If you are under the impression that the Pernem excise station is the sole blot on the Excise Department, you might be mistaken. The entire department has consistently engaged in misconduct and purportedly exploited loopholes within the system, over the years.
The misappropriation of funds and forgery, involving at least three officials including two inspectors so far, could be just the tip of the iceberg. Official records reveal numerous irregularities that have plagued the department. While some issues were rectified subsequently in a bid to avoid coming under the intense scrutiny of the probing agencies, others were overlooked without any punitive action taken against those responsible.
Unarguably, the State excise department “ besides Tourism - plays a crucial role in generating revenue for the government, and particularly after the mining closure, dependence on this sector has increased manifold.
The excise revenue primarily consists of excise duty collected from manufacturing units, as well as licence and surcharge fees imposed on the wholesale and retail sale of liquor. One of the key revenue sources for taluka excise stations is the collection of yearly renewal licence fees from wholesalers/retailers and the granting of new liquor licences. This is what initially brought the gross misconduct at the Pernem station to light when forged receipts for forged licenses were issued to over 70 licence holders.
A performance audit conducted around three years ago exposed the department’s attempts to conceal various irregularities. The audit identified significant financial losses to the State exchequer due to negligence on the part of officers and staff assigned to various positions over the past couple of years.
The department, which is supposed to collect surcharges from hotels operating casinos, licensees operating on weekly closure days, additional time licence fees, occasional licence fees, fines, sales proceeds, etc has allegedly played up with the figures. According to the available information, there are around 12,003 licensees, 52 manufacturing units, and several wholesale and retail units operating under the jurisdiction of 11 excise stations.
During the financial years 2014-15, 2015-16, 2017-18, and 2018-19, excise revenue showed a gradual increase before 2016-17, but during this financial year, there was a negligible increase in revenue. The department failed to provide any reasons for this insignificant growth, though it justified it by showing a marginal increase in total tax revenue from 6.88 per cent in 2014-15 to 10.46 per cent in 2019-20.
Audit exposed troubling flaws
To the government's embarrassment, the audit findings exposed flaws in Goa’s Excise Policy, Act, and Rules. The CAG stated that there’s no State government-framed policy for minimum production and allowable wastage in the production of malt spirit; and no standards in place for minimum production or wastage related to malt spirit.
“Norms for drawal of samples of IMFL manufactured by distilleries in the State were also not set. An audit of five selected excise stations revealed that the Department lacks internal control at the primary level of function for grant and renewal of licences. The existing internal control mechanism was not being enforced by the excise inspectors resulting in a short levy of excise revenue amounting to Rs 7.59 crore in the five selected excise stations during 2014-15 to 2019-20. Non-submission of export verification certificates by the manufacturing units on the export of liquor was not acted upon for more than five years,” it said.
The issue was also thoroughly covered by The Goan in its edition on July 3.
Short-levy of additional fees
from hotels with casinos
The concerned officials dared to let go of hotels running land casinos from paying additional fees, which has undoubtedly added to the total revenue loss figures.
According to Rule 122 of the Goa Daman and Diu (Excise Duty) Rules, 1964, an additional licence fee of Rs one lakh was supposed to be levied separately for the retail sale of Foreign Liquor (FL) from hotels that hold a casino licence, regardless of the category. The rule also empowers the Excise Department to impose an additional amount equivalent to two per cent of the licence fee for each month for delay in paying the annual licence fee within the prescribed time.
However, during the audit scrutiny conducted in July 2017, November 2017, and February 2018, it was observed that in four out of the five excise stations, the additional licence fee was not levied from nine licensees who had casino licences for the retail sale of foreign liquor between 2008-09 and 2015-16.
As a result, there was a shortfall in the collection of the additional licence fee amounting to Rs 1.22 crore, including interest.
It was only thereafter that in May 2020, the then Commissioner issued directions to the excise inspectors at the stations to be more vigilant in recovering government dues. Salcete, Mormugao, and Tiswadi excise stations recovered Rs 24.12 lakh from four licensees. However, out of these four cases of recovery, only the Salcete excise station recovered the interest from one licensee. The remaining three licensees were only able to recover the short-levied amount without interest. As for the remaining five licensees, the recovery is still pending.
The report further revealed a lack of key controls, which resulted in ineffective supervision and revenue loss. What’s also interesting to note is that these irregularities were scanned through only at five excise stations at Tiswadi, Bardez, Ponda, Salcete, and Mormugao, while the remaining six remained out. Sources said that if these excise stations are also audited, the loss to the department and the government could spike.
From luxury to budget,
scams reached hotels too
The department officials, if not all, do not seem to get exhausted from resorting to fraudulent activities. In yet another significant fraud, there’s a contradiction in the number of hotels recorded by the five excise stations in their respective jurisdictions with that of the Department of Tourism.
The CAG has revealed that the number of “A,” “B,” and “C” category hotels identified by the five excise stations for the levy of licence fees was shockingly lower than the number of hotels registered with the Department of Tourism. This has resulted in a shortfall in the collection of licence fees.
To assess the risk of incorrect categorisation of hotels for the levy of license fees, the audit selected 100 per cent of “A” category hotels, 50 per cent of “B” category hotels, and 10 per cent of “C” category hotels registered with the Department of Tourism. The CAG stated that the purpose was to cross-verify the excise licence fees levied and the amount collected from these hoteliers by the respective excise stations between June and September 2019.
The auditors were startled to find that in 20 cases where the licence fees for category hotels were to be levied, the rates were applicable as that for normal hoteliers, which resulted in a shortfall of Rs 55.21 lakh in licence fees and interest of Rs 33.96 lakh.
The CAG made a critical observation, stating that taluka excise stations are expected to exercise vigilance. “However, the excise stations failed to verify the accuracy of facts before categorising the hotels, leading to a shortfall in the collection of licence fees,” it said.
The report stressed the need to strictly implement internal controls to ensure the accurate categorisation of hotels and prevent the recurrence of such lapses. Unfortunately, the attempt to plug the revenue leakage did not succeed 100 per cent. The records show that an amount of Rs 6.69 lakh from three licensees was recovered by the excise stations of Bardez, Salcete, and Mormugao but the recovery of the remaining 17 cases is still pending.
Surprisingly, these excise stations failed to provide files related to the remaining 106 cases to the audit, raising concerns about transparency and accountability within the system.
