Audit report flags 44.75% cost escalation in streetlight work

An audit report of the office of the Executive Engineer, Electrical Division No. III, UT, has revealed that a work executed by the division witnessed an alarming price escalation of 44.75%, along with irregular GST payments to a contractor.

The findings came to light in a reply to an application filed under the Right to Information (RTI) Act by social activist RK Garg, who sought the audit and inspection report of the division’s accounts for the period from April 1, 2022, to March 31, 2024. The audit was conducted by the office of the Principal Director of Audit (Central), Chandigarh, between March 26 and April 2 this year.

According to the report, the tender work for providing streetlights through underground cables on the slow carriageway from Tribune Chowk (Junction 38) to Poultry Farm (Junction 39) was awarded to a Pinjore-based firm. As per the Detailed Notice Inviting Tender (DNIT) dated March 22, 2022, the contract was allotted for Rs 30,04,430, which was 39.95% lower than the administrative approval of Rs 50,04,047.43. The work was completed on October 31, 2022.

However, the audit found that the final cost ballooned to Rs 43,49,110.67, reflecting a 44.75% increase. The report noted that extra items worth Rs 4,49,706 and Rs 5,24,617 were approved by the Executive Engineer (XEN) and Superintending Engineer (SE), respectively. The XEN also approved deviations amounting to Rs 4,26,304.

The report stated that, as per the department manual, an increase or decrease of up to 20% in the total contract value is permissible in electrical works. However, the actual escalation was more than double the allowed limit. “If the DNIT had been prepared properly, the work would have been completed at competitive price. A malpractice of adding non-scheduled items would also have been reduced,” the report observed.

Further scrutiny revealed irregular payment of Rs 2,63,769 to the contractor towards Integrated GST (IGST). The audit noted that under Section 39 of the GST Act, 2017, every registered person is required to furnish GST returns periodically.

The audit pointed out that payments worth Rs 20,41,389 were made to the contractor between August 2023 and June 2024. While Rs 34,854 was deducted as 2% TDS on GST and deposited into the government account, the contractor’s final bill claim of Rs 1,92,603 remained pending.

Online verification by the audit revealed that the contractor’s GST registration was cancelled from April 5, 2023, and no returns were filed for the financial years 2023–24 and 2024–25. Moreover, the GST challan lacked the name of the principal employer, raising doubts over its authenticity. “Without submission of GST returns, the possibility of misuse of these challans in other government or private departments cannot be ruled out,” the audit stated.

The report categorised the GST payment of Rs 2,63,769 as unverified and stated that no reply was received from the division on the audit observations. The matter remains under final examination.