Nagaland: CAG flags excess payment of Rs 7.20 Cr by Agri Dept for machineries

‘Proposal submitted to GoI only to obtain funds,’ observes CAG

Morung Express News
Dimapur | September 25

The Comptroller and Auditor General (CAG) of India has flagged that the Nagaland Agriculture Department arbitrarily reduced/ increased procurement of Tractors, Power Tillers and Brush Cutters and deviated from the physical and financial targets approved by Government of India. 

It its report for the year ending March 31, 2022, the CAG informed that financial assistance/cost norms of Rs 1.25 lakh per beneficiary was not followed and expenditure of Rs 3.41 crore was incurred on five items which was not approved by the Centre. The department also made excess payment of Rs 7.20 crore to the supplier without actual receipt of the full items, the report highlighted. 

According to the General Financial Rules (GFR), 2017, all materials are to be counted, measured or weighed and subjected to visual inspection at the time of receipt to ensure that quantities are correct, the quality is according to the required specifications and there is no damage or deficiency. Details of the material should thereafter be entered in the appropriate stock register and the officer-in charge of stores should certify that he has actually received the material and recorded it.

As per the Sub-Mission on Agricultural Mechanisation (SMAM) operational guidelines, the cost norms for financial assistance for procurement of machinery/ implements under ‘Promotion of Farm Machinery and Equipment in North Eastern Region’ sub- component, the maximum financial assistance was limited to Rs 1.25 lakh or 100 per cent cost of machinery/ implement/ equipment per beneficiary.

The CAG informed that as per records examined in April 2022, that Government of Nagaland on September 2018 submitted a proposal to the Department of Agriculture, Cooperation and Farmers Welfare (DAC&FW), Government of India (GoI) for ‘Promotion of Farm Machinery and Equipment in North Eastern Region’ under SMAM amounting to Rs 33.33 crore for the year 2018-19. The Centre in October 2018 approved the proposal for Rs 24.40 crore on a 90:10 sharing pattern between Central (₹21.96 crore) and State (₹2.44 crore) Governments.

The Centre in November 2018 released the entire share of Rs 21.96 crore (in two instalments of Rs 10.98 crore each) to the State and the Nagaland Government in turn released Rs 24.40 crore to the implementing Department. 

However, examination of records revealed that instead of providing financial assistance to the beneficiary, the department in November 2018 issued five supply orders for Rs 21.79 crore (inclusive of GST and transportation charges) to three suppliers empanelled by the Nagaland Government for supply of machineries/ equipment during 2018-19.

The CAU audit found that instead of providing the maximum admissible financial assistance of Rs 1.25 lakh per tractor to each beneficiary, the department procured 49 tractors at a cost of Rs 4.90 crore in violation of the scheme operational guidelines and distributed the tractors for free to 49 beneficiaries. This not only resulted in denial of intended benefits to 351 beneficiaries but also led to allowance of financial assistance in excess of the maximum limit of Rs 1.25 lakh to 49 beneficiaries. The excess financial assistance amounted to ₹4.29 crore.

Similarly, it was found that the department procured 350 Power Tillers at a cost of Rs 7.63 crore in violation of the scheme operational guidelines and distributed the tillers for free to 350 beneficiaries. This also resulted in denial of intended benefits to 450 beneficiaries and led to allowance of financial assistance in excess of the maximum limit of Rs 1.25 lakh to 350 beneficiaries. The excess financial assistance amounted to Rs 4.19 crore. 

In the case of Brush Cutter, the department reportedly procured 1,652 units, against the approved target of 752 units, at a cost of Rs 8.46 crore in violation of the scheme operational guidelines and distributed the same to 1,652 beneficiaries.

The records showed that the supplier M/s HT Enterprises, Dimapur (registered as M/s Hyusinlo Thong) was paid Rs 8.46 crore (including GST of Rs 1.29 crore) by the department for supply of 1,692 Brush Cutters on the certificate given by the Officer incharge of Departmental Central Store, Dimapur, that the materials were received (December 2018 to February 2019) in full and in good condition and accounted for in the stock register. 

The copies of the manufacturer invoices, e-way bills and consignment note/ lorry receipts of transporters were however not available on record, the CAG said. It further informed that the department could not furnish the copies of the manufacturer’s price, departmental analysis of rates and government approved rates of farm machineries/ equipment.

To authenticate the actual supply of the machineries, the CAG took up the matter with the Commissioner of Goods and Services Tax (CGST), Dimapur with the request to furnish e-way bills101 and GSTR-2A returns. As per the e-way bills and GSTR-2A provided by the CGST, the supplier had actually purchased Brush Cutters worth Rs 1.26 crore (including GST of Rs 19.22 lakh) from a Guwahati based dealer during 2018-19.

The CGST, Dimapur, Nagaland also stated that M/s HT Enterprises, Dimapur had paid tax of Rs 12,676 only (CGST Rs 6,338 and SGST Rs 6,338). “The above information from the Tax Authorities clearly indicated that the supplier had not supplied the full quantity of 1,692 Brush Cutters but the Department made the payment in full,” the CAG said.

Meanwhile, in addition to the farm implements, the department also procured 400 Falcon Premium Garden Tools at a cost of Rs 0.80 crore and executed four more components at a cost of Rs 2.61 crore which was not approved by GoI and “was thus irregular,” the CAG stated.

It noted that financial assistance norms of Rs 1.25 lakh per beneficiary was also not followed leading to deprival of benefits to 801 beneficiaries. Further, expenditure of Rs 3.41 crore (Rs 0.80 crore plus Rs 2.61 crore) was incurred on five items which was not approved by GoI.

In reply, the government, in October 22, told the audit that the Directorate of Agriculture has awarded supply orders to empanelled dealers with procurement rates as per the cost norms given in the Operational guidelines for smooth services and timely completion of targeted operations. As for the Department Analysis of rates and Government approved rates of farm machineries/ equipment, the Department followed cost norms given in the SMAM Operational Guidelines, 2018-19, it was added.

The department further said that they do not maintain manufacturer invoices, e-way bills, etc and that the department has no mechanism to check GST payment by the supplier. The Department’s only concern is whether all materials were received in full and in good condition as per the supplied terms and conditions, it said. 

The CAG however observed that the justifications provided by the Department are “indicative of the fact that the proposal was submitted to GoI only to obtain the funds whereas the actual implementation of the scheme deviated from the scheme guidelines.”

It recommended that the State Government investigate the matter and fix responsibility on the officers/ officials involved in the procurement process for making excess payment to the supplier; and ensure that the scheme is implemented as per the physical and financial targets approved by the GoI.