Haryana Loses Over Rs 1,100 Crore in Revenue Due to Tax Irregularities, Says CAG

Haryana's financial management has come under serious scrutiny after the Comptroller and Auditor General (CAG) revealed that the state has lost over Rs 1,100 crore in potential revenue due to widespread tax irregularities. The report, presented in the Haryana Vidhan Sabha on Tuesday, highlights significant lapses in tax collection and financial oversight across multiple departments.

GST Implementation Gaps Cost State Nearly Rs 700 Crore

The most alarming findings came from the audit of sales tax and value-added tax (VAT) assessments under the Excise Department. After examining just one-third of total cases, auditors uncovered irregularities amounting to Rs 1,008.36 crore across 578 cases. 

"The state's GST oversight has serious holes," said a senior official familiar with the report. "We found departments weren't properly tracking GST payments or return filings, which alone cost the state treasury Rs 678.22 crore." 

The report also flagged incorrect Input Tax Credit (ITC) claims that resulted in excess credits of Rs 211.45 crore being granted to businesses, further depleting state finances. 

Liquor Licence Violations Go Unpunished 

The excise department's failures to enforce regulations and collect penalties emerged as another area of concern. The CAG found that penalties for illicit liquor operations and licence fee violations weren't being pursued, causing a Rs 7.46 crore shortfall in government revenue. 

One particularly troubling case involved M/s Shokeen Wines, which was fined Rs 5.99 crore for regulatory breaches in 2020-21. However, officials recovered only Rs 1.02 crore from the security deposit, leaving Rs 4.97 crore uncollected with no apparent follow-up. 

"This pattern of partial recovery suggests either negligence or something more concerning," remarked a financial analyst who reviewed the findings. "When violators know they can get away with paying just a fraction of penalties, it undermines the entire regulatory system."

Property Registration System Falls Short

The Revenue Department didn't fare much better, with stamp duty and registration fee irregularities totaling Rs 60.13 crore identified in 1,308 cases during 2020-21. These lapses occurred at various registration offices across the state, where proper valuation and duty assessment protocols weren't followed.

Digital Financial System Still Flawed After Eight Years

Perhaps most concerning is the CAG's critique of the state's Integrated Financial Management System (IFMS), which was implemented eight years ago to modernize financial operations. 

"Even after more than eight years, the system lacks basic benchmarks to measure its effectiveness," the report stated. "Poor validation controls allowed irregular bills to be processed, and the absence of adequate input controls during the generation of the Unique Code of Payee led to the acceptance of invalid PANs."

These technology shortcomings have created additional vulnerabilities in the state's financial management, potentially opening doors for further revenue leakage.

Despite acknowledging issues worth Rs 643.07 crore across 1,077 cases, the departments have managed to recover only Rs 3.52 crore from 64 cases – a recovery rate of just 0.5%. Most of these recoveries (Rs 3.35 crore) were from issues identified in previous years, suggesting current problems remain largely unaddressed.