AUDIT REPORT ON THE ACCOUNTS OF DEFENCE SERVICES … 2018-19.pdfGeneral of Pakistan are responsible...

AUDIT REPORT

ON

THE ACCOUNTS OF

DEFENCE SERVICES

AUDIT YEAR 2018-19

AUDITOR-GENERAL OF PAKISTAN

i

TABLE OF CONTENTS

Page

No.

PREFACE iv

ABBREVIATIONS AND ACRONYMS v

EXECUTIVE SUMMARY xi

SUMMARY TABLES & CHARTS

I. Audit Work Statistics

II. Audit Observations Classified by Categories

III. Outcome Statistics

IV. Irregularities Pointed Out

V. Cost-Benefit Analysis

xx

xx

xxi

xxii

xxii

CHAPTER-1 Ministry of Defence

1.1 Introduction 1

1.2 Status of Compliance of PAC Directives

1

AUDIT PARAS

Pakistan Army

1.3 Irregular / Un-authorized Expenditure 3

1.4 Recoverables / Overpayments 22

1.5 Loss to State 42

1.6 Mis-procurement of stores 52

1.7 Non-production of Record 58

Military Lands and Cantonments

1.8 Irregular / Un-authorized Expenditure 61

ii



1.11 Mis-procurement of stores 104

Pakistan Air Force

1.12 Irregular / Unauthorized Expenditure 106



1.15 Mis-procurement of Stores 131

Pakistan Navy




1.19 Mis-procurement of Stores 166

1.20 Non-production of Record 170

Military Accountant General



Inter Services Organizations



CHAPTER-2 Ministry of Defence Production

2.1 Introduction 180

2.2 Status of Compliance of PAC Directives

180

iii

AUDIT PARAS




Annexure-I MefDAC Paras (DGADS North) 205

Annexure-II MefDAC Paras (DGADS South) 239

iv

PREFACE

The Auditor-General conducts Audit subject to Articles 169 and

170 of the Constitution of Islamic Republic of Pakistan 1973, read with

Sections 8 and 12 of the Auditor-General’s (Functions, Powers and Terms

and Conditions of Service) Ordinance, 2001. The Audit of Defence

Services was carried out accordingly.

The Directorates General of Audit Defence Services (North and

South) conducted Compliance Audit on the accounts of Defence Services

during July to November for the financial year 2017-18 with the view to

report significant findings to the relevant stakeholders. Audit examined the

economy, efficiency and effectiveness aspects of the Defence Services. In

addition, Audit also assessed, on test check basis whether the management

complied with applicable laws, rules and regulations in managing the

resources. The Audit Report indicates specific actions that, if taken, will

help the management realize the objectives of the Defence Services. Most

of the observations included in this Report have been finalized in the light

of discussions in DAC meetings.

The Audit Report is submitted to the President in pursuance of the

Article 171 of the Constitution of Islamic Republic of Pakistan 1973, for

causing it to be laid before the Parliament.

(Javaid Jehangir)

Auditor-General of Pakistan

Dated: 2019

v

ABBREVIATIONS AND ACRONYMS

ACAS Assistant Chief Air Staff

ACE Additional Chief Engineer

AFDP Armed Forces Development Programme

AFI Air Force Instruction

AFNS Armed Forces Nursing Services

AFOHS Air Force Officers Housing Scheme

AG Accountant General

AGE Assistant Garrison Engineer

AGP Auditor General of Pakistan

AHQ Air Headquarters

AMF Aircraft Manufacturing Factory

AOC Air Officer Commanding

ARV Annual Rental Value

ASC Army Services Corps

ASID Army Stores Inspection Depot

ASRF Advance System Rebuild Factory

ATG Annual Training Grant

AWACS Airborne Warning and Control System

BA Fee Building Application Fee

BG Bank Guarantee

BMP Dte Budget Marketing and Procurement Directorate

BOO Board of Officers

BOQ Bachelor Officer Quarter

BoQ Bill of Quantity

BTS Base Trans-receiver Station

BTU British Thermal Unit

C&SC Command & Staff College

CA Contract Agreement

CNA Controller of Naval Accounts

CBC Cantonment Board Clifton

vi

CBI Cash Book Item

CBR Cantonment Board Resolution

CBs Cantonment Boards

CDR Cash Deposit Receipt

CEO Cantonment Executive Officer

CFA Competent Financial Authority

CIF Cost Insurance and Freight

CIMLA Cantonment Institute of Municipal and Land

Administration

CLAR Cantonment Lands Administration Rules

CLS Chief of Logistics Staff

CMA Controller of Military Accounts

CMES Commander Military Engineering Services

CMH Combined Military Hospital

CNE Civilian Non-Entitled

COD Central Ordnance Depot

COMLOG Commander Logistics

COMPAK Commander Pakistan

COMSAT College of Management Sciences and Technology

CP Dte Civilian Personnel Directorate

CPD Chief Project Director

CRV Consignee Receipt Voucher

DAC Departmental Accounts Committee

DBA Director Budget Accounts

DCAS Deputy Chief of Air Staff

DCI Defence Complex Islamabad

DCNS Deputy Chief of Naval Staff

DG DP Directorate General Defence Purchase

DG RV&F Director General Remount Veterinary and Farms

DGMP Director General Munition Production

DGP (Army) Directorate General Procurement (Army)

DGW&CE Director General Works & Chief Engineer

vii

DHA Defence Housing Authority

DMA Daily Messing Allowance

DOHS Defence Officers Housing Scheme

DP Draft Para

DP (Air / Navy) Directorate Procurement (Air / Navy)

DP Establishment Defence Production Establishment

DRTS Damage Repair Training Simulator

DSAS 2000 Defence Services Accommodation Scales 2000

DSR Defence Services Regulations

DW&CE Director Works & Chief Engineer

EDO Executive District Officer

E-in-C Engineer-in-Chief

EME Electrical and Mechanical Engineering

Engr. Engineer

ESD Engineering Stores Depot

FA Financial Advisor

FAM Financial Audit Manual

FBR Federal Board of Revenue

FIA Federal Investigation Agency

FOB Free on Board

FOR Free on Rail

FR Financial Regulations

FTO Federal Treasury Office

FWO Frontier Works Organization

GE Garrison Engineer

GHQ General Headquarters

GSR General Staff Requirements

GST General Sales Tax

HEC Higher Education Commission

HESCO Hyderabad Electric Supply Company

HIT Heavy Industries Taxila

HQ SC Headquarter Southern Command

HQ SC Headquarter Southern Command

viii

HRA House Rent Allowance

HRF (T) Heavy Rebuilt Factory (Tank)

HSR Hospital Stoppage Receipts

IE&I Institute of Electronics and Instruments

INTOSAI International Organization of Supreme Audit Institutions

ISPR Inter Services Public Relations

IT Invitation of Tender

JCOs Junior Commissioned Officers

JSHQ Joint Staff Headquarters

JSI Joint Services Instruction

KARF Kamra Avionics and Radar Factory

KCB Karachi Cantonment Board

KW&SB Karachi Water & Sewerage Board

LAC Land Acquisition Collector

LC Letter of Credit / Local Currency

LD Liquidated Damages

LP Local Purchase

LS Logistic Support

LUMS Lahore University of Management Sciences

MAG Military Accountant General

Mef DAC Memorandum for Departmental Accounts Committee

MEO Military Estate Office

MES Military Engineering Services

MH Military Hospital

MIS Management Information System

ML&C Military Lands and Cantonments

MOD Ministry of Defence

MODP Ministry of Defence Production

MOL Memorandum of Law

MOQs Married Officer Quarters

MRF Mirage Rebuild Factory

NAB National Accountability Bureau

NAM New Accounting Model

ix

NHQ Naval Headquarters

NHS Naval Housing Scheme

NIV Not in Vocabulary

NLC National Logistics Cell

NLI Northern Light Infantry

NOC No Objection Certificate

NORE Naval Officer Residential Estate

NUST National University of Science and Technology

OC Officer Commanding

PA Dte Personnel Administration Directorate

PAC Pakistan Aeronautical Complex

PAF Pakistan Air Force

PAO Principal Accounting Officer

PBG Performance Bank Guarantee

PC Peshawar Command

PEC Pakistan Engineering Council

PESCO Peshawar Electric Supply Company

PNAD Pakistan Naval Ammunition Depot

PNS Pakistan Navy Ship

PPRA Public Procurement Regulatory Authority

PTDC Pakistan Tourism and Development Corporation

QCC Quality Control Committee

QMG Quarter Master General

R&E Risk and Expense

RAR Running Account Receipt

RC Rawalpindi Command

RHQ Regional Headquarter

RO Reverse Osmosis

RSPA Revised System of Pay & Accounting

RTLT Repair Through Local Trade

RV&F Remount Veterinary and Farms

SADA Special Army Development Account

SAR Special Audit Report

x

SI&T School of Infantry & Tactics

SMA Special Messing Allowance

SOP Standing Operating Procedure

SRB Sindh Revenue Board

SRO Statutory Regulatory Order

SSD Special Security Division

SSD Station Supply Depot

SSGC Sui Southern Gas Company

STA Special Transfer Account

TC/ DC Term Contract/ Decoration Contract

TESCO Tribal Electric Supply Company

TIP Transfer of Immovable Property

TO&E Table of Organization and Equipment

TR Treasury Receipt

UA Unit Accountant

UNRA United Nations Reimbursement Account

VOQ Visiting Officers Quarter

WAPDA Water and Power Development Authority

WTI Walton Training Institute

xi

EXECUTIVE SUMMARY

The Directorates General of Audit Defence Services (North and

South) being Field Audit Offices (FAOs) of the Department of Auditor-

General of Pakistan are responsible for conducting the audit of budgetary

grants of Defence Services (except Pakistan Ordnance Factories),

administered by Ministry of Defence (MoD) and Ministry of Defence

Production (MoDP). Audit of accounts of other allocations made to

Defence Services like Special Transfer Account, United Nations

Reimbursement Account and Defence Pension is also conducted by these

FAOs. Moreover, audit of the Federal Government Education Institutions

(FGEI) under the Ministry of Defence with their budget allocation from

civil grant is also within mandate of these FAOs. Besides, these FAOs

conduct audit of Cantonment Boards, Military Lands and that of NUST,

DHA and FWO.

The jurisdiction of Directorates General Audit Defence Services

(North & South) has been made on geographical basis. The two

Directorates conducted audit of 310 formations of MoD and 23 formations

of MoDP during the Audit Year 2018-19.

This Report highlights systemic issues like payments to contractors

on documents without receipt of stores to avoid lapse of funds,

unauthorized use of military lands, mis-procurement, allotment of

residential accommodation without recovery of HRA, weak internal

controls in Cantonment Boards, departures from codal formalities /

delegated financial powers, contractual deviations, loopholes in supply

chain, policy deviations in case of Al-Mizan, UNRA and DCI, etc.

Remaining draft paras are listed in the Annexures-I & II of this Report for

pursuance at DAC level. However, all cases in Annexure-I & II where

appropriate action is not forthcoming from the relevant Ministry, the Audit

observation will be reported to the Public Accounts Committee through

the next year’s Audit Report.

xii

a. Scope and objectives of Audit

Out of total expenditure of the Federal Government for the

financial year 2017-18, auditable expenditure under the jurisdiction of

Directorates General Audit Defence Services (North and South) was

Rs.1,022,595.838 million1 covering 3882 entities under the 2 PAOs. Out

of this, Directorates General Audit Defence Services (North and South)

audited an expenditure of Rs. 269,084.451 million out of normal defence

budget which, in terms of percentage, was 26.31% of the auditable

expenditure. In addition, accounts of special packages of entities selected

during the year have also been audited and observations raised thereon are

reflected in this Audit Report.

Overall audit objective was to assess compliance with financial

rules, accountal of receipts, examination of propriety, economy of

expenditure, observance of regulation, adequacy of internal controls and

review of internal audit.

b. Recoveries at the instance of audit

Through audit paras, recovery of Rs. 93,601.362 million was

pointed out, out of which recovery of Rs. 7,937.298 million was accepted

by the management. However, a sum of Rs.1,884.558 million, US $

0.0645 million and EUR 0.290 million was recovered up to the time of

compilation of report. The remaining recovery remains outstanding at the

time of issue of this Report and updated position will be brought into

notice of PAC during discussion on the relevant paras.

c. Audit Methodology

In accordance with the themes approved by the AGP, the Audit

Plan was framed and implemented. The activities, workflows, procedures

and internal controls of audited organizations were reviewed for

identifying risk areas of irregularities. Accordingly, a unit-wise audit

1 This figure does not contain budget of Al-Mizan/AFDP/UNRA/Pension/FGEIs/CBs/FWO

xiii

strategy was devised with such selection of method and employment of

tactics which may help in devising strategy for audit scrutiny. Remaining

within available resources, audit was conducted on test-check basis with

emphasis on risk areas of high monetary value. Budget allocation, actual

expenditure and account reconciliation of each audited unit was assessed

as far as possible within the system in vogue because system-based

spending-level detailed head-wise allocation as documented on civil side

was not available.

d. Audit Impact

As mentioned earlier, Defence Audit has an institutional

compatibility with the Defence Services, developed over a century. Hence,

Audit advice is always valued by the executive. Audit observations are

deliberated upon at appropriate level and remedial actions taken wherever

required. Hence, Defence Audit has been able to form an impact on

strengthening of control environment in Defence entities. As a result of

raising of observations on following issues, the executive agreed to revise

policy matters: -

i) Policy on recovery of HRA from allottees of Government

accommodation below entitlement has been deliberated by MOD

with all stakeholders and is now in MOD for approval in

consultation with Military Finance.

ii) Policy on commercial use of A-1 land was devised in 2008. Audit

has critically examined its implementation and raised objections. A

revised policy covering these issues is now under active

consideration.

iii) All departures from PPRA reported by Audit have been taken

seriously by MOD and inquiry has been ordered to fix

responsibility in each case.

iv) The issue of defence expenditure pointed out by Audit as incurred

in deviation of policy decision for use of special budget package of

xiv

Al-Mizan has been conceded to by MOD for regularization. A case

to this effect is now with Military Finance for concurrence.

v) Expenditure made out of UNRA budget on purposes other than

replenishment has been identified by Audit during 2017-18. MOD

has agreed to regularize it. Moreover, policy letter will be revised

to bring it in line with present requirements.

vi) The procedure for verification of bank guarantees of procurement

contracts is being revised by the executive due to audit

observations relating to non-confirmation and provision of fake

documents. As per revised procedure, verification will be carried

out through regional offices of banks instead of concerned

branches.

vii) With instructions from the Services HQs, steps to improve working

and output of field audit committees have been taken.

viii) MoD and MODP have held regular DAC Meetings during the year

and pending workload is, therefore, less if compared with other

Ministries / Divisions.

ix) Issue of Audit of DHA is being discussed at top level to find a way

forward to satisfy Supreme Court Judgment in line with Articles

169 and 170 of the Constitution.

x) An inquiry against FWO as Audit refusing entity is presently in

progress in MOD on direction of the PAC.

e. Comments on Financial and Accounting Management

The final Grant No. 26 pertaining to Ministry of Defence for

financial year 2017-18 was Rs. 998,200.400 million against which

expenditure of Rs. 1,022,595.838 million was incurred. Thus, showing an

overall excess of Rs. 24,395.438 million. This issue has been highlighted

by Audit during the course of Certification Audit 2017-18 and reported in

Management Letter to the MAG. It is pertinent to mention here that

Defence Audit also audits all other expenditure made by its auditees out of

xv

funds made available through other sources for AFDP, UNRA, Defence

Pension, Aid to civil power, Election duty, FWO accounts, Civil Grant of

Defence-managed organizations, Defence receipts, Cantonment Funds, DP

establishments, etc.

f. Comments on Internal Controls and Internal Audit

i. An elaborate structure comprising rules, regulations and

procedures specifying internal checks regarding procurements, HR

payments, inventory management and receipts is available in

entities under MoD, MoDP and MAG. Internal Audit Department

conducts internal audit of Defence Services.

ii. There is no internal audit structure available in Cantonment

Boards.

iii. Defence budget is centrally controlled at Service HQ level. CMA-

wise budget allocation is not available. Moreover, detailed head-

wise spending level budget is not made for all heads of Accounts.

