Kar Vivad Samadhan Scheme a failure: CAG

By Our Special Correspondent

NEW DELHI, AUG. 12. The Comptroller and Auditor General (CAG) has slammed the Kar Vivad Samadhan Scheme (KVSS) which was aimed at declogging the administration and realising the Government dues. ``The scheme failed to either declog the system or realise a significant amount of reasonable Government dues. However, it did provide an escape route for several debtors whose liability was little or not disputed,'' it noted. The CAG has also reported extensively on the absence of safeguards to prevent the abuse of the scheme. Most of those who patronised the scheme had cases against them in which the possibility of an adverse judgement was strong. In some instances, no samadhan (resolution) was required as there were no pending cases.

The intention clearly was to avail the benefits of the scheme. ``The response from actual cases of dispute was rather poor and they continued to clog the system. Its overall impact on revenue was negative.'' Announced by the Union Finance Minister, Mr. Yashwant Sinha in his Budget speech in 1998, the scheme's first objective was to declog the system. It could clear less than one- seventh of the number of outstanding cases. It failed miserably in its second objective of realising the dues much earlier by giving an abatement of 50 per cent of the duty and full waiver of penalty and immunity from persecution. To this end, the Government sacrificed Rs. 624 crores to realise just Rs. 400 crores. The additional sacrifice of Rs. 224 crores was on account on waiver of penalty, interest and fine. ``The scheme failed to enthuse even companies under the administrative control of the Government,'' commented the CAG in its report tabled in Parliament. More shocking was the CAG's discovery that a significant proportion of the cases settled under the scheme did not involve any dispute. In all likelihood, full realisation would have taken place in normal course. It also came across nine ``undeserving'' cases which accounted for half of the revenue realised under the scheme and 51 per cent of the revenue foregone.

The scheme was not open to those who had no appeal or case pending in courts or appellate authorities. In order to avail of the scheme, many companies applied for the scheme on the same day on which they had filed an appeal with the appellate authorities. ``Apparently the appeals were filed only with the intention of availing benefits under the scheme.''

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