CAG: Only 21% of cess on crude oil utilised for intended purpose in 5 yrs

Responding to CAG findings, the petroleum ministry has said that the government was financing various activities from the budget which included proceeds from the cess, and this qualified as being for development of the oil industry in terms of the OIDB Act.

Oil Industry (Development) Act, 1974 provides for establishment of Oil Industry Development Board (OIDB) for the development of Oil Industry and for that purpose levy a duty of excise on crude oil and natural gas as a cess.

Flagging concerns that cess proceeds collected by the Centre is not being fully utilised for the identified purpose, the Comptroller and Auditor General of India (CAG) said only Rs 15,506 crore or 21% of the total receipt of Rs 72,484 crore from cess on crude oil have been spent for development of oil industry during FY16-FY20.

Oil Industry (Development) Act, 1974 provides for establishment of Oil Industry Development Board (OIDB) for the development of Oil Industry and for that purpose levy a duty of excise on crude oil and natural gas as a cess. CAG audit scrutiny for the period FY10 to FY20, showed that no funds from cess proceeds have been transferred to OIDB as against the total cess collection of Rs 1,28,461 crore.

It is also significant that since inception of OIDB only Rs 902 crore had been transferred to the body and since FY92, no funds out of the cess collected by the government were transferred to OIDB.

Responding to CAG findings, the petroleum ministry has said that the government was financing various activities from the budget which included proceeds from the cess, and this qualified as being for development of the oil industry in terms of the OIDB Act. “It may, however, be noted that treatment of the cess as a general pool tax defeats the very purpose of levy of the cess which was to create a non-lapsable pool of funds for specified use,” the CAG said in its report tabled in Parliament on Monday.

In the case of Universal Access Levy (UAL), for achieving universal service objectives by providing access to telephone services in rural and remote areas, CAG said against the total collection of UAL amounting to Rs 7,962 crore in FY20, only Rs 2,926 crore was transferred to the USO Fund, resulting in short transfer to the USO Fund by Rs 5,035.53 crore.

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