Centralization of budget has its pros and cons. Excess expenditure

to the tune of Rs. 24.00 billion is one such shortfall.

iv. System-based non-availability of data, unlike civil audit side,

continues to be a hindrance for Defence Audit.

v. PAF and PAC Kamra follow imprest-based post-audit and

accounting under AFI 42/57 in departure of FR 1986.

vi. As a result of gradual IT interventions in Defence Services, forms

and procedures have undergone revisions without due approval

from the AGP.

vii. Internal controls on databases such as payroll master data,

inventory, pension etc. as well as internal audit, including IT audit,

is required to be established.

xvi

viii. There is no formal mechanism to reconcile MAG’s monthly

expenditure figures with the executive, which raises questions on

correctness of accounting reports.

ix. MAG does not reconcile data with State Bank of Pakistan on

monthly basis.

x. Defence receipt via NBPs is unreconciled and unverified because

no authentic direct information from AG/FTO is available with

MAG. Verification of genuineness of Treasury Receipts remains

an issue on Defence side.

xi. Public Account master-data as well as transactional data is

unreconciled and is without updation of review of balances.

xii. Decentralization of data management by the MAG to CMAs is

without development of quality assurance mechanism at both ends.

xiii. System based transfer of accounting data from CMAs to MAG for

consolidation and reporting, is presently on parallel run with the

paper centric legacy system of punching media. An authentic

quality control system at CMA, MAG and CLA levels should be in

place before full abandonment of legacy system.

xiv. Formal conveying of sanction of expenditure with full particulars

of each transaction along with details of budget, entity and

authority to CMA concerned should be put in place in the whole

Defence Services in line with civil practices.

xv. Consolidation of payments to reduce number of cheques in CMAs

lacks maturity, wherever done which is in departure of usual

workflow of PMAD by disengaging it with PMAD HR and their

respective JDs.

g. The key audit findings of the report

xvii

i. Irregular/Unauthorized Expenditure of Rs 64,229.300 million and

US $ 0.117 million in 94 DPs contained in 7 Paras 2

ii. Recoverables of Rs 7,410.629 million and US $ 2.616 million in

187 DPs contained in 7 Paras3

iii. Loss to State valuing Rs 24,611.299 million, US $ 0.617 Million

and EURO 0.096 million in 37 DPs contained in 5 Paras 4

iv. Mis-procurement of Stores of Rs 14,067.582 million in 31 DPs

contained in 4 Paras5

v. Non-production of Auditable Record of Rs 2,008.764 million in 09

DPs contained in 2 Para6

h. Recommendations

(i) PPRA should be included in syllabi of all training courses in

defence institutes.

(ii) The unauthorized use of A-I land should be checked limiting its

use for the specified purposes only. The income earned from the

use of A-I land should be made transparent, disclosed in the public

accounts and provided to Audit for scrutiny.

(iii) The management needs to take steps to recover large amounts of

Government dues pointed out in this report and fix responsibility

thereof.

(iv) An internal audit wing comprising qualified officers and staff

should be institutionalized in Military Lands and Cantonments

Department to mitigate the risk of irregularities.

(v) HRA should not be paid to allottees of Government

accommodations.

2 1.3, 1.8, 1.12, 1.16, 1.21, 1.23, 2.3 3 1.4, 1.9, 1.13, 1.17, 1.22, 1.24, 2.4 4 1.5, 1.10, 1.14, 1.18, 2.5 5 1.6, 1.11,1,15, 1.19 6 1.7, 1.20

xviii

(vi) Policy implementation in relation to expenditure on DCI out of

funds generated through sale of land etc is seemingly confusing as

civil works are also being carried out at DCI by GEs other than

GEs (DCI). MOD / GHQ should take steps to clarify this

amalgamation.

(vii) The PAO should issue instructions to produce the auditable

documents to the audit teams during Audit to avoid the reported

cases of non-production of auditable record in future and constitute

service wise standing committees to sort out recurring issue of

non-production of auditable documents to Audit by units selected

by AGP in Annual Audit Plan.

(viii) MOD and MODP should take up cases with the Auditor General of

Pakistan for approval of revised forms and procedures adopted as a

result of automation by the three services and other Defence

entities, under Article 170(1) of the Constitution.

(ix) Monthly account reconciliation between executive and account

office should be made at entity level to authenticate budget and

account figures.

(x) CMA wise budget should be allocated for budgetary controls at

each transaction level.

(xi) Erstwhile mechanism of commitment budgeting should be

substantially revived to avert last quarter vulnerabilities reflected

in this Audit Report because of which entities resort to fictitious

documentation to get payment released to contractors without

supply of goods or services secured through CDR, thereby putting

undue cashflow burden on the Government. Ordering staff to

fabricate documents without receipt of store to get huge payments

released is in fact a mismanagement tool which is weakening

internal controls.

xix

(xii) BG verification authentication system should be strengthened by

MOD / MODP in consultation with SBP / SECP.

(xiii) Given the magnitude of present commercial activities in Defence

Services relating to land, dairy, medical, DP Establishments, etc

there is an emerging need to frame rules to formalize existing

arrangements thereby introducing controls far beyond SOPs /

drills.

(xiv) No CMA cheque should be issued to non-public fund against

sanction for payment to units.

(xv) UA offices attached with Engineering units (other than RSPA)

needs to be upgraded to proper account offices linked with the

CMAs through system based accounting system for daily transfer

of booked data.

(xvi) Issue of recovery of rent and allied charges has been repetitively

pointed out by Audit over the years. MOD should tackle this

problem holistically.

(xvii) Successive Audit Reports reflect rampant internal control

weaknesses in Cantonment Boards. MOD / ML&C should take

steps to strengthen controls in the Boards for efficient and effective

service delivery / value for money. It should include creation of

internal audit structure in ML&C.

(xviii) Procurement / award of contract by splitting to keep in financial

power of lower authority is a nagging issue raised by Audit. MOD

should take initiative to remove the interpretationary aspect of this

issue.

(xix) In view of existing Pre-Audit / Post Audit / Internal Audit

weaknesses, extent, scope and frequency of Statutory Audit of

PAF and PAC Kamra should be enhanced.

xx

Summary Tables & Charts

Table-1: Audit Work Statistics

(Rs. in Million)

Sr # Description No Budget/ Expenditure

1 Total Entities (Ministries/PAOs) in Audit

Jurisdiction

2 Budget 998,200.400

2 Total formations in audit jurisdiction 3882 Exp 1,022,595.838

3 Total Entities (Ministries/PAOs) audited 2 269,081.451

4 Total Formations audited 333

5 Audit and Inspection Reports (LTAR) 333

6 Special Audit Reports 7 -

7 Performance Audit Reports 3 -

8 Other Reports - -

Table-2: Audit Observations by Categories

(Rs in Million)

Sr # Description Amount placed under

Audit Observation

1 Unsound asset management 86,297.526

2 Weak financial management 162,507.090

3 Weak internal controls 41,053.007

4 Others 4,547.142

Total 294,404.765

xxi

Table-3: Outcome Statistics

(Rs. in Million)

Sr

# Description

Expenditur

e on

acquiring

Physical

Assets

Civil Works Receipts Others

Total

current

year

Total last

year

1 Outlays

Audited 131,077.562 61,970.629 11,510.610 64,522.650 269,081.451 126,461.834

2

Amount

under Audit

observation

106,248.376 119,630.326 32,822.559 35,703.504 294,404.765 172,366.385

3

Recovery

pointed out

by Audit

3,518.073 15,729.337 30,920.889 43,433.063 93,601.362 82,507.106

4 Recovery

accepted 51.014 840.596 507.838 6,537.850 7,937.298 23,641.949

5 Recovery

realized 9.720 29.027 2.573

1,843.238

+ EUR0.290

+US$0.0645

1,884.558

+EUR 0.290

+US$0.0645

1,213.486

+US$0.866

xxii

Table-4: Irregularities Pointed Out

(Rs. in Million)

S # Description Amount

under Audit

Observation

1 Violation of rules and regulations as well as principle of propriety and

probity

238,520.800

2 Cases of fraud, embezzlement, thefts and misuse of public resources 17.309

3 Misclassification of expenditure and receipts. 1,920.097

4 Weaknesses of internal control system 41,052.715

5 Established recoverable and overpayments, or misappropriation of

public money 10,284.109

6 Non-production of record 75.682

7 Others, including cases of accidental loss, negligence etc. 2,534.053

Total 294,404.765

Table-5: Cost-Benefit Analysis

(Rs. in Million)

S # Description Amount

1 Outlays audited (Item 1 of Table 3) 269,081.451

2 Expenditure on audit 300.880

3 Recoverable realized at the instance of audit 1,884.558

+EUR 0.290

+US$0.0645

4 Cost - Benefit Ratio 6:1

1

CHAPTER-1

Ministry of Defence

1.1 Introduction

Ministry of Defence (MoD) deals with all policy and

administrative matters pertaining to the three armed forces, defence

treaties, defence agreements and military assistance to foreign countries.

MoD also administers Inter Services Organizations, Pakistan Military

Accounts Department, Military Lands and Cantonments and Federal

Government Educational Institutions in Cantonments and Garrisons.

Besides, coordination of civil grants relating to pension and FGEI, the

MoD administers Grant relating to Defence Services which encompasses

budget of Army, Air Force, Navy, ISOs, DP Establishments, PMAD and

SSD.

1.2 Brief comments on the status of compliance with

PAC directives

The status of compliance of Public Accounts Committee

(PAC) directives for the Audit Reports from 1985-86 to 2017-18 discussed

during its various meetings held from July, 1992 to December, 2018 is

given below:-

Year

Total

Paras No. of

Paras

Discussed

Compliance

Made Compliance

awaited / Non

Complied

Percentage

of

Compliance 1 2 3 4 5 6

1985-86 76 05 02 03 40% 1986-87 36 06 03 03 50% 1987-88 49 08 01 07 12.5% 1988-89 48 15 03 12 20% 1989-90 69 03 0 03 0% 1990-91 63 04 01 03 25% 1991-92 65 05 0 05 0% 1992-93 91 12 06 06 50% 1993-94 198 83 28 55 34% 1994-95 91 0 0 0 0%

2

1995-96 102 09 01 08 11% 1996-97 106 104 58 46 55% 1997-98 651 05 0 05 0% 1999-00 443 222 78 144 35% 2000-01 699 696 85 611 40%

2001-02 570 15 10 5 66.67% 2002-03 161 161 152 9 94.40% 2003-04 111 21 03 18 14.29% 2004-05 55 55 34 21 61% 2005-06 138 121 73 48 60% 2006-07 95 35 13 22 37% 2007-08 56 40 05 35 12.05% 2008-09 39 18 0 18 0% 2009-10 124 59 25 34 42.37%

2010-11 Report yet not discussed 2011-12 Report yet not discussed 2012-13 Report yet not discussed 2013-14 33* 30 04 26 13.33% 2013-14 Not yet discussed by Sub-PAC up to 50 million 2014-15 Report yet not discussed 2015-16 Report yet not discussed 2016-17 Report yet not discussed 2017-18 Report yet not discussed

Total 4169 1732 585 1147 33.77%

Ministry of Defence fully complied with 585 PAC

directives out of 1732. The Principal Accounting Officer should take

necessary steps to expedite further compliance of PAC directives.

* Above 50 million paras discussed by PAC

3

Pakistan Army

Audit Paras

1.3 Irregular / Unauthorized expenditure – Rs

14,290.245 Million

1.3.1 Un-authorized expenditure on works out of Al-Mizan

fund – Rs 8,942.278 Million

According to Para 1(V) of Government of Pakistan

Ministry of Defence letter No. 7/6/4004-05/D-21 (Budget) dated 30th

November, 2004, “the releases from Special Transfer Accounts shall be

used for replenishment of stores and procurement under Armed Forces

Development Plan”.

During audit of following units / formations for the years

2016-17 and 2017-18, it was observed that contracts / package valuing Rs.

8,942,278,000 were sanctioned out of Al-Mizan fund, which were not

covered as per above cited Government orders:-

(Rs. in million)

S # DP No. Name of Unit / Formation Amount

1 DP-N-156/2017-18 GE Const-II, Rawalpindi 6,394.165

2 DP-N-199/2017-18 GE (Army) Abbottabad 93.460

3 DP-N-202/2017-18 GE (Army) Services, Lahore 12.560

4 DP-N-208/2017-18 GE (Army) Jhelum 267.908

5 DP-N-323/2017-18 GE (Army) Services, Rawalpindi 137.311

6 DP-N-332/2017-18 ACE (A), Mangla 152.522

7 DP-N-349/2017-18 702 PWS, Bhimber 27.652

8 DP-N-432/2017-18 GE (Army), Jhelum 16.003

9 DP-N-436/2017-18 ACE (A) 11 Corp, Peshawar 490.021

10 DP-N-448/2017-18 GE (Army), Mangla 8.995

11 DP-N-103/2018-19 GE (Army) Const-I, Rawalpindi 299.226

12 DP-N-110/2018-19 GE (Army-I), Sialkot 85.048

13 DP-N-116/2018-19 AGE (Army), Bannu 58.618

14 DP-N-155/2018-19 GE (Army) Const-I, Rawalpindi 821.00

15 DP-N-90/2018-19 ACE (Army) 10 Corps, Rawalpindi 33.289

16 DP-N-365/2017-18 11 Corps, Peshawar 44.500

Total 8,942.278

4

Audit was of the opinion that incurring of expenditure other

than the specified purpose was a violation of Government policy.

