Audit Report (Stand Alone), Punjab for the Year 2010-11

Date on which Report Tabled:
Wed 28 Mar, 2012
Date of sending the report to Government
Government Type
Sector Taxes and Duties


The levy and collection of State Excise Duty is sole responsibility of the State Government in terms of entry 52 of List II of the Seventh Schedule of the Constitution of India. The State Excise Duty is one of the important sources of tax receipts of the State Government and it constituted 11.87 per cent of the total revenue collections of the State of Punjab Receipts from State Excise mainly consist of duty which is levied on production and sale of liquor. Licence fee is levied and collected on grant of different type of licences for manufacture and sale of liquor. Other receipts of Excise Department are application fees, permit fees, development cess, penalty and interest for delayed/belated payments of dues etc. Rates of Excise Duty, licence, permit and application fees are determined by the State Government and their collection is made by the Excise and Taxation Department.

The revenue from State Excise duty increased from RS 1568.16 crore to RS 2373.07 crore during the period 2005-06 to 2010-11. We saw that the increase in State excise revenues was not commensurate to the increase in consumption of liquor in the State. In this context we considered it necessary to examine whether the policy measures taken by the Government for increasing the Excise Revenues were adequate and whether the Department was discharging its functions effectively and efficiently, in the overall performance of levy and collection of the State Excise duty.

We conducted a Performance Audit on Working of State Excise Department for the period 2005-06 to 2009-10 in order to ascertain whether the provisions of various Acts and Rules made thereunder were enforced effectively by the Excise and Taxation Department. We ascertained whether there existed an effective system for levy and realisation of excise duty on production of liquor, licence fees on sale of liquor and levy of interest/penalty etc. in the cases of default was effective. We also analysed internal controls and monitoring mechanism for their effectiveness. Further, we tried to assess whether the environmental and ecological concerns had been taken care of by the distilleries in the process of manufacture of liquor and also whether the Department had discharged its social functions of preventing the production/sale of spurious and illicit liquor.

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