CAG pulls up Odisha govt over Rs 112 cr royalty shortfall on coal

The Comptroller and Auditor

General (CAG) of India has pulled up the Odisha government for non-inclusion of sizing charges in the Run-of-Mine price of coal during assessment, resulting in short levy of royalty of Rs 112.26 crore.

Mines and Minerals (Development and Regulation) Act, 1957, provides that the holder of a mining lease shall pay royalty in respect of any mineral removed or consumed by him from a lease area at the specified rate, the CAG said in its report on revenue sector for the year ended March 2018.

In terms of a 2012 notification of the Ministry of Coal, royalty on coal is leviable at the flat rate of 14 per cent ad-valorem on the price of coal as reflected in the invoice excluding taxes, levies and other charges, said the report tabled in the Odisha Assembly on Tuesday.

As per the notification of Coal India Limited of December 2013 on price of coal, if the top size of coal is limited to 100 millimetres through manual facilities or mechanical means, sizing charge at the rate of Rs 79 per tonne shall be added to the price applicable for Run-of-Mine (ROM) coal, it said.

Further, under Mining Concession Rules (MCR), 1960, in case processing of ROM minerals is carried out within the leased area, then, royalty shall be chargeable on the processed mineral removed from the leased area, it said.

Stating that the mention was made in earlier audit reports regarding short-levy of royalty on sized coal in different mining circles, the CAG report said that scrutiny of relevant records revealed that similar irregularity persisted in three mining circles in the year 2017-18 as well.

It was observed that one lessee despatched 10.15 crore MT of sized coal of less than 100 mm size relating to 15 coal mines during April 2016 to February 2017. The lessee paid royalty at the rate applicable to the price of ROM coal and not on the price of coal, including sizing charges, it said.

The Deputy Director of Mines (DDMs) concerned during assessment did not calculate the royalty on the price of coal including sizing charges. The sizing charges notified by the Coal India Limited were Rs 79 per tonne and the royalty on sizing charges worked out to Rs 11.06 (14 percent of Rs 79) per tonne. This resulted in a short-levy of royalty worth Rs 112.26 crore, it said.

"Thus, by not adhering to the prescribed guidelines and notifications during assessment of royalty on coal, the DDMs deprived the state exchequer of royalty worth Rs 112.26 crore," the CAG report said.

Similarly, dead rent of Rs 155.95 lakh by 65 lessees and Surface Rent of Rs 16.67 lakh by 14 lessees were neither paid nor were they demanded by the Deputy Director of Mines, it said.

The CAG report further pointed out that the salary component of Rs 51.26 lakh in respect of the government staff posted in private weighbridges was not realised by the Deputy Director of Mines and deposited in the government account.