The irregularity was pointed out by Audit during 2016-17

and 2017-18. The executives replied that works were carried out on the

basis of funds released by QMG‟s Branch GHQ Rawalpindi. The reply

was not tenable being in departure of the above stated Government policy.

The DAC vide meetings held in November & December,

2018 directed the management to get the irregular expenditure regularized.

However, no progress was reported to Audit till finalization of this report.

Audit recommends an expeditious implementation of DAC

directive, besides, remedial measures.

1.3.2 Un-authorized utilization of funds out of United Nations

Reimbursement Account – Rs 3,246.312 Million

According to provision of Government of Pakistan,

Ministry of Defence letter No. 7/7/2004/05/D-21(Budget) dated 27th

November, 2004, expenditure out of UNRA could be utilized for:-

a) Purchase and replenishment of equipment and stores for

Army contingents deployed on UN peace keeping missions.

b) Pay and allowances and transportation of troops.

c) Incidental and Misc expenditure of Army contingents

directly related to UN peace keeping mission.

Further, as per amendment made by the Ministry of

Defence letter dated 7th

March, 2009, expenditure can be incurred on

projects approved by the Chief of Army Staff and concurred by the

Finance Secretary on case to case basis.

During audit of the accounts of following MES formations

for the year 2016-17 and 2017-18, it was observed that an amount of Rs

3,246,312,000 was expended on different works out of UNRA which did

not fall under the parameters mentioned above:-

5

(Rs. in Million)

S # DP No. Unit / Formation Amount

1 DP-N-306/2017-18 GE (Army) Services, Rawalpindi 43.865

2 DP-N-307/2017-18 GE (Army) GHQ Rawalpindi 231.370

3 DP-N-329/2017-18 GE (Army) Abbottabad 41.926

4 DP-N-451/2017-18 GE (Army) Mangla 348.546

5 DP-N-502/2017-18 GE (Army) Peshawar 406.19

6 DP-N-573/2017-18 GE (Army) Const-II, Rawalpindi 171.99

7 DP-N-100/2018-19 GE (Army) Const-I, Rawalpindi 1,417.850

8 DP-N-132/2018-19 GE (Army) Bahawalpur 69.701

9 DP-N-189/2018-19 ACE (Army) Mangla 78.591

10 DP-N-347/2017-18 ACE (Army) 11 Corps Peshawar 83.599

11 DP-N-453/2017-18 GE (Army) Jhelum 352.684

Total 3,246.312

Audit was of the view that incurring of expenditure other

than the specified purpose without approval of Competent Authority was

unauthorized.

The irregularity was pointed out by Audit in 2016-17 and

2017-18. The executive replied that the expenditure was sanctioned by

the GHQ, QMG‟s Branch (Qtg & Land Dte) and MES was bound to

execute the work as per orders of the Competent Financial Authority. The

reply was not tenable as funds were used without any authorization.

The DAC vide meetings held in November and December,

2018 directed the management that expenditure may be got regularized.

However, no progress was reported to Audit till finalization of this report.

Audit recommends an early regularization and its

verification by Audit.

1.3.3 Un-authorized expenditure out of defence budget – Rs

476.337 Million

According to Government of Pakistan, Ministry of Defence

Rawalpindi letter No.F.48/49/S/GHQ/F-2/18/D-12/2008, dated 6th

November, 2003, a QMG Fund was established for shifting of GHQ to

Islamabad. Further, according to para-2 (f) of Ministry of Defence

6

Rawalpindi letter No F.2/18/D-12 (ML&C)/2003 dated 11th

November

2003 “QMG Fund shall be used to bear all expenses related to shifting/

construction of Defence Complex Islamabad (DCI)”.

During audit of following Army formations, it was

observed that works valuing Rs 476,337,000 relating to works of DCI

Islamabad were sanctioned by QMG from Normal Defence budget

estimates, instead of QMG fund, and payments were made to contractors.

This resulted into unauthorized expenditure of Rs 476,337,000.

(Rs. In Million)

S # DP No. Formation Amount

1 DP-N-66-2018-19 GE (A) Construction-II, Rawalpindi 125.072

2 DP-N-122-2018-19 Additional Chief Engineer (Army) 10 Corps

Rawalpindi

24.856

3 DP-N-422-2017-18 Garrison Engineer (A) Services Rawalpindi 326.409

Total 476.337

The irregularity was pointed out by Audit in 2017-18. The

executive replied that their responsibility was only execution / completion

of works. Contention of audit pertains to allotments of funds which falls

under purview of Budget Directorates and QMG Branch (Qtg & Land

Dte) GHQ Rawalpindi. Further, funds from regular budget were also

expendable against DCI projects in addition to the QMG fund. The works

were also included in priority list of Capital Works FY 2016-17 approved

by Govt. of Pakistan/MOD without objecting to the proposal. The reply

was not tenable because expenditure was debitable to DCI Head of

Account of QMG Fund which was established for construction of Defence

Complex Islamabad and not from defence budget. Audit, therefore,

emphasized that amount incurred, so far, be reimbursed from QMG Fund,

besides, stoppage of further sanctioning of expenditure from normal

defence budget.

The DAC vide meetings held on 12th

, 13th

and 14th

December, 2018 directed to shift the draft para to GHQ for appropriate

7

response. No further progress was reported to Audit till finalization of this

report.

Audit recommends refund of expenditure incurred on DCI

out of normal Defence budget, besides, stoppage of further sanctioning of

expenditure on DCI from normal Defence Budget.

1.3.4 Payment without actual execution of work - Rs 399.248

Million

Under Para-412 of Defence Services Regulations for MES,

payment on running account may be made by the GE for work done. The

amount of such payment shall not exceed the difference between the

approximate value of work done and the cost of stores issued up-to-date.

In making such an advance due regard is to be paid to total value of work

done.

During Audit of Garrison Engineer (Army) Peshawar for

the year 2016-17, it was observed that payment on account of Running

Account Receipts (RARs) against 17 contracts was released up to 90% of

total value of contracts during May and June, 2017, whereas record

showed that work was not physically carried out at site and in some of the

cases work was not even started. This showed that undue favor was

extended to the contractors and unjustified payment of Rs 399,248,000

was released to them.

The irregularity was pointed out by Audit in August 2017.

The executive replied that payments were made to contractors due to

allotment of funds by QMG in closing month of financial year. These

funds were cost of war / UNRA and lapsable. Therefore funds were

utilized for sake of early completion of project. The management hence

accepted that payment was made just to avoid lapse of funds.

The DAC vide meeting held on 13th

December 2018 was

apprised that the works had been completed and handed over to the users.

DAC directed not to repeat such practice in future and relevant record be

8

provided to audit. Record regarding completion of the work was not

produced to Audit till finalization of this report.

Audit recommends that the matter should be investigated to

fix responsibility, besides, regularization of the expenditure. Moreover,

remedial measures should be taken to avoid such lapses in future.

DP-N-520/2017-18

1.3.5 Irregular award of work before admin approval - Rs.

325.00 Million

According to para-16 (a) of MES Regulation, 1998, no

works / service will be executed without administrative and technical

sanction having first been obtained from the authority appropriate in each

case and without funds being available to meet expenditure on it.

During audit of GE (A) Hospital Rawalpindi, it was

observed from contingent bills that payment against Ist Running Account

Receipt was made amounting to Rs.325,000,000/- vide CBI No. 244

dated 23-06-2017 for construction of OPD Block Urology Department at

CMH Rawalpindi. However, it was observed from acceptance letter issued

by E-in-C to contractor vide letter No. 2000/21-A/DP&W/E-2 dated 14-

06-2017 that date of admin sanction was mentioned as 02-06-2017

whereas competent authority i.e. QMG in consultation with Deputy

Financial Adviser issued administrative sanction on 20-06-2017

amounting to Rs 473,161,000/-. Hence issuance of acceptance letter to

contractor without administrative approval was not in order and indicates

weakness of process of work award and favour to the contractor.

Audit was further of the view that the whole exercise was

made in haste at a belated stage of financial year to avoid lapsing of funds

and 68 % (approx.) of the administratively sanctioned amount was paid to

contractor in just 2 days, even without issuing work order (the same was

not enclosed with the RAR payment voucher). The work amounting to Rs.

325,000,000/- was not possible in just 2 days.

9

The irregularity was pointed out by Audit in December

2017. The executive replied that work was verbally sanctioned by QMG

and hence the work was started early whereas allotment was received late

from higher authority. The reply was not tenable as there was no provision

in the rules whereby a high budget work can be started on mere verbal

approval.


December 2018 was

apprised that work was started on verbal orders of QMG in February,

2017, due to urgent medical requirement. DAC directed that relevant

record may be provided to Audit for verification. No further progress was

reported to Audit till finalization of this report.

Audit recommends an inquiry into the matter for fixing

responsibility on person(s) at fault. Moreover, the expenditure should be

got regularized from competent authority.

DP-N-12/2018-19

1.3.6 Splitting-up of sanctions - Rs 237.375 Million

According to Table- A of Para-25 and Para-389 of DSR

1998, as amended vide MoD letter No. 2/12/D-15/2001 dated 12-6-2006,

the power of administrative sanction of QMG is up to Rs 30 million and

the contractual powers of E-in-C and DW & CE are up to Rs 35 million

and Rs 30 million respectively. Further, Para-27 of DSR 1998 stipulates

that no project will be split up merely to bring it within the powers of an

approving authority.

During scrutiny of record relating to GE(A)-I Quetta for the

financial year 2017-18, it was observed that 13 contracts valuing Rs

237,375,000 were split up in order to avoid sanction of higher authority.

Audit was of the opinion that the splitting up of expenditure was due to

weak internal controls and financial management.

The irregularity was pointed out in September 2018 The

executive replied that the works were sanctioned through administrative

10

approvals at different locations. The reply was not tenable as the nature of

works and their location was the same. Administrative sanctions were

issued on the same date. This showed split-up.

The DAC vide meeting held in December, 2018 directed

the management that relevant documents in rebuttal of DP be provided to

audit for examination. No further progress on the matter was reported to

audit till finalization of this report.

Audit recommends regularization of expenditure by the

competent authority.

DP-S-92/2018-19

1.3.7 Un-authorized utilization of funds - Rs 215.714 Million

According to provision of Government of Pakistan,

Ministry of Defence letter No. 7/7/2004-05/D-21(Budget) dated 27th

November, 2004, the expenditure out of UNRA could be utilized for:-

(a) Purchase and replenishment of equipment and stores for

Army contingents deployed on UN peace-keeping

missions.

(b) Pay & Allowances and transportation of the troops.

(c) Incidental and miscellaneous expenditure of Army

contingents directly related to UN peace-keeping mission.

Further, as per amendment made by the Ministry of

Defence letter dated 7th

March, 2009, expenditure can be incurred on

projects approved by the Chief of Army Staff with the concurrence of

Secretary Finance.

During audit of accounts of the following MES (Army)

formations for the period 2015-17, it was observed that an amount of Rs

215,714,268 was expended on different unrelated works out of UNRA

funds in violation of above government orders/ instructions.

11

(Rs in million)

S.No DP No Name of Unit/ Formation Amount

1 DP-S- 45 GE (Army) Services Quetta 102.165

2 DP -S- 42 GE (Army) Karachi 98.387

3 DP -S- 18 AGE (Army) Rahim Yar Khan 15.162

Total 215.714

Audit was of the opinion that incurring of expenditure for

other than the specified purpose without approval of competent authority

tantamounted to misuse of funds and reflected weak financial

management.

The irregularity was pointed out in December, 2017 and

January, 2018. The executive, however, furnished irrelevant reply.


that the expenditure out of UNRA fund be got regularized from the

competent authority. No further progress was reported to audit till

finalization of this report.

Audit recommends for regularization of expenditure and its

verification by audit, besides, fixing of responsibility against the person(s)

at fault.

1.3.8 Un-authorized purchase of buffaloes beyond financial

powers - Rs 100.775 Million

As per Rule-89 Annexure H of Financial Regulations Vol-I

1986, QMG is empowered to conclude contract up to Rs.13.500 Million.

While examining the record of Military Farm Punjnad

Okara, it was observed that contracts were concluded on the basis of rate

offered by M/S Junni Traders for purchase of 550 buffaloes-in-milk

amounting to Rs 100,777,500/- by GHQ QMG Branch RV&F Directorate

Rawalpindi vide their letter No.5804/119/Farms-4WP8x2 dated 15th

Sep

12

2015 which was in contravention of the above Rule. This resulted into

unauthorized purchase of buffaloes beyond Rs13,500,000.

The irregularity was pointed out by Audit in November

2017. The auditee stated that separate contracts were made by each

military farm. The reply was not tenable as overall expenditure in question

was over and above the powers of QMG.


November, 2018

directed that revised reply be provided to audit for scrutiny. No further

progress was reported to Audit till finalization of this report.

Audit recommends for regularization of expenditure from

the competent financial authority.

DP-N-567/2017-18

1.3.9 Irregular sanctioning of expenditure beyond financial

limit – Rs 94.60 Million

Under the provisions of Rule-43 (d) of FR Vol-I 1986,

amended vide Ministry of Defence letter No: F.3/1/98/D-15 dated 23-02-

2018, financial powers of IGT&E on behalf of COAS for procurement of

training aids are Rs. 450,000/- per item (not exceeding Rs. 13,500,000 in

one year).

During audit of PMA Kakul for the financial year 2015-16,

it was observed from payment vouchers that Rs. 94,600,000/- were

sanctioned by IGT&E during the whole financial year for incurring

expenditure on training facilities for foreign trainees. Audit was of the

view that maximum limit of IGT&E to sanction the expenditure under the

rules ibid was Rs 13,500,000 in one year, whereas Rs 94,600,000 was

sanctioned, which was violation of above rule.

The irregularity was pointed out by Audit in March 2017.

