The Union government has been pulled up by the Comptroller and Auditor General of India (CAG) for deficiencies in collecting cess and utilising it for its intended purposes, according to its report on the financial audit of accounts for 2017-18. To be sure, the audit raises issues that go back to the turn of the decade, when a different government was in power, and which continue to the day an indication that successive governments have been cavalier in their treatment of cess. According to the government auditor, the central government collected Rs 2,14,050 crore in cess in 2017-18. According to the ministry of finance, the government collected a total of Rs 2,35,307.75 crore cess in 2016-17.
“Major cess that were subsumed under Goods and Services Tax (GST) w.e.f 01 July 2017 are Krishi Kalyan Cess, Swachh Bharat Cess, Clean Energy Cess and Cess on Tea, Sugar and Jute etc. However, six Cess continue to be levied,” the report said. A cess is a tax on a tax and usually levied for a specific purpose. And unlike other taxes that have to be shared with the states, the Centre gets to keep the entire amount raised by cess. The six cess that continue to be levied are: Primary Education Cess, Secondary Education Cess, Education Cess on Imported Goods, Cess on Crude Petroleum Oil, Road Cess, NCCD on Tobacco and Tobacco Products and Crude Petroleum Oil.
These funds raised are to be kept in the Consolidated Fund of India, before being transferred to dedicated accounts. But the audit also noted “short transfer of cess collected in Consolidated Fund of India (CFI) to the dedicated non-lapsable fund in public account”. In some cases, even the entire amount was retained. CAG found Rs 94,036 crore was collected under Secondary and Higher Education Cess (SHEC) which was levied in 2006-07. “The Cess is being retained in the CFI, contrary to procedure, though a Fund (Madhyamik and Uchchtar Shiksha Kosh) for this purpose was created in August 2017, and has not been operationalised so far.This issue has been reported regularly in previous CAG reports,” Comptroller and Auditor General of India noted.
The R&D Cess Act, 1986, provides for levy and collection of a Cess on all payments made for the import of technology. After creation of Technology Development Board (TDB) in 1996, the money collected was to be disbursed as Grants-in-aid to TDB. “Rs 8,077 crore was collected under R&D Cess from 1996-97 to 2017-18. Of this, only Rs 779 crore (9.64%) was disbursed to TDB. Further, though the Cess was abolished with effect from April 2017, Cess amounting to Rs 191.41 crore and Rs 1.14 crore was irregularly collected during 2017-18 and 2018-19 (September 2018) respectively,” the report found.