Kathmandu, April 11

A report by the Office of the Auditor General (OAG) published today has said authorities capitalised on suspension of a number of rules meant to expedite works related to rescue, relief and rehabilitation of earthquake victims for their own benefit.

The report has further said the government’s performance in disaster management was very dismal.

The government had waived the customs tariff and other taxes levied on import of tarpaulin and tents and certain per cent on import of corrugated sheets for a month after the devastating earthquake.

Unveiling the audit report of fiscal 2014-15, the supreme audit institution of the country said that such facility was, however, extended to some traders even after the deadline had expired.

Utilising the facility, traders had imported tarpaulin sheets worth Rs 188.7 million.

However, traders are yet to submit the value added tax (VAT) collected from the sales of tarpaulins to the respective tax offices. Reportedly, traders have been claiming that they did not collect VAT from the sales of tarpaulin sheets.

As the government had not granted permission to traders to sell tarpaulins without collecting VAT, the OAG has recommended the government to recover VAT worth Rs 29.8 million, including penalties, from the traders.

Apart from compliance-based auditing, the OAG had conducted separate audits on the issues of public concern, like disaster management, expenses of SAARC summit, tax exemption and tax settlement.

Since the government refused to submit the report of tax settlement, the OAG has suspected lack of transparency and favouritism in tax settlement.

The government, through the formation of Tax Settlement Commission, had settled 1,069 cases amounting to Rs 9.55 billion last fiscal. The government had formed the commission under the provision of Tax Settlement Commission Act, 1976.

But the OAG has said that as the government has introduced advanced tax system through new laws, settling old dues based on the provisions of the old act has no relevance.

“Income Tax Act of 2001 has introduced the provision of self-assessment for the tax-payer, and the government’s move to settle the due taxes through the provision of an old act is quite dubious,” said Auditor General Bhanu Prasad Acharya.

The report has also identified misuse of tax exemption facility. “The government has not submitted the record of revenue loss due to the provisions of exemption,” according to the report.

Based on the data made available by the Department of Customs, the supreme audit institution has assumed that the government exempted tax worth Rs 49 billion in fiscal 2014-15 under various headings.

Similarly, the OAG has also done a separating auditing of government’s expenses for SAARC summit.

“The date of SAARC summit was fixed eight months earlier, which was sufficient time for the government to procure

the required resources through the usual procurement process,” said the report, adding, “But the government started procuring the resources only two or

three months prior to the summit and directly awarded the contract to a supplier and paid quite high fees for the procurement of goods and services.”

The government had spent Rs 2.05 million for the preparation of SAARC summit. According to the OAG report, the supplier was unable to deliver some of the goods and services in a timely manner due delay in procurement process.