The executive replied that the works were carried out in the light of

CCMA GHQ Rawalpindi letter No. AT/Misc-2281-xxxiv dated 24-12-

13

2013. Reply was not satisfactory because the CCMA letter only clarifies

about splitting of expenditure through sanctions of Rs. 450,000/- each and

confirms the limit of sanctions up to Rs13,500,000/- in one year. Audit has

accordingly pointed out sanctioning of expenditure of Rs 94,600,000 in

one year, which was beyond the financial powers of COAS.


November, 2018 was

apprised that expenditure was made under different heads and the same

was not in one specific head. DAC directed that relevant documents be

provided to audit for scrutiny. No further progress was reported to Audit

till finalization of this report.

Audit recommends that expenditure incurred beyond the

financial limits may be got regularized from the Government, besides,

initiation of remedial measures to avoid such lapses in future.

DP-N-324/2017-18

1.3.10 Unauthorized expenditure due to split-up sanctions - Rs

93.425 Million

According to Para-27 of Defence Services Regulations for

MES 1998, “No project will be split up merely to bring it within the power

of an approving authority”. Further, according to Govt. of Pakistan

Ministry of Defence letter No. 2/12/D-15/2001 dated 12th

June, 2006, the

power of QMG for granting Admn sanction to a particular project / work

is Rs. 30.00 million.

While examining the accounts of Garrison Engineer

(Const-I) Rawalpindi, it was observed that six sanctions for construction

of three blocks of (E-type flats) at Rawalpindi costing Rs. 93,425,790/-

were sanctioned by QMG in piecemeal by issuing two separate sanctions

for each block i.e. one for ground and first floor and the other for second

and third floor. The sanctions were also issued on one date i.e. 2nd

March,

2012, which was beyond the financial powers of QMG.

14


The management stated that on the basis of sanction accorded by the

QMG and contract concluded by the DW&CE (A) Rawalpindi the work

was executed by GE (A) Const-I at site according to recommended

drawing and BoQ of contract. Reply was not acceptable as the entire

expenditure related to one work which was split into blocks merely to

bring the job into financial powers of Q.M.G.

The DAC vide meeting on 14th

December, 2018 directed

the management to get the expenditure regularized from Government of

Pakistan. No further progress was reported to Audit till finalization of this

report.

Audit recommends implementation of DAC directives,

besides, adoption of remedial measures to avoid such lapses in future.

DP-N-156/2018-19

1.3.11 Award of contracts to ineligible firm – Rs 61.744

Million

According to Rule-6(a) of Financial Regulations Volume-I,

1986, “Every officer should exercise the same vigilance in respect of

expenditure incurred from government revenue as a person of ordinary

prudence would exercise in respect of the expenditure of his own money”.

Likewise, Clause 8 of Contract Agreement specifies that “if tender of a

contractor not enlisted with MES is accepted he shall be required to

deposit 5% of CA amount as security in the form as demanded by

accepting officer”.

During scrutiny of record pertaining to ACE 5 Corps for

the financial year 2016-17, it was observed that 11 contracts amounting to

Rs 61,744,400 were awarded to M/s Proof Tech which was not enlisted

with the MES. Besides, requisite security deposit was not obtained.

15

The irregularity was pointed out by audit in May, 2018.

The executive stated that necessary notices had been issued to the

contractor for the purpose. The reply was not tenable as the management

failed to follow due process of work award.


that a fact-finding inquiry be conducted to investigate the matter and

record thereof be produced to audit for examination. No further progress

was reported to audit till finalization of this report.

Audit recommends an early implementation of DAC

directive.

DP-S-38/2018-19

1.3.12 Payment without execution of work – Rs 32.092 Million

Under para-412 of DSR, payment on running account may

be made by the GE for work done. The amount of such payment shall not

exceed the difference between the approximate value of work done and

the cost of stores issued up-to-date. In making such an advance due regard

is to be paid to total value of work done. Moreover, according to Rule 22

of FR(Vol-I) 1986, no advance payment (except in case of Govt to Govt

contracts) and letter of credit will be authorized without the concurrence

of the Finance Division even the contract may have been approved

without reference to the finance division.

During audit of Garrison Engineer (Const)-I Rawalpindi, it

was observed that payment on account of RARs against several contracts

was released up to 95% of total cost of CAs whereas record showed that

work was not physically carried out at site and progress was nil as per

progress report. This was irregular and indicated an undue favor to the

contractors by releasing advance payment of Rs 32,092,000 to avoid lapse

of funds.

16

The irregularity was pointed out by Audit in October 2017.

The executive replied that although the process was for adjustment of

expenditure against lapsable allotments but the same amount was received

back in form of CDR in order to keep the same amount held with the

Government and to release according to the work done. Therefore, no

undue benefit was rendered to the contactor. Release of payment without

actual execution of work was in violation of rules. Moreover, release of

payment without actual execution of work at the close of financial year

shows lack of planning and weak controls on the part of management.


December 2018 was

apprised that as the funds were lapsable, the payments were released with

consultation of higher authorities on retention of CDRs from the

contractor to avoid surrender of funds. DAC pended the Draft Para and

directed the executive to get the case scrutinized from the MAG. No

further progress was reported to Audit till finalization of this report.

Audit recommends inquiry, besides, regularization of the

expenditure.

DP-N-522/2017-18

1.3.13 Irregular conclusion of contract with a de-registered

firm - Rs 16.835 Million


1986 “Every officer should exercise the same vigilance in respect of



Moreover, according to PEC Engineering Bye-Laws, 1987, Rule

(3)(1),”No engineering work shall be constructed except by a constructor

or operated except by an operator licensed as such by the Council”.

During scrutiny of record related to the office of GE

(Army) C&SC Quetta for the financial year 2016-17, it was observed that

03 of the contracts valuing Rs 16,835,979 were awarded to M/s Zardan

17

Khan & Co, which was already de-registered by Pakistan Engineering

Council w-e-f 01.01.2016. This resulted into irregular award of contract.

The irregularity was pointed out by audit in January, 2018.

The executive provided an attested photocopy of PEC certificate bearing

serial No 327873 PEC-II, license No 57706, category C, showing validity

up to December, 2017 which was found non-genuine as the PEC website

clearly reflected the status of the contractor as being “De-Registered” after

31.12.2015.


for proof of registration of the contractor with PEC during the

corresponding period for verification to audit and that inquiry may be

conducted and responsibility fixed against the concerned.


directive, besides, fixing of responsibility.

DP-S-59/2018-19

1.3.14 Non-recovery of liquidity damages – Rs 12.752 Million

As per Para-52(a) of PAFW-2249 forming part of contract

that, if the contractor fails to complete the works and clear the site as

stated in clause-53, such breach shall be liable to payment of

compensation amount equal to 1% of the sum or of the measured value of

the works order for every week, provided that total amount of

compensation so payable under this condition shall not exceed 10% of the

contract sum.

During audit of accounts of following MES (Army)

formations for the period 2016-18, it was observed that the management

failed to effect liquidated damages of Rs 12,752,551 from 11 of the

contracts not completed within stipulated time, not extended by the

Executive.

18

(Rs in million)

S.No DP No Name of Unit/Formation Amount

1 DP-S- 187 GE (Army) Kashmore 4.582

2 DP -S- 227 GE (Army) Karachi 4.486

3 DP -S- 110 GE (Army) Services Quetta 3.684

Total 12.752

The irregularity was pointed out by audit in August and

September, 2018. The executive at Sr. Nos 01 and 03 replied that the

works had been completed by the contractors within stipulated time and

extended dates. For Sr. No. 2, the executive replied that the works were

suspended due to some reasons and the extensions were granted.

Therefore, no LD was leviable. The reply was not tenable as the executive

failed to provide any documentary evidence.

The DAC vide meeting held in December, 2018 in case of

Sr. Nos 01 and 02 directed that the handing/taking over report of the

Board and completion report (part-A and B) of works be provided to audit

for verification. In case of Sr. No. 03, the DAC directed that relevant

documents in rebuttal of DP be provided to audit for examination. No

further progress in the matter was reported to audit till finalization of this

report.

Audit recommends expeditious implementation of DAC

directives/ recovery of LD charges from the contractors concerned.

1.3.15 Unauthorized advance payment to electric utility – Rs

11.531 Million

According to Para-408 to 417 of DSR, 1998, "There is no

provision of advance payment to contractor except secured advance". As

per Rule-47(c) of Financial Regulations Volume-I 1986, “The most

careful supervision over expenditure will be exercised and on no account

shall money be spent simply because it is available.”

19

While examining the accounts of AGE(A) Chhor for the

financial year 2016-17, it was observed that advance payment amounting

to Rs 11,531,293 was released on account of electricity bill to HESCO in

the month of June to avoid lapse of funds. This resulted into unauthorized

advance payment of Rs 11,531,293.

The irregularity was pointed out by audit in November,

2017. The executive replied that the advance payment would be adjusted

against bills of the upcoming months. The reply was not tenable as the

advance payment was not covered under the rules.

Audit recommends early regularization of expenditure and

avoidance of such violations in future.

DP-S-240/2018-19

1.3.16 Un-authorized expenditure out of public fund against

an un-approved officers mess – Rs 9.230 Million

According to Rule-6 of Financial Regulations (Vol-I) 1986,

Government revenue shall not be utilized for the benefit of a particular

person or section of community.

During audit of Garrison Engineer (Army) Maint-II

Rawalpindi, it was noted that GHQ QMG‟s Branch (Quartering and Lands

Dte) Rawalpindi accorded 03 (x) sanctions for different works of Garrison

Officers Mess, Rawalpindi. Contracts were concluded accordingly and

final payment amounting to Rs 9,229,979/- was released out of public

fund.

Audit observed that Government sanction for establishment

of “Garrison Officer Mess” was neither available in record nor did the

mess exist at site. On ascertaining the position from CMA (RC)

Rawalpindi, it was confirmed that “Mess Maintenance Allowance” was

not being claimed for Garrison Officers Mess, indicating that the building

20

was not being used as Officers Mess. Therefore, the expenditure was not a

bonafide charge against public fund and, hence, needed recovery from the

management of the Garrison Officers Mess Rawalpindi and deposit into

Govt. Treasury.

The irregularity was pointed out by Audit in February 2015.

The executive did not provide any reply.


December, 2018 was

apprised that contracts were awarded for provision of parking for sports

area and footpaths. DAC directed that either sanctions may be got revised

from Competent Authority as per actual work done or recovery may be

effected and got verified from audit. No further progress was reported to

Audit till finalization of this report.

Audit recommends immediate recovery of the amount

involved, besides, regularization of the expenditure so incurred.

DP-N-195/2018-19

1.3.17 Irregular conclusion of contracts with blacklisted firms

- Rs 8.997 Million





Moreover, according to Rule 04 of PPRA Rules 2004, “Procuring

agencies, while engaging in procurements, shall ensure that the

procurements are conducted in a fair and transparent manner, the object of

procurement brings value for money to the agency and the procurement

process is efficient and economical”.

During scrutiny of record related to the office of AGE

(Army) Badin for the year 2016-17, it was observed that the contracts

amounting to Rs 8,997,200 were concluded with M/s Mayo Builder & M/s

21

KB Associates which were blacklisted in FBR since 23-08-2008 & 08-12-

2015, respectively.


The executive replied that the contractors could have been defaulter in tax

payment matters at FBR but no other significant discrepancy & contract

violation was found against them during the currency of contract.

Audit was of the view that while concluding contract the

executing authorities were under obligation to protect government interest.


that a fact-finding inquiry be conducted to investigate the matter and

record thereof be produced to audit for examination. No further progress

in terms of outcome of inquiry was however reported to audit till




DP-S-84/2018-19

1.3.18 Unauthorized local purchase beyond financial powers –

Rs 6.00 Million

According to Rule 43 (a) (5) of Financial Regulations

Volume -I, 1986, an officer‟s financial powers in the matter of the

purchase of stores ordinarily extend to the limits to which he is

empowered to enter into contracts. But in the case of local purchase of

stores the limits up to which power to purchase any one article or any

number of similar articles purchased at one time are pre-defined. The

financial power of Commandant or equivalent is up to Rs 250,000/- per

transaction.

22

During audit of School of Army Air Defence, Malir for the

year 2016-17, it was observed that an amount of Rs 6,000,000 was

expended on local purchase of items through 14 supply/work orders each

valuing Rs 450,000, which was beyond financial authority vested with the

Commandant.

Audit was of the opinion that the unauthorized expenditure

was due to poor internal controls and weak financial management.

The irregularity was pointed out by audit in February,

2018. The executive furnished an irrelevant reply.


that the expenditure may be got regularized from the competent authority

under intimation to Audit/MoD. No further progress in terms of

regularization was reported to audit till finalization of this report.



DP-S-218/2018-19

1.4 Recoverable / Overpayments – Rs 1,621.724 Million

and US $ 2.616 Million

1.4.1 Overpayment of electricity charges - Rs. 954.00 Million

Under Rule 47 (e) FR Vol-II 1986, “most careful

supervision over expenditure shall be exercised and on no account shall

money be spent simply because it is available. Moreover, according to

Rule-1 of the above regulations, the Government servant shall also be held

personally responsible for any loss sustained by the Government through

fraud or negligence on his part and for any loss arising from fraud or

negligence on the part of any other Government servant to extent to which

23

it may be shown that he contributed to the loss by his own action or

negligence.

During audit of Garrison Engineer (Army) Services

Peshawar, it was observed that PESCO had charged over billing for an

amount of Rs. 954,000,000 as was evident from Additional Chief

Engineer Peshawar letter No.400 / PESCO /11/E-4 dated 30th

November,

2015, which required to be refunded. On scrutiny of the case, it was

observed that only an amount of Rs. 6,423,570/- was deducted by the

MES while making payment to the PESCO up to May 2017. Audit was of

the view that payment should have been made after due verification.

The irregularity was pointed out by Audit in January 2017.

The executive stated that the case was already in NEPRA. Reply furnished

by the executives was not satisfactory. PESCO was overbilling the Unit

since 2007-08, but the management failed to check overbilling and

payments were released without due verification by MES.


December, 2018 was

apprised that the case for refund was referred to PESCO but claim of

excessive units was denied by PESCO and filed appeal in Peshawar High

Court. DAC directed to pursue the court case for recovery of the amount

involved and updated position be shared with audit. No further progress

was reported to Audit till finalization of this reports

Audit recommends inquiry into the matter for fixing

responsibility on the person(s) at fault and following court case

meticulously, besides, adoption of remedial measures to avoid such lapses

in future.

