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PESHAWAR: The Auditor General of Pakistan (AGP) has detected a loss amounting to Rs.362.232 million in various heads by the Communication & Works (C&W) Department, Khyber Pakhtunkhwa during the financial year 2018-19, said Audit Report on the Accounts of Khyber Pakhtunkhwa Audit Year 2019-20.

The highest loss of Rs.128.562 million was occurred due to non-deduction of Sales Tax on Services. According to Rule 28 & 37 of the Government of Khyber Pakhtunkhwa, Khyber Pakhtunkhwa Revenue Authority (KPRA) working tariff taxable services as per record schedule to the KP Finance Act, 2013, 15% sales tax is to be recoverable on the services provided by Consultants read with the contract agreement between C&W Department and Consultant, Clause 1.10, the consultant shall pay all taxes and duties levied by the client country without reimbursement by the client.

During audit of the Emergency Rural Roads Rehabilitation Project for the financial year 2017-18, it was observed that a sum of Rs.857, 081, 666/-was paid to NESPAK for their consultancy services. However, sale tax on services @15% was not deducted from the consultant, resulting in a loss of Rs. 128,562,249/- that was required recovery.

The lapse occurred due to weak internal controls and non-observance of contact agreement.

When pointed out in February 2019, the department replied that M/S NESPAK is well reputed-Government: Consultancy organization working under the Ministry of Water & Power and all the taxes are deposited by the firm directly to FBR through their annual returns. It is worth noting that payment to M/S NESPAK had not been made during the auditable year 2017-18. Furthermore, payment to the consultant has directly been made by the donor.

In the Departmental Audit Committee (DAC) meeting, the department stated that the case was sub-judice in the Peshawar High Court and M/S NESPAK is a registered firm with the KPRA and they submit their return regularly with the KPRA. Furthermore, a notification in this regard has also been made by KPRA regarding sales tax at @2% notified w.e.f 1/07/2019 in all previous agreements made been exempted. However, DAC did not agree and directed that para stands. Audit has recommended the recovery of the Sales Tax on services and fixing of responsibility against the persons at fault.

The second loss of Rs.80.104 million was due to non-imposition of penalty on the contractors in violation of the Clause 2 of the contract agreement executed with the contractor, liquidated damages for delay equal to 1% of the contract price per day subject to minimum of 10% of the contract price stated in the letter of acceptance.

The loss was initially noticed during audit of the Executive Engineer C&W Division Haripur for the financial year 2017-18 and was observed that different schemes were executed which were awarded to the contractors, for accumulated bid cost of Rs.801.07 million. The schemes would have been completed within their stipulated time as mentioned in the acceptance of letter. In case of delay in finalization, the engineer-in-charge was required to impose a 10% penalty amounting to Rs.47.609 million in five cases.

Audit held that non-completion of the said schemes not only deprived the beneficiaries of the schemes, rather also increased its cost because all the schemes were still in progress and not completed till the date of audit. The lapse has occurred due to weak internal controls and financial mismanagement. But, when pointed out in October 2019, the department stated that a detailed reply will be furnished after consulting of record.

The audit requested the department for holding of DAC meeting. However, no DAC meeting was convened till the finalization of the AGP report, which prompted audit to recommend the recovery.

Third loss amounting to Rs.42.00 million was occurred due to non-recovery of rent from the illegal occupants of shops and flats. During audit of the Executive Engineer Provincial Building Maintenance Cell for the financial year 2014-15, it was observed that rent of 24 shops and 11 flats was collected @ 37 to Rs.53 per month per shop/flat, which was further sub-let by the occupants. The proper record was neither maintained nor available. Furthermore scrutiny of record revealed that in this regard Chief Minister Khyber Pakhtunkhwa had approved a summary on 18.11.2014 for vacation of the shops and flats and construction of plaza on Built Operate Transfer (BOT basis, which was not implemented till the date audit. When pointed out in January 2016, the department replied that the government has decided to construct multipurpose plaza on the land and paperwork on in progress.

In the DAC meeting held on 27.04.2017, the department stated that rent of 24 shops and 11 flats in Khyber Bazaar for the year 2014-15 has been recovered and duly credited into the government treasury. DAC did not agree and directed that fact-finding inquiry should be conducted within 30 days under intimation to audit. The inquiry report was received on 14.10.2019, which stated that the stay order provided by tenants was defective. The audit has directed the recovery of the amount from the tenants.

Another loss of Rs.37.914 million was incurred due to non-imposition of penalty on the contractors in violation of the Clause 2 of contract agreement executed with the contactor; liquidated damages for delay to 1% of the contract price per day subject to a maximum of 10% of the contract price stated in the letter of acceptance would be recoverable. It was first noticed during the audit of the Executive Engineer C&W Division Haripur for the financial year 2018-19 that different cases were executed which were awarded to the contractors, for accumulated bid cost of Rs.801.07 million.

The schemes would have been completed within their stipulated time as mentioned in the acceptance letter. Moreover, while going through the agreement file and other relevant record, none of the following contactors recorded any grievances regarding the non-availability of funds in their initial applications. In case of delay in finalization, the Engineer-In-Charge was required to impose 10% penalty, amounting to Rs.37.914 million by invoking Clause 2 of the contract agreement, which was done.

Copyright Business Recorder, 2022

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