in three districts of Karnataka has resulted in a loss of Rs. 3,414.45 crore in revenue, of which the State government could recover only Rs. 7.22 crore, said a report of the Comptroller and Auditor General (CAG) of India.

The CAG report on Controls and Systems of Sustainable Mining in Karnataka revealed a number of system and compliance deficiencies in the assessment, collection and accounting of revenue involving monetary implications of Rs. 3,414.45 crore.

The report, tabled in the Legislative Assembly on Wednesday, did not cover specific instances of illegal mining already examined by the Karnataka Lokayukta and under investigation by the CBI.

In Chitradurga, Tumkur and Hospet divisions, four lessees had extracted 14.68 lakh tonnes of iron ore valued at Rs. 150.59 crore without the consent of the Karnataka State Pollution Control Board, the report said.

Mining of iron ore and stone quarrying in Karnataka was selected for the audit as they were the two major contributors of revenue to the State in major and minor minerals.

Iron ore of 9.95 lakh tonnes, valued at Rs. 107.40 crore, was extracted beyond the permissible limit prescribed in the mining plan. “The cost of the mineral, though recoverable, was not recovered,” it said.

Revenue loss

The report said despite the accelerated growth in turnover of the mining companies from 2003-2004 onwards, there was no upsurge in revenue from royalty.

“This indicates failure of the government to recognise the revenue mobilisation opportunity in an industrial sector which was showing an exponential growth,” the report noted.

Incorrect sales price

It said incorrect application of sale prices of iron ore published by the India Bureau of Mines in 36 cases in three divisions resulted in short levy of royalty amounting to Rs. 13.11 crore.

The report said the lack of coordination between work executing departments responsible for deduction of royalty at source and Department of Mines and Geology resulted in non/short collection and remittance of royalty to the extent of Rs. 23.75 crore to the government.

Processing fee

The report said though there was a provision for levy of processing fee for minor minerals, no such fee was prescribed for major minerals. “This resulted in potential foregoing of revenue of Rs. 37.85 crore for the period 2007-2008 to 2009-2010,” the CAG report said.

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