DP-N-463/2017-18

1.4.2 Non recovery of training charges from foreign students

- US $ 2.616 (M)

24

According to JSI-4/2006, “Tuition fee @ US $ 300 per

week per student was required to be recovered from foreign students /

allied officers”.

Further according to Annexure-E to JSI-4/2006, “Messing

charges @ US $ 8 per day, Accommodation charges @ US $ 12 per day

single bed room single occupancy and US $ 6 double occupancy and

Medical charges @ US $ 3 per day per student was required to be

recovered from foreign students / allied officers”.

During audit of PMA Kakul, it was observed that messing,

accommodation, medical charges and tuition fees amounting to US $

2,616,236 were not recovered from students of Saudi Arabia, Libya and

Bahrain who attended / completed their courses.

The irregularity was pointed out by audit in March 2017.

The executive replied that charges of objected period in respect of foreign

Cadets have already been claimed and forwarded to GHQ. Further

disposal of claims was being carried out at GHQ level and no action was

required at PMA end. Reply was not tenable as a mechanism should have

been adopted which ensured timely recovery of fee / charges from the

international trainees / government.


November, 2018 was

apprised that the claims have already been forwarded to GHQ and being

pursued at GHQ level. DAC directed that record of recovery for the

financial year 2016-17 may be provided to audit for verification. No


Audit stresses for early compliance of DAC directives and

verification of recovery by Audit.

DP-N-357/2017-18

1.4.3 Non recovery of rent and allied charges from private

consumers - Rs. 133.368 Million

25

According to Para-442 of Defence Services Regulations

1998, “the GE is responsible for making demands for payment of all

revenue and for taking steps for its prompt realization”.

During audit of the accounts of following (08) MES

formations for the years 2016-17 and 2017-18, it was observed that rent

and allied charges amounting to Rs. 133,368,000 were lying outstanding

against various consumers, which needed immediate recovery.

(Rs. in Million)


1 DP-N-91/2017-18 AGE (A), Bannu 1.642

2 DP-N-223/2017-18 GE (A), Abbottabad 1.166

3 DP-N-289/2017-18 GE (A) Svcs, Rwp 115.30

4 DP-N-298/2017-18 GE (A) Svcs, Multan 6.917

5 DP-N-311/2017-18 GE (A), Thal 1.915

6 DP-N-500/2017-18 702 PWS Bhimber 3.424

7 DP-N-580/2017-18 AGE (A), Risalpur 1.615

8 DP-N-128/2018-19 GE (A) Svcs, Okara 1.389

Total 133.368

Audit was of the view that non-recovery of Government

dues was loss to state and showed weak internal controls.

The irregularity was pointed out by Audit during the year

2017-18 and 2018-19. The executive replied that partial recoveries were

effected and balance thereof would be recovered shortly but no

documentary evidence was presented to audit for verification.


2018 directed the management to get verified the recovered amount from

Audit and unit wise recovery schedule be provided to Audit. No further


Audit recommends expeditious recovery of the amount

involved and its verification by Audit.

26

1.4.4 Non-recovery of Government dues from tenants - Rs.

117.971 Million

According to Rule 2 of FR Vol-II 1986, “All transactions to

which any officer of Government in his official capacity is a party, shall,

without any reservation, be brought to account and all moneys received by

or tendered to Government officer which are due to, or are required to be

deposited with Government shall, without undue delay, be paid, in full,

into a Government treasury or into the bank to be credited to the

appropriate account or they shall be credited through the pay bill or other

public account if it is so authorized”.

During audit of Military Farm Sargodha, it was observed

that Land of Chak No. 39 & 44 of MF Sargodha was leased out to tenants

for cultivation but the tenants were not depositing rent of the farm.

Therefore, an amount of Rs. 117,971,095 for the period ending 2015-16

was outstanding against lessees, which needed immediate recovery.

The irregularity was pointed out by audit in November

2016. The executive replied that case for recovery of lease rent was under

process at Lahore High Court. The case as and when finalized the amount

would be recovered accordingly. Audit stresses upon to pursue the court

case vigorously.


November, 2018 was

apprised that case is subjudice. DAC directed that court case be pursued

vigorously. No further progress was reported to Audit till finalization of

this report.

Audit recommends vigorous pursuance of court case for

early recovery of rent besides adoption of remedial measures to avoid such

lapses in future.

DP-N-310/2017-18

1.4.5 Non-recovery of Sales Tax on services – Rs 107.758

Million

27

According to Balochistan Sales Tax Ordinance, 2000 dated

29th

June 2000, as amended vide Balochistan Sales Tax on Services Act,

2015, Schedule II, Part-B, services provided or rendered by persons

engaged in contractual execution of work or furnishing supplies are liable

to pay 15% Sales Tax on their rendered services.

A) During audit of following army units covering period 2013-

18, it was observed that Sales Tax on services @ 15% amounting Rs

106,295,292 was not recovered from the contractor payments.

(Rs in million)

S. No Name of Unit/Formation DP No Amount

1 GE (Army) I, Quetta S-144 66.847

2 GE (Army) Command & Staff , Quetta S-54 25.932

3 SI & T, Quetta S-270 13.516

T o t a l 106.295

Non-recoveries were pointed out by audit during January to

September, 2018. The executive at Sr. Nos 1 & 2 replied that no Sales Tax

was applicable on TC/DC works. Executive at Sr. No. 3 replied that the

unit being federal entity was not authorized to deduct Sales Tax on

services. The contention of the management was not tenable as the Sales

Tax on services was a provincial subject and was recoverable.

The DAC vide meeting held in December, 2018 was

informed by executive at Sr. No. 1 that the matter had been taken up with

FBR and its clarification was awaited. Executive at Sr. No. 2 replied that

no Sales Tax was chargeable on civil works and with reference to Sr. No.3

the management replied that being a federal entity, it was not authorized to

deduct Sales Tax on services. DAC pended the DP till formulation of

policy/decision at MoD level, whereas the audit suggested recovery of tax

due as per rules/instructions of the provincial government. Further

progress in terms of recovery was not intimated to audit till finalization of

this report.

28

Audit recommends expeditious recovery of the Sales Tax

on services.

B) According to Sindh Sales Tax Act No XII of 2011, issued

by Sindh Revenue Board (SRB), Government of Sindh, vide Notification

No. SRB/TP/51/2016/212146 dated 08th

March 2017, Sales Tax would be

charged @ 13% to 16% (from 2011 to 2017) on contractors‟ services.

During audit of 544 HY EME Bn Malir Cantt Karachi for

the period 2012-17, it was observed that an amount of Rs 10,327,000 was

expended on repair and maintenance of various vehicles and machinery

from Repair Through Local Trade(RTLT) head. However, Sales Tax on

services amounting to Rs 1,463,000 was not recovered from the

contractors, which was in violation of rule quoted above.

Non-recovery of applicable taxes caused financial loss to

the public exchequer and it indicated weak financial management.

The matter was pointed out by audit in June, 2018. The

executive replied that Account Offices were responsible for making

payment against bills and that they were required to deduct Sales Tax at

source. The reply was not tenable as tax was not recovered.

The DAC vide meeting held in December, 2018 pended the

DP till formulation of policy/ decision at MoD level, whereas the audit

suggested recovery of tax due as per rules/instructions of the provincial

government. Further progress in terms of recovery was however not

reported to audit till finalization of this report.


on services.

DP-S-48/2018-19

1.4.6 Non-recovery of Sales Tax on goods – Rs 72.475 Million

29

Section 3 of Sales Tax Act, 1990 stipulates that subject to

the provisions of this Act, there shall be charged, levied and paid a tax

known as Sales Tax @ 17% of the value of taxable supplies made by a

registered person in the course of furtherance of any taxable activity

carried on by the person. Further, as per Rules 2(2) and (3)of the Sales

Tax Special Procedure (Withholding) Rules, 2007 under S.R.O.

660(1)/2007, Islamabad, the 30th June, 2007, "A withholding agent shall

deduct an amount equal to one-fifth of the total Sales Tax shown in

the Sales Tax invoice issued by the supplier and make payment of the

balance amount to him." Further, 2% extra tax levy was imposed on spare

parts of vehicles w.e.f 4-10-2013 (SRO 896(1)/2013).

During audit of following Army units for the period 2013-

18, it was observed that Sales Tax amounting to Rs 72,475,526 was not

deducted from the contractors‟/suppliers‟ payments as per following

details:

(Rs in million)


1 CMH Quetta S-114 27.276

2 305 Spare Depot, Karachi S-276 26.815

3 601 Regional Workshop, Quetta S-166 10.871

4 SI&T, Quetta S-237 2.622

5 305 Spare Depot, Karachi S-299 2.310

6 GE (Army)-II, Malir S-194 1.814

7 AGE (Army), Khuzdar S-241 0.767

T o t a l 72.475

Audit was of the opinion that due to non-recovery of Sales

Tax on goods, government exchequer was deprived of hefty amount of

revenue on account of recoverable tax.

Non-recoveries were pointed out by audit during 2017-19.

The executive at Sr. Nos1,2,3& 5 replied that the deduction of GST was

the responsibility of CMA. The executive at Sr. No. 4 replied that the rate

of GST had been amended vide FBR SRO in 2013. The executive at Sr.

30

No. 6 furnished irrelevant reply, while no reply was furnished by

executive at Sr. No. 7.

The DAC vide meeting held in December 2018 directed the

executive at Sr. Nos 1, 2, 5, 6 & 7 that relevant documents showing

recovery be provided to audit. In case of Sr. No. 4, the DAC directed the

executive that deduction of GST as per applicable rate of the relevant year

be recovered and record produced to audit for verification. No reply was

furnished by formation at Sr. No. 3. Record in terms of recovery was not

produced to audit till finalization of this report.

Audit recommends early recovery of Sales Tax amount

along-with fixation of responsibility against the person(s) at fault.

1.4.7 Non-recovery of electric charges- Rs 50.188 Million

According to Para 442 of DSR, 1998, “the Garrison

Engineer is responsible for making demands for all revenues and its

realization into government treasury”. Further, according to Rule 5 of

Financial Regulations 1986, Volume – I, “Defence expenditure may be

sanctioned by the Ministry of Defence and by the authorities subordinate

to it provided the expenditure pertained to Defence”.

During audit of GE (Army) Karachi for the year 2017-18, it

was observed that an amount of Rs 50,188,534 was lying outstanding

against FWO on account of electricity charges since long. Audit was of

the opinion that FWO was a separate commercial entity having its own

accounting procedures and budget. Hence, the provision of electricity

connection to FWO by the MES organization also stood as un-authorized.

Non-recovery was pointed out by audit in October 2018.

The executive replied that the unit concerned was being approached for

recovery.

31


informed that recovery had been effected from the concerned. DAC

accordingly directed that the recovered amount be got verified from audit

and balance amount be recovered within 04 months. Relevant record in

terms of recovery was not produced to audit for verification till


Audit recommends for an early implementation of DAC

directive.

DP-S-184/2018-19

1.4.8 Less recovery of Income Tax from contractors – Rs

38.546 Million

As per Section-153 of Income Tax Ordinance 2001, as

amended from time to time, every prescribed person making a payment for

rendering or providing of services is liable to deduct Income Tax from the

gross amount of the bills at prescribed rates.

During audit of following MES (Army) units for the period

2016-2018, it was observed that Income Tax amounting to Rs 38,546,864

was less deducted from various contractors‟ payments as required under

the rules.

(Rs in million)


1 GE (Army) I, Quetta S-85 18.025

2 GE (Army), Karachi S-39 5.585

3 AGE (Army), Khuzdar S-244 4.319

4 AGE (Army), Chhor S-11 3.772

5 GE (Army) Services, Quetta S-118 3.363

6 GE (Army), Kashmore S-197 1.816


8 GE (Army) II, Malir S-19 0.517

T o t a l 38.546

32

Non-recovery of government tax reflected poor financial

management and weak internal controls.

The matter was pointed out by audit during January, 2017

to October, 2018. The executive replied that all the contractors were filers.

The replies were not substantiated by relevant documentary evidence.


that proof regarding filer status of the contractors be provided to audit. In

case of non –filer, the difference of Income Tax be recovered from the

contractors and record thereof be produced to audit for verification. No

further response on the matter was reported by executive to audit till


Audit recommends recovery of Income Tax as per rules


1.4.9 Non-recovery of allied charges – Rs 40.272 Million

According to Para-442 of DSR, 1998, “the GE is

responsible for making demands for payment of all revenue and for taking

steps for its prompt realization”.

During audit of following MES (Army) formations for the

period 2016-18, it was observed that allied charges amounting to Rs

40,272,643 were lying outstanding against various consumers.

(Rs in million)



2 GE (Army),Karachi S-49 9.114

3 GE (Army) Services, Quetta S-196 5.161

4 GE (Army) Services, Malir S-16 4.310

5 AGE (Army), Chhor S-04 2.239

6 AGE (Army), Badin S-93 2.225


T o t a l 40.272

33

Audit was of the view that non-recovery of allied charges

indicated weak financial management.

Non-recoveries were pointed out by audit during

November, 2017 to September, 2018. The executive at Sr. Nos 1 to 4, 6

and 7 replied that all the concerned consumers had been approached for

recovery. No reply was furnished by executive at Sr. No 05.


informed that partial recoveries had been made and action was being taken

for recovery of the balance amount. The DAC directed that recovery made

so far be got verified from audit and balance amount be recovered

expeditiously. No further progress in terms of recovery was reported by

executive to audit till finalization of this report.

Audit recommends expeditious recovery of amount and its

verification by audit.

1.4.10 Non-recovery of House Rent Allowance (HRA) – Rs

27.032 Million

According to Ministry of Housing and Works O.M No. F-

11(33)/2012-Policy dated 17th

May, 2013 endorsed by Finance Division

(Military Finance Wing) Rawalpindi vide U.O No. 134/R-1/ASMF/2014

dated 31st January, 2014, armed forces officers allotted residential

accommodation may not be paid 45% house rent allowance and 5% of

their running basic pay should be charged to bring them at par with

civilian set up. Further, Rule-24(c) of Quarters & Rents 1985 provided

that a married officer shall be allotted married accommodation if his

family is residing with him, if his family is not residing with him he may

only be allotted single accommodation.

During audit of accounts of following Army formations for

the period 2016-18, it was observed that army officers were availing the

facility of government married accommodation and also drawing House

34

Rent Allowance. This resulted into irregular payment amounting to Rs

27,032,684.

