News

The state is losing millions of rupees due to various frauds connected to the import, issue of vehicle permits and registration of motor vehicles in the country each year, with test checks carried out by the Auditor General revealing losses amounting to Rs. 745.8 million during the past three years.

These facts have been revelased in an audit report submitted recently by the Auditor General to Parliament. The report had only calculated losses based on test checks in the Customs, Registration of Motor Traffic and the Import and Exports Control Department. The Report said the actual losses could run into billions.

The waiver of taxes contrary to provisions of the Excise Duty (Special Provisions) Act had resulted in the loss of Rs. 460 million between January 2003 and June 2004, while the State lost over Rs. 204.8 million through failure to charge proper permit fees, which came into effect in September last year, from vehicle owners, the report said.

The State had also suffered a loss of over Rs. 66.2 million in excise duty from vehicles imported for tsunami disaster work, contrary to provisions in the law and without gazette notification and no action had been taken to regularise the waiver up to July this year.

Other losses amounting to Rs. 3.4 million were due to registration of motor vehicles on the production of fictitious documents in the Department of Motor Traffic. Another Rs. 11.4 million had been lost due to defrauding of taxes by fraudulent registration of imported motor vehicles.

An audit check of 50 imported vehicles had revealed that in 13 instances imported motor vehicles had been fraudulently registered as trucks by the payment of customs fees less than what should be paid to the government.

According to a Customs official, vehicles declared as trucks come under the agricultural equipment category and duty payable is around six per cent its value, while the duty payable on a diesel motor vehicle is over 250 per cent of the its value while for a diesel motor vehicle such as a Prado the duty is around 380 per cent. The duty of a petrol motor vehicle is also over 150 per cent and hence a false declaration results in massive losses to the State, the official said.

In the case highlighted by the AG’s office, it was revealed that losses in Customs duty on nine out of those 13 motor vehicles it had investigated had amounted to over Rs. 11. 4 million. The Custom’s duty payable on the examined nine vehicles was a little over Rs12. 36 million but the actual amount paid was Rs. 963,117 thus making the tax revenue less by Rs. 11.4 million.

The Customs official said one reason for this kind of fraud is because the appraiser is unable to check each vehicle individually because there is a shortage of staff.

Investigations in this particular case also found that files required for the computation of the rate defrauded on the balance four motor vehicles had disappeared.

The AG’s report also found many more fraudulent activities in the issue of vehicle import permits as well as illegal refund of permit fees amounting to millions of rupees during 2004 and 2005.