SC urges swift action on tax recovery, mandates implementation of Auditor General's recommendations

KATHMANDU: The Supreme Court recently issued a verdict urging tax authorities to promptly heed recommendations from the Office of the Auditor General (OAG), stressing the OAG's status as a constitutional entity. This move mandates government offices to implement OAG recommendations as mandatory directives for fiscal discipline. The SC emphasized the significance of the OAG's annual report in pinpointing financial discrepancies within government operations, calling it essential for bureaucratic fiscal accountability.

The OAG's 61st annual report, released recently, underscored the Ministry of Finance's (MoF) inadequate efforts in tax recovery, especially concerning uncontroversial dues. Despite significant sums pending before the Revenue Tribunal, the MoF has been criticized for ineffective measures in recouping outstanding dues. Current figures from the Inland Revenue Department reveal staggering dues totaling over Rs 258.85 billion, including significant amounts in income tax, value-added tax, excise duty, and other categories. Of these, a notable portion, Rs 145.77 billion, is subject to appeals before the Revenue Tribunal.

The reluctance of government offices to enforce OAG recommendations is reflected in escalating arrears, as highlighted in the 61st annual report. Government arrears surged by Rs 95.60 billion in the fiscal year 2022/23, pushing the total to Rs 669 billion. Notably, the MoF accounted for the largest share of arrears among federal ministries last year, totaling Rs 25.47 billion, with the Ministry of Physical Infrastructure and Transport following closely with arrears of Rs 12 billion.

Additionally, the OAG's report criticized the MoF and related offices for failure to recover revenue dues and loan principal amounts and interests, totaling Rs 415.03 billion. The constitutional organ also expressed dissatisfaction with the perfunctory treatment of its recommendations in federal parliamentary discussions, highlighting systemic issues in addressing fiscal accountability.