(Rs in million)


1 CMH, Quetta S-226 14.761

2 GE (Army) Karachi S-47 10.829

3 6 Punjab MIB, Malir S-27 0.865

4 544 EME Bn, Malir S-44 0.577

T o t a l 27.032

Non-recovery was pointed out by audit in 2016-2018. The

executive replied that allotted accommodations were below entitlement

and MAG allowed withdrawal of HRA. The reply was not tenable as HRA

was not admissible to those who availed of government accommodation as

a policy.


DP till finalization of HRA policy at MoD level, whereas the audit

suggested recovery of HRA as per government instructions on priority. No

further progress in terms of recovery was reported to audit till finalization

of this report.

Audit recommends early recovery of HRA as per rules/

policy.

1.4.11 Non-recovery of stamp duty from contractors – Rs

16.970 Million

As per Section 35 of Stamp Act 1899, no instrument

chargeable with duty shall be admitted in evidence for any purpose by any

person having by law or consent of parties authority to receive evidence,

or shall be acted upon, registered or authenticated by any such person or

35

by any public officer, unless such instrument is duly stamped. Further, as

per Government of Sindh Finance Act 2009, “Stamp duty of Thirty five

paisa for every hundred rupees or part thereof of the amount of the

contract will be charged”.

Contrary to above rule provisions, the record pertaining to

the period 2016-18 held with the following units/formations showed that a

sum of Rs 16,970,147 on account of stamp duty was not recovered by

them against different contract agreements executed within their

jurisdiction.

(Rs in million)

S.No Name of Unit/Formation DP No Amount

1 GE (Army)-I, Quetta S-80 8.594

2 GE (Army)-II, Malir S-40 3.190

3 ACE 5 Corps, Karachi S-31 2.708


5 GE (Army) Hyderabad S-34 0.728

6 GE (Army) C & SC, Quetta S-56 0.518

7 305 Spares Depot, Karachi S-36 0.488

T o t a l 16.97

When pointed out by audit in 2016-18, it was replied that

Finance Act of Government of Sindh and Stamp Act 1899 were not

applicable on departments working under Federal Government. The

contention of the management was not tenable as it was in disregard of

rules quoted above.


DP till formulation of policy/decision on recovery of stamp duty at MoD

level, whereas the audit suggested recovery of stamp duty in question on

priority. No progress in terms of recovery of stamp duty was reported to


Audit recommends recovery of provincial duty as per rules

on priority.

36

1.4.12 Non-recovery of Income Tax from contractors – Rs

16.419 Million



rendering or providing of services is liable to deduct Income Tax from the

gross amount of the bills at prescribed rates.

During audit of following army formations for the period


was not deducted from various contractors‟ payments as required under

the rules.

(Rs in million)

S. No Name of Unit/Formation DP No. Amount


2 601 Regional Work Shop EME Quetta S-169 3.611

3 CMH Malir Cantt S-222 3.413


5 CMH Malir Cantt S-207 1.212


T o t a l 16.419

The issue was pointed out by audit during February -

September, 2018. The executive at Sr. Nos 02, 03, 04, 05 & 06 replied that

the responsibility of recovery of Income Tax rested with CMAs. No reply

was furnished by the formation at Sr. No 01.

The matter was discussed in DAC meeting held in

December, 2018. For Sr. Nos 03 to 06, the DAC directed that the

distributor certificate from the concerned health authority in rebuttal of DP

be provided to audit for verification/examination. Formations at Sr. Nos

01 & 02 did not furnish reply to the DP. No further progress in terms of

recovery was reported by executive to audit till finalization of this report.

37

Audit recommends implementation of DAC‟s directives

and recovery of Income Tax as per rules along-with fixation of

responsibility against the concerned.

1.4.13 Non-recovery of House Rent Allowance from Army

Officers allotted Married Accommodation - Rs. 16.286

Million






accommodations may not be paid 45% house rent allowance and 5% of


civilian set up.

During audit of the accounts of following 06 Army

formations for the year 2016-17 and 2017-18, it was observed that Army

officers were availing of the facility of Government married

accommodation and also drawing House Rent Allowance which was

irregular and resulted into overpayment amounting to Rs 16,286,000,

which needed recovery.

(Rs. in Million)


1 DP-N-162/2017-18 CMH, Sialkot 1.043

2 DP-N-339/2017-18 HQ AAD Commod, Rwp 1.060

3 DP-N-346/2017-18 HQ 11 Corp, Peshawar 5.709

4 DP-N-584/2017-18 Military College, Murree 1.579

5 DP-N-44/2018-19 HQ 4 Corps, Lahore 2.625

6 DP-N-151/2018-19 CMH, Kharian 4.27

Total 16.286

Audit was of the opinion that payment of house rent

allowance to the Army officers availing married accommodation was loss

to state.

38

The irregularity was pointed out by Audit during 2017-18

and 2018-19. The executives replied that HRA was authorized to all

married officers who were residing in MOQ vide MAG letter No.

AT/MES/2254-XVIII dated 15th

February, 2003. In this connection, it is

pointed out that the practice of non-recovery of HRA on allotment of

MOQs / BOQs / VOQs continues in units other than mentioned above but

not reported by auditors in anticipation of revised HRA policy presently

under review in MOD as mentioned in impact of ARDS 2017-18.

The DAC vide meetings held in November and December

2018 directed to pend the paras till formulation of House Rent Allowance

Policy. No progress regarding formulation of House Rent Allowance

Policy was reported till finalization of this report.

Audit recommends recovery of House Rent Allowance and

its verification by Audit, besides, remedial measures.

1.4.14 Non recovery of rent and allied charges from cellular

companies - Rs 14.022 Million

According to Para-442 of DSR for MES 1998, GE is

responsible for making demands for all revenue, and for taking steps for

its prompt realization.

During audit of Garrison Engineer (A) Murree, it was

observed that two cellular companies, M/s. Zong and M/s. Mobilink, had

installed one BTS tower/antenna each within the premises of School of

Military Intelligence (SMI) Murree. However, an amount of Rs.

14,022,831/- was lying outstanding on account of rent and allied charges

against both companies from July, 2012 to June, 2017 as was evident

from UAGE (A) Murree Cantt letter No. UA/TA/2017-18 dated 08-11-

2017.


The executive replied that office had intimated General Officer

Commanding 12 Div Murree for effecting recovery vide letter

39

No.UA/TA/2017-18 dated 08 Nov 2017. The reply was not satisfactory

because even after lapse of one year no fruitful response was received

therefrom. The matter, therefore needed proper pursuance at higher level.

The matter was reported to Ministry of Defence on 1st

October, 2018 and formal request for convening DAC meeting was also

made on 4th

October, 2018 and 6th

November, 2018 for arranging of DAC.

However, till finalization of this report no DAC was arranged.

Audit recommends for early recovery of the amount

involved and its verification by Audit besides adoption of remedial

measures to avoid such lapses in future.

DP-N-134/2018-19

1.4.15 Less recovery and non-deposit of towers fee into

treasury- Rs 8.800 Million

According to Para 7(b) of MOD letter

No:51/411/lands/ML&C/2005, dated 24-06-2005, “the cellular companies

will be required to pay an antenna/ tower fee @ Rs 20,000 per month with

an annual enhancement @ 10%”.

During audit of accounts of HQ 16 Div Pano Aqil Cantt for

the period 2013-17, it was observed that 4 of BTS towers of cellular

companies were installed on A-1 land at different locations. The record

showed that BTS towers fee at the DC rate of Rs15,628/- per month

amounting to Rs 757,000 for four years instead of Rs 9,557,143 was

recovered by the executive from the cellular companies, which was not in

order as the recovery was to be effected at the flat rate of Rs 20,000 per

month with 10 % annual enhancement and not at the DC rate as decided

by the formation.

Audit was of the view that non-implementation of

government orders resulted in less recovery of the fees due and it

exhibited weak financial management at the end of the executive.

40

Less recovery of Rs 8,800,143 was pointed out by audit in

May, 2018. The executive however didn‟t furnish any reply nor did it hold

discussion on the specified date.

Audit recommends expeditious recovery of BTS fees as per

government orders, their deposit into treasury and verification by audit.

DP-S-157/2018-19

1.4.16 Non-recovery of gas charges –Rs 5.409 Million

According to Rule-81 of Quarters and Rents Rules 1985, as

amended vide letter No. F.5620/109/Qtg-4/F-2/D-3 (AIII)/2002 dated

October 14, 2009, scale for free consumption of Sui Gas to a cook house is

prescribed by the government @ 400 cft per month. Consumption in

excess of this scale is to be paid by the consumer concerned. Further, as

per Para 442 of DSR, 1998, the Garrison Engineer is responsible for

making demands for all revenue and its realization into government

treasury.

In following Army units, gas was consumed in excess of

authorized quantity amounting to Rs 5.409,000 during the period 2016-18.

However, the amount on account of excess consumption was not

recovered from the concerned units/formations.

(Rs in million)


1 GE(Army) Services, Quetta S-198 4.636


T o t a l 5.409

The irregularity was pointed out by audit in 2016-2018.

The executive replied that recovery when realized would be intimated to

audit.


December, 2018, wherein it was directed that recovery on account of

41

excess consumption of gas beyond authorization be effected within 3 to 6

months and recovery got verified from audit.

Audit recommends early recovery of gas charges beyond

authorization.

1.4.17 Non-deposit of profit into Government treasury - Rs.

2.833 Million

Rule 2 of FR Vol-II 1986 stipulates that “All transactions to

which any officer of Government in his official capacity is a party, shall,

without any reservation, be brought to account and all moneys received by

or tendered to Government officer which are due to, or are required to be

deposited with Government shall, without undue delay, be paid, in full,

into a Government treasury or into the bank to be credited to the

appropriate account or they shall be credited through the pay bill or other

public account if it is so authorized.”

During audit of following Combined Military Hospitals, it

was observed from bank statement of “CNE” Account that an amount of

Rs 2,833,000 was earned as profit on cash balance held in Askari Bank but

was not deposited in to Government Treasury alongwith interest.

(Rs. in Million)


1 DP-N-171/2018-19 CMH, Peshawar 1.370

2 DP-N-177/2018-19 CMH, Attock 1.463

Total 2.833

The irregularity was pointed out by Audit in April, 2015

and May, 2018. The executive replied that the amount was earned on

account of profit on balance amount deposited by patients. As per existing

policy of CNE Accounts, HSR / Government share was regularly

deposited into Government treasury on monthly basis. Reply was not

justified as audit has pointed out amount of profit earned on the balance of

CNE account, which was required to be deposited into Government

Treasury.

42

The DAC vide meetings held on 11-12 December 2018

pended the paras till finalization of policy of the subject matter. No further


Audit recommends early deposit of the whole amount into

Federal Government Treasury, besides, adoption of remedial measures to

avoid such lapses in future.

1.4.18 Non-deposit of government share against CNE

pat ients -Rs 2.208 Million

As per Government of Pakistan, Ministry of Defence

letter NO.3532/32/DMS-3(c)/F.6/16/D-2(A-II)/2014 dated 26th

November,

2014, addressed to Director General Medical Services (Inter Services)

government share is to be deposited into government treasury as per

prescribed sharing percentage. Further, under Rule 2 of Financial

Regulations Volume II 1986, it is provided that all transactions to which

any officer of government in his official capacity is a party, shall, without

any reservation, be brought to account and all moneys received by or

tendered to government officer which are due to or are required to be

deposited with government shall, without undue delay, be paid, in full,

into a government treasury.

During audit of CMH Malir for the year 2016-17, it was

observed that government share amounting to Rs 2,208,466 on account

of advances received from CNE patients was not deposited into

government treasury.

Audit was of the view that the retention of public money

indicated poor financial management.

The irregularity was pointed out by audit in March,

2018. The executive replied that the government share against CNE

patients had already been deposited into treasury, which was not

substantiated by relevant documentary evidence.

43

The DAC vide meeting held in December, 2018,

directed that the delay in deposit of government share be justified and

the amount due be deposited into treasury on priority.

Audit recommends early compliance of DAC`s

directives.

DP-S-217/2018-19

1.5 Loss to State – Rs 17,344.529 Million

1.5.1 Unauthorized transfer of A-1 land for commercial use –

Rs 16,480.00 Million

According to Rule 5 of CLA Rules 1937 “ a land which is

actually used or occupied by military authorities, for the purpose of

fortification, arsenals, aerodromes, bungalow for military officer, which

are the property of Government, parade grounds, military recreation

grounds, rifle ranges, grass farms, dairy fields, brick fields, soldier &

hospital, gardens and other official requirements of military authority. As

per para 2(3) of policy on the use of A-1 land issued under the

Government of Pakistan, Ministry of Defence Rawalpindi letter No. F-

2/5/D-12/ML & C/99 dated 2-04-2008, detailed procedure for the

utilization of A-1 land shall be formulated by GHQ to ensure complete

transparency and got approved from Govt. through Ministry of Defence”

Para 6 of A-1 land policy ibid stipulates that, “in future, no welfare project

shall be established/initiated without prior approval of respective Service

Chief”.

During audit of Military Farm Lahore, it was observed that

103 acres of cultivatable land against survey No. 251 & 251-A was

earmarked for establishment of special commercial project & sport

facilities. The Government had recently expended millions of rupees on

construction of modern animal sheds to fulfill the need of milk for army

personnel. Contrary to the provisions of Rule 5 of CLA rules & A-1 Land

44

policy, the said land was being used for commercial purpose without

obtaining permission, which resulted into unauthorized encroachment on

cultivated land of Rs. 16,480,000,000/- (103 Acres x 160 = 16,480 Marlas

x Rs. 1,000,000/- per Marla = Rs.16,480,000,000).


2017. It was stated by the military farm authorities that the case was under

process with Quartering & Land Directorate and that assets, cultivated

crops standing with assessed value, price of trees were included in the

board of officers. The reply was not agreed to as status of land was

changed without the permission of competent authority.


December, 2018

directed to shift the para to 4 Corps Lahore. No further progress was


Audit stresses that change of status should be got

regularized, procedure be got approved and government share deposited in

treasury retrospectively.

DP-N-24/2018-19

1.5.2 Unnecessary purchase of land - Rs. 485.00 Million

Under Rule 47 (e)(5) of Financial Regulations (FR)

Volume-I, 1986, most careful supervision over expenditure shall be

exercised and on no account shall money be spent simply because it is

available.

