Report No. 7 of 2014 - Performance Audit on Effectiveness of Kerala Value Added Tax Information System(KVATIS) in the Tax Administration of Commercial Taxes Department of Government of Kerala

Date on which Report Tabled:
Thu 17 Jul, 2014
Date of sending the report to Government
Government Type
Sector -


Commercial Taxes Department contributes about 75 per cent of the revenue of the State which includes General Sales Tax, Value Added Tax and Central Sales Tax. Kerala Value Added Tax was introduced with effect from 01 April 2005. As part of e-govemance initiative, the Kerala Value Added Tax Information System (KVATIS), application software was deployed during 2007 and became operational from 2007-08 onwards in a phased manner. This was developed by CMC Ltd., a TATA enterprise, as a web based application with 12 modules. Up to March 2010 total expenditure incurred on the project was Rs.29.75 crore and three modules were fully operational. In this context, an audit of effectiveness of KVATIS on the tax administration was taken up.

The audit was conducted from February to December 2013 and data was collected from the Information Technology Management Cell (ITMC) in the Commissionerate of Commercial Taxes. The entire data in the system for the period upto May 2013 was extracted and analysed using the Interactive Data Extraction and Analysis (IDEA) software. The audit observations were cross verified on a sample basis with the assessment details in the Assessment Circle Offices. The results of audit of information in the modules like Dealer information system, Checkpost management system and Return Processing System are narrated in Chapters II to IV and other deficiencies noticed in Chapter V of this Report.

Audit observed several deficiencies/defects in the application of the system for tax administration. Some key risks resulting from weak systemic controls are highlighted in this Report which involves a tax effect of Rs.4,653.43 crore. A maximum penalty of Rs.7,311.81 crore and security deposit of Rs.317.15 crore were also leviable.

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