During audit of Military Estate Office Lahore Cantt, it was

observed that a land measuring 4201 Kanal 14 Marla at Chunian and 781

Kanal 01 Marla at Pattoki was acquired for transfer of Ammunition Depot

from Lahore to Pattoki with the approval of Ministry of Defence vide

letter No. 3605/122/Land.3.A/1/30/D-12/12 dated 07-06-2012. Award

bearing No. 1/2014 was announced by Land Acquisition Controller on 20-

01-2014. Ammunition Depot has however not so far been shifted to the

acquired location. This showed that the land was purchased unnecessarily

45

without proper planning, which resulted into loss to state amounting to Rs

485,000,953.

The irregularity was pointed out by audit in January 2018.

The executive replied that army authorities were ready to shift their entire

infrastructure pertaining to Ammunition Depot. However, Geo Technical

survey of acquired land was carried out which revealed that land was un-

suitable for the envisaged purpose due to high water level and concerned

formation reported that Ammunition Depot from Lahore was not likely to

be shifted to a new location in near future as the site was under

reevaluation for ascertaining suitability.

The reply of the executive substantiates audit view point

that the lands were purchased without proper planning.


November, 2018

directed to shift the Draft Para to Army authorities for responding to Audit

observation. No further progress was intimated to audit till finalization of

this Report.

Audit is of the view that the expenditure incurred on

acquisition of the land was not properly planned and resulted into loss to

state exchequer. Audit recommends early disposal of above land and its

deposit into Govt. treasury besides holding court of inquiry to fix

responsibility.

DP-N-13/2018-19

1.5.3 Irregular transfer of defence fund to private fund

account - Rs 114.00 Million

According to Rule-6(a) of Financial Regulations 1986,

Volume – I “Every officer should exercise the same vigilance in respect

of expenditure incurred from government revenue as a person of ordinary

prudence would exercise in respect of the expenditure of his own

money”.(b) “No authority shall exercise its power of sanctioning

46

expenditure to pass an order which will directly or indirectly be to its own

advantage”.

A) During audit of HQ 16 Div Pano Aqil Cantt for the period

2013-17, it was observed that an amount of Rs 100,000,000 had been

received by HQ 16 Div from HQ 5 Corps, which was initially deposited

into defence fund. Subsequently, on 02-11-2015 the amount was shifted

by HQ 16 Div to Non-Public Fund on the plea that it was erroneously

deposited into defence fund.

Audit was of the opinion that the transfer of money from

defence fund into private fund account tantamounted to a loss to the state

and it reflected weak financial management and internal controls.

The irregularity was pointed out by audit in May, 2018 but

no reply was furnished.

Audit requires the reason of transfer of Rs 100,000,000 by

HQ 5 Corps to HQ 16 Div and subsequent shifting of this amount from

defence fund to non-public fund account along-with provision of complete

expenditure details, its break-up, PPRA rules compliance documents,

bank statements and other related record for a detailed examination. Audit

also recommends senior level inquiry into the matter to fix responsibility,

and deposit of government money into treasury.

DP-S-143/2018-19

B) During audit of 662 Engineers Battalion Karachi for the

financial year 2016-17, it was observed that an amount of Rs 14,000,000

was drawn as consumed / expended on execution of works reflecting

payment to the contractor M/s AL Hakeem Traders. The review of record

showed that the said amount was allotted by HQ 5 Corps to 662 Engrs

Battalion vide letter No. 171/1/GS(T)/-SBJAOQ dated 14-03-2017 on

account of Special ATG for the financial year 2006-17 with the condition

47

that “Prepare all bills/quotations and claim the amount from CMA and

reimburse to this HQ Trg Branch Pvt Fund Account”.

This indicated that the above expenditure was not actually

incurred and all the bills were prepared merely to claim the amount from

CMA which was unjustified and tantamounted to a loss to the state.

The irregularity was pointed out by audit in April, 2018 but

no reply was received.


informed that the letter referred to was not an auditable document and that

the payment was released to the party against the expenditure incurred.

The DAC, however, directed that the record reflecting complete money

trail leading to transfer of funds, approvals, utilization/ expenditure

details/break-up, bank statement and compliance of PPRA rules provisions

in the said expenditure be provided to audit for a detailed examination. No

further response on the matter was reported by executive to audit till


Audit recommends early implementation of DAC directive

along-with due fixation of responsibility.

DP-S-10/2018-19

1.5.4 Un-due payment without delivery of dozers - Rs.

108.810 Million

According to clause 14 (a&b) of contract No. 14-0736-00,

dated 06-04-2016 “the payment will be made to supplier by CMA DP

Rawalpindi on submission of bill duly supported by the CRV and

Inspection note”.

While examining the accounts of CMT & SD Golra, it was

observed that above contract was concluded with M/S Pak Japan Trading

Co-Lahore by DGP Army Rawalpindi for the supply of 03 x Dozer size II

Liebherr PR-734-4 (NATO Green Colours) for Rs. 108,810,000/-. CRV

48

bearing No. VSDR-394-C15 dated 25-05-2016 and Inspection Note dated

11-05-2016 were issued by CMT&SD Golra and IV & EE respectively.

Accordingly, CMA (DP) Rawalpindi paid the entire amount to the firm on

21-06-2016. However, as per CMT&SD Golra letter No.

3106/289/Con/Veh Dep dated 22-12-2016 and even number dated 20-03-

2017 the store was not delivered by the firm.

The irregularity was pointed out by Audit in March 2017.

The executive replied that delivery period was expired and this depot was

regularly approaching DGP (Army) for supply of contracted stores. Reply

was not acceptable as payment against fictitious CRVs & Inspection Note

was made to supplier before actual delivery of store and undue favour was

extended to supplier.

The matter was reported to Ministry of Defence on 4th

May

2018 and it was requested on 28th

June, 2018, 1st October, 2018 and 6

th

November, 2018 for arranging of DAC meeting. However, no DAC

meeting was convened till finalization of this report.

Audit recommends safeguarding and delivery of

government store and ensure proper delivery alongwith verification by

Audit besides holding of an inquiry for fixing responsibility of person(s) at

fault.

DP-N-427/2017-18

1.5.5 Unjustified local purchase of combat boots – Rs.

106.898 Million

According to Government of Pakistan Ministry of Defence

Army Branch Rawalpindi letter No: F.5/32/ME/D-5/04, Dated 27-12-2004

Local Purchase will be resorted to only those “Items which are not

available in depots, but are urgently required by the units, and their non-

availability or drawn in normal supply may affect the unit efficiency,

training or morale of troops”.

49

During audit of Central Ordnance Depot, Lahore Cantt, it

was observed that 44615 pairs of Combat Boot (Black with Cordura Cloth

Double Density (PU+Rubber) Sierra) of different sizes worth Rs

106,897,540/- were locally purchased by the Depot @ Rs.2,396/- each

from M/S Askari Shoes Project during 2016-17, which was unnecessary as

7117 pairs of boot were already available in stock with the Depot received

against contract. It was evident from record that the Depot issued only

3248 pair of boots during 2016-17. As such, un-necessary local purchase

of store was made without any emergent requirement.

The irregularity was pointed out by Audit in February,

2018. The executive replied that Combat Boots (Black with Cardura Cloth

Double Density (PU+Rubber) Sierra) were authorized to army personnel

and were purchased on the orders of GHQ. Reply was not tenable as there

was no emergent requirement. Besides, a reasonable contracted quantity of

Combat Boots was already available in the Depot to meet with

requirement of units.


December 2018 was

apprised that GHQ OS Dte was responsible to maintain / update overall

data of the ordnance inventory based on monthly reports and returns

received from all ordnance entities. DAC directed that relevant record may

be provided to audit for verification. No further progress was reported to


Audit recommends inquiry besides regularization of

procurement beyond requirements and initiation of remedial measures to


DP-N-35/2018-19

1.5.6 Non-recovery of GST –Rs 23.625 Million



50



carried on by the person. Further, 2% extra tax levy was imposed on spare

parts of vehicles w-e-f 4-10-2013 (SRO 896(1)/2013).Likewise, under

Ministry of Finance S.R.O. 603(1)/2009, Islamabad, dated 25-06 2009, “A

withholding agent shall deduct an amount equal to one-fifth of the total

Sales Tax shown in the Sales Tax invoice issued by the supplier and make

payment of the balance amount to him.

During audit of 544 HY EME Bn Malir Cantt Karachi for

the period 2012-17, it was observed that a sum of Rs 138,969,990 was

paid to various contractors for procurement of different spares for the

formation. The record did not show any proof of deduction of Sales Tax

amounting to Rs 23,624,898.

Audit was of the opinion that non-recovery of amount of

Sales Tax tantamounted to a loss to the state which reflected weak

financial management and internal controls.


executive furnished irrelevant reply.


that relevant documents be provided to audit. No further response in

terms of proof of recovery was reported to audit till finalization of this

report.

Audit recommends early implementation of DAC‟s

directives along-with fixation of responsibility against the person(s) at

fault.

DP-S-101/2018-19

1.5.7 Non-recovery of risk and expense money - Rs. 22.077

Million

51

According to Para - 67 (b) ASC Regulations Vol - II, 1986

“A party which exercises the right to make purchase at the risk and

expense of a contractor under the law, may be required to prove that it had

taken reasonable precautions to minimize the loss suffered by the

defaulting contractor as a result of such purchases. Risk purchases should,

therefore be resorted to with great care. Items purchased at the risk and

expense of the contractors must be those which are actually demanded

from the contractors and which they fail to supply despite their availability

in the market. Risk purchases of a variety of fruit and vegetable against the

demand for another variety would be justifiable only after placing the

demand on the contractor and giving him reasonable time to comply with

the same. Care should however be taken to ensure that risk purchases are

not in ordinarily delayed.

During audit of Reserve Supply Depot ASC Sialkot, it was

observed that two contracts for supply of meat and chicken were awarded

to M/S Yasir Humayun for the year 2015 vide Contract Deeds No.5271 of

2015 and No.5291 of 2015 respectively. After supplying meat & chicken

for 2 months, the contractor failed to supply said items for rest of the

period. As a result, the formation procured meat & chicken from local

market and later on through another contract agreement at higher rates.

Due to failure of M/s. Yasir Hamayun to fulfill their contractual

obligations, Government sustained a loss of Rs. 22,077,144/- on account

of purchase of meat and chicken for the remaining period at higher rates.

Therefore, amount of risk purchase needed recovery from the defaulting

contractor.


2017. The executive replied that action would be taken for regularization

of amount. Reply was not agreed to as the amount of risk purchase was

required to be recovered from the defaulting contractor besides

confiscation of security held by the unit.

52


December, 2018 was

apprised that case regarding recovery of risk purchase from defaulting

contractor had already been forwarded to GHQ for necessary action. DAC

directed that amount may be recovered within one month. No further


Audit recommends for early recovery of the amount

involved from defaulting contractor and its verification by Audit besides

adoption of remedial measures to avoid such lapses in future.

DP-N-23/2018-19

1.5.8 Irregular charging of GST on exempted items - Rs 4.119

Million

According to Section 13 (1) Table -1 of The Sixth

Schedule, Sales Tax Act 1990, bricks etc are exempted from application of

GST.

During audit of SI&T Quetta for the period 2013-17, it was

observed that different suppliers included the amount of GST in the sales

invoice @ 17% on bricks etc totaling to Rs 4,119,360, whereas, the items

were exempted from the applicability of GST.

Audit was of the opinion that the incorporation of Sales

Tax amount by the suppliers on exempted items resulted in extra financial

burden and loss to the state which also indicated weak financial

management at the end of the executive.

The matter was pointed out by audit in March, 2018. The

executive replied that Rs 4,119,360 had been paid to the suppliers for

supply of different items out of “Cost of war head”. They further informed

that the GST @ 1/10th

had been deducted through TR and the balance

amount had been deposited through FBR return. The reply furnished by

the executive was without any documentary proof.

53


that relevant documents be provided to audit for verification. No further

response on the matter proving payment to FBR/government was

reported to audit by the executive till finalization of this report.

Audit recommends for early implementation of DAC‟s

directives along-with fixing of responsibility against the concerned.

DP-S-268/2018-19

1.6 Mis-procurement of stores – Rs 1,511.114 Million

1.6.1 Irregular procurement of stores– Rs 1,101.464 Million

According to Section-12(1-2) of Public Procurement Rules-

2004, “Procurements over one hundred thousand rupees and up to the limit

of Rs 2.000 million shall be advertised on the authority‟s website. Further,

procurements over Rs 2.000 million should be advertised on the

authority‟s website as well as in two national dailies, one in English and

the other in Urdu”. Further, According to PPRA Rule 35, procuring

agencies shall announce the results of bid evaluation in the form of a

report giving justification for acceptance or rejection of bids at least ten

days prior to the award of procurement contract.

Further, according to PPRA‟s S.R.O.1170(1)/2009 dated

July 9, 2009, all procuring agencies whether within or outside Pakistan

shall post Contract Awards over fifty million rupees on PPRA‟s website.

on the proformas as set out in Annexure-I and Annexure-II to these

regulations, provided that where any information related to the award of a

contract is of proprietary nature or where the procuring agency is

convinced that such disclosure of information shall be against the public

interest, it can withhold only such information from uploading on PPRA‟s

website subject to the prior approval of the Public Procurement Regulatory

Authority. [F.No. 2/1/2008/PPRA-RA.III]

http://www.ppra.org.pk/doc/elvform50.doc

54

During audit of accounts of the following Army formations

for the period 2016-18, it was observed that different contracts works

valuing Rs 1,101,464, 428 were awarded without advertisement. In case of

SSD Malir, PPRA Rule 35 and above SRO dated 09-07-2009 were also

violated.

(Rs in million)

S No DP No Name of Unit / Formation Amount

1 DP-S-07/2018-19 SSD Malir 639.955

2 DP-S-08/2018-19 AGE (Army) SI&T, Quetta 146.137

3 DP-S-43/2018-19 CMH Quetta 81.934

4 DP-S-266/2018-19 601 Regional Workshop, Karachi 78.471

5 DP-S-12/2018-19 AGE (Army) SI&T, Quetta 52.143

6 DP-S-01/2018-19 Military Dairy Farm, Quetta 41.272

7 DP-S-171/2018-19 CMH Malir 26.955

8 DP-S-300/2018-19 305 Spare Depot, Karachi 20.597

9 DP-S-06/2018-19 662 Engr Bn Karachi 14.00

Total 1,101.464

Audit was of the view that incurring of public expenditure

without adoption of PPRA Rules could lead to misuse of government

funds which indicated weak financial management at the end of the

executive.

The irregularity was pointed out by audit in 2016-18. The

executive replied that the contracts of stores and works were awarded to

firms after meeting all codal formalities. The replies were not tenable as

documentary evidence regarding advertisement in newspapers and

PPRA‟s invoices were not produced in support of such contention.


that relevant documents be provided to audit for examination. No further

progress was reported to audit till finalization of this report.

55

Audit recommends expeditious compliance of DAC`s

directives and avoidance of such violations in future.

1.6.2 Non-transparent award of contracts– Rs 224.396

Million

According to PPRA Rule 35, procuring agencies shall

announce the results of bid evaluation in the form of a report giving

justification for acceptance or rejection of bids at least ten days prior to the

award of procurement contract.

During audit of accounts of the following MES (Army)

formations for the financial year 2017-18, it was observed that works

contracts amounting to Rs 224,396,328 were awarded to different

contractors without announcing the results of bid evaluation on

justification for acceptance or rejection of bids. This resulted into non-

transparent award of contracts.

(Rs in million)

S. No DP No Name of Unit / Formation Amount

1 DP-S-89/2018-19 GE(Army)-1 Quetta 173.735

2 DP-S-103/2018-19 GE (Army) -Services Quetta 50.661

Total 224.396



funds which indicated weak internal controls.

The irregularity was pointed out by audit in September,

2018. The executive replied that the PPRA rules had been followed. The

reply of the management was not substantiated by relevant documentary

evidence.




56

Audit recommends expeditious compliance of DAC‟s


1.6.3 Irregular expenditure on procurement and repair &

maintenance-Rs 136.227 Million

Under Rule-12 (2) of PPRA Rules 2004 “All procurement

opportunities over two million rupees should be advertised on the

Authority‟s website as well as in other print media or newspapers having

wide circulation. The advertisement shall principally appear in at least two

national dailies, one in English and the other in Urdu. Likewise, under

Rule-13(1)of PPRA Rules 2004 “The procuring agency may decide the

response time for receipt of bids or proposals (including proposals for pre-

qualification) from the date of publication of an advertisement or notice,

keeping in view the individual procurement‟s complexity, availability and

urgency. However, under no circumstances the response time shall be less

than fifteen days for national competitive bidding”.

During audit of accounts of SI&T Quetta for the period

2013-17, it was observed that an amount of Rs 136,227,500 was expended

by the formation on account of procurement and repair/maintenance

wherein NIT response time in different procurements was less than 15

days. Besides, the advertisements were not published in national dailies,

which rendered the entire expenditure as irregular.


without following PPRA Rules could lead to misuse of government funds

and indicated weak internal controls.

The irregularity was pointed out by audit in March, 2018.

The executive replied that all the advertisements were processed through

HQ SC and that the late publishing of advertisements was due to delay at

their end.

57


that an inquiry be conducted and responsibility be fixed against the

concerned. No further progress on the matter was reported to audit till


Audit recommends early implementation of DAC

directives.

(DP-S-281 /2018-19)

1.6.4 Procurement of stores without tender – Rs 22.039

Million

According to Rule-12(1-2) of Public Procurement Rules

2004, “all procurement over one hundred thousand rupees and up to the

limit of Rs.2.00 Million shall be advertised on the authority‟s website.

Further procurement over Rs. 2.00 Million should be advertised on the


the other in Urdu”.

During audit of following formations, it was observed that

contracts valuing Rs 22.039,000 were awarded to different contractors

without fulfilling requirements of Public Procurement Rules i.e.

publication of advertisements in newspapers and hosting on the

Authority‟s website.

(Rs. in Million)


1 DP-N-321/2017-18 GE (Army)-II, Kharian 6.218

2 DP-N-536/2017-18 GE (Army), Peshawar 9.960

3 DP-N-305/2017-18 GE (Army) Svc, Rwp 5.861

Total 22.039

The irregularity was pointed out by Audit during 2017-18.

The reply furnished by the executives were not tenable.

58


2018 directed the management to hold fact finding inquires in each case.

No further progress was reported to Audit till finalization of this report.

Audit recommends finalization of inquiry proceedings and

fixing of responsibility on the person(s) at fault, besides, regularization of

the amount involved and adoption of remedial measures to avoid such

lapses in future.

1.6.5 Unauthorized and improper procurement of electro-

medical equipment - Rs 17.150 Million

According to Rule-12(1,2) of PPRA Rules -2004, all

procurements over one hundred thousand rupees and up to the limit of Rs

2.00 million shall be advertised on the authority‟s website. Further,

procurements over Rs 2.00 million rupees should be advertised on the

Authority‟s website as well as in two national dailies, one in English and

other in Urdu. Moreover, T.O & E, dated 5th

December, 2012 of C.M.H,

Malir Cantt “No Electro-Medical Equipment is authorized”.

During audit of accounts of CMH Malir for the year 2016-

17, it was observed that a sum of Rs 17,150,000 was expended by the

formations on purchase of electro-medical equipment. The record showed

that a tender notice was published for the subject procurement in only one

newspaper instead of two widely circulated newspapers. The details in

terms of the cost, description and specification of items were also not

mentioned in the tender notice. Moreover, the electro-medical equipment

purchased was not authorized in the T.O&E of the hospital.

Audit was of the opinion that the total expenditure of

Rs17,150,000 was incurred in violation of above rules which indicated

weak financial management and internal controls.

The irregularity was pointed out by audit in March, 2018.

The executive replied that the EM equipment was purchased according to

need of the patients after approval of GHQ Medical Dte, Rawalpindi and

59

that the case involving revision in TO & E was already under process with

higher authorities.


that record on following of PPRA rules and revision of TO & E be

provided to audit for examination. Relevant record was not produced to



directives.

(DP-S-17 & 167/2018-19)

1.6.6 Award of contracts before publication of tenders –Rs

9.838 Million

According to Rule-12(1,2) of PPRA Rules - 2004, all

procurements over one hundred thousand rupees and up to the limit of Rs


procurements over Rs 2.00 million rupees should be advertised on the

Authority‟s website as well as in two national dailies, one in English and

other in Urdu. Likewise, Rule-50 of PPRA Rules, 2004 stipulates that

“any unauthorized breach of rules shall amount to mis-procurement”.

During audit of accounts of GE (Army) Karachi for the

year 2017-18, it was observed that tenders of different works amounting to

Rs 9,838,280 were advertised in newspapers merely as a formality as the

contracts had been awarded to the contractors before hand and without

following due process.

The irregularity was pointed out by audit in October, 2018.

The executive replied that the works were concluded by ACE office after

fulfilling PPRA requirements. The contention of the management was not

supported by relevant documentary evidence.


that documents be provided to audit for verification within 2 weeks and in

60

case of failure, an inquiry be conducted. No record was produced to audit

for verification till finalization of this report.

Audit recommends for early implementation of DAC‟s

directives.

(DP-S-181/2018-19)

1.7 Non-production of record – Rs. 1,993.764 Million

1.7.1 Non-production of auditable documents – Rs. 1,988.542

Million

In terms of Articles 169 and 170 of the Constitution of the

Islamic Republic of Pakistan read with the Auditor General Ordinance,

2001 and orders of the Supreme court of Pakistan passed in CMAs 3330,

3471, 3594/13 in Constitution Petition No. 105/12, audit is a

constitutionally mandated process and after 18th

Amendment in the

Constitution, there is no room for denial of disclosure and withholding of

accounts from Auditor General for audit.

Under section-14(3) of above Ordinance, any person or

authority hindering the auditorial functions of the Auditor General

regarding inspection of accounts shall be subject to disciplinary action

under relevant Efficiency and Discipline Rules, applicable to such person.

During audit of following formations for the year 2016-17,

auditable record requested through written requisitions and verbal requests

was not produced to the audit teams, which was a serious violation on the

part of the executive.

(Rs. in Million)


1 DP-N-125/2017-18 HQ Log Area, Gujranwala ---

2 DP-N-186/2017-18 Station HQ, Sialkot ---

3 DP-N-418/2017-18 Remount Depot, Sargodha ---

4 DP-N-529/2017-18 POL Depot, Lahore 7.703

5 DP-N-392/2017-18 HQ 1 Corps, Mangla 1,949.64

6 DP-N-391/2017-18 Military Farm, Lahore 31.199

7 DP-N-29/2018-19 CMH Lahore ---

61

Total 1,988.542

Audit was of the view that non-production of auditable

documents tantamounts to hindering the auditorial functions of the

Auditor General of Pakistan and serious lapse which showed weak internal

and financial controls on the part of the management.

The irregularity was pointed out by Audit during 2017-18.

The reply furnished by the executive was not satisfactory.


2018 directed the management that documents be provided to audit for

verification within three months. No further progress was reported to


Audit stresses for expeditious implementation of DAC

directive, besides, investigation and adoption of remedial measures to

avoid recurrence of such instances in future.

1.7.2 Non-production of auditable record – Rs 5.222 Million

Under Section-14(3) of Auditor General`s Ordinance 2001,

“any person or authority hindering the auditorial functions of the Auditor

General regarding inspection of accounts shall be subject to disciplinary

action under relevant Efficiency and Disciplinary Rules, applicable to such

person”.

During audit of accounts pertaining to HQ 16 Div. Pano

Aqil Cantt, it was observed that an amount of Rs 5,222,000 was allocated

to the Div during the financial year 2016-17 vide HQ 5 Corps Karachi

Cantt letter No. 786/23/CBMC-WYJ44A dated 17-05-2017. The auditable

record against the said allocation was requested through written

requisitions and verbal requests. However, the HQ 16 Div did not produce

record to the audit team which was a serious violation on the part of the

auditee organization and it entailed strict action against the concerned.

62

Audit was of the opinion that non-production of auditable

documents to audit constituted a serious lapse and it also indicated poor

management.

The irregularity was pointed out by audit in May, 2018 to

which the management did not reply.

Audit recommends early production of complete auditable

record, expenditure‟s purpose and its break-up, PPRA Rules compliance,

bank statements and other related details along-with fixation of

responsibility against the concerned.

DP-S-148/2018-19

63

Military Lands and Cantonments

1.8 Irregular / Unauthorized expenditure – Rs

9,200.577 Million

1.8.1 Illegal sale of amenity plots - Rs 9,128.21 Million

According to Rule 2.1.4 of DHA Karachi By-Laws 2017,

"Amenity Plot means a non-leasable plot allocated exclusively for the

purpose of amenity such as worship places, burial grounds and

recreational areas (parks and play grounds)”.

According to Article 78 of the Constitution of Islamic

Republic of Pakistan, receipt of any kind is required to be deposited into

Federal Consolidated Fund. According to Rule-11 of Cantonment Land

Administration Rules 1937, “all receipts from land entrusted to the

management of the MEO shall be credited in full to the central

government.”

During scrutiny of record relating to MEO Karachi, it was

observed that ML&C Department, Rawalpindi through letter No:

42/348/lands/ML&C/2001 dated 19-10-2006 addressed to DML&C

Karachi allowed DHA Karachi to obtain market value of the amenity plots

from the allottees to enable it to liquidate its liabilities worth Rs

9,128,210,000. The same authorization was re-confirmed/ reiterated by

ML&C Department vide its letter No: 42/348/Lands/ML&C/2001 dated

17-4-2008. The action by DHA in terms of sale of amenity plots at market

value to buyers to liquidate its liabilities was not in order as the amenity

lands/ plots were meant for provision of amenity facilities to the

community and they couldn‟t be re-categorized for any residential or

commercial use.

The matter was pointed out by audit in May-2018. The

executive while submitting an evasive reply and admitting unauthorized

64

use of amenity plots stated that a comprehensive report had been

submitted to HQ ML&C vide letter dated 03-9-2008, copy of which was

not found attached with the reply. Audit is of the view that the DHA

should not have sold amenity plots to clear its dues nor the ML & C

Department should have permitted any such sale, as it constituted serious

violation of purpose of land, the misuse of such facilities has also been

objected to by the Supreme Court of Pakistan from time to time.

The DAC vide meeting held in December 2018, directed

that fresh reply be provided to audit for verification, which was provided

by the executive immediately after discussion on 19-12-2018, which was

irrelevant.

Audit opined that the serious matter involving illegal sale

of amenity plots be got investigated at appropriate level and responsibility

fixed. Also the sale proceeds amounting to Rs 9,128,210,000 be deposited

into government treasury and record got verified from audit. No further

progress on the matter was reported to audit till finalization of this report.

Audit recommends finalization of action as outlined above.

DP-S-63/2018-19

1.8.2 Non-realization of composition fees on un-authorized

construction - Rs. 60.00 Million

In accordance with Section 181 of Cantonment Act, 1924

read with Ministry of Defence letter No.75/853/Lands/92/4970/D-

/ML&C/94 dated 06th

November 1994, “unauthorized construction within

the limits of a cantonment is an offence and Board is empowered to

demolish the unauthorized construction or regularize it on payment of

composition fee”.

During audit of Cantonment Board Havelian, it was

observed from Board Resolution No. 16 dated 06-08-2015 that building

65

plans of 40 properties situated in Prime Minister Housing Scheme

Havelian were approved for 2 storey buildings. The owners of properties

constructed 3rd

storey without any authorization in the relevant lease deed.

The Board imposed minimum lump sum composition fee @ Rs.

1,500,000/- for each building amounting to Rs. 60,000,000/- (Rs.

1,500,000/-x 40) for regularization of un-authorized construction of 3rd

storey on leased land. Later on, the Board revoked above decision vide

another Resolution No. 8 dated 17/02/2016, which was indicative of undue

favour to owners and loss to Cantonment Fund.

The irregularity was pointed out by Audit in April 2017.

The executive replied that as per Section 185 of Cantonment Act 1924, the

Board was competent to impose or write off composition fee in respect of

unauthorized construction and since the Board had revoked the case,

recovery was not required. Reply was not satisfactory because as per Cantt

Act 1924, the 3rd

storey was required to be either demolished or

compounded, which was not done.


November, 2018 was

apprised that construction of 3rd

storey was not allowed for security reason

and lessees had been issued notices for demolition of 3rd

storey. DAC

directed that this case be placed before the Board in its next meeting for

decision so as to finalize action within two months. No further progress of

the matter was reported to audit till finalization of this report.

Audit recommends that the matter may be investigated to

fix responsibility on the person(s) at fault, besides, regularization of 3rd

storey on payment of composition fee or demolition of unauthorized

construction.

DP-N-293/2017-18

1.8.3 Irregular conclusion of contract with de-registered firm

- Rs 9.793 Million

66


1986 “Every officer should exercise the same vigilance in respect of



Moreover, according to PEC Engineering Bye-Laws, 1987, Rule

(3)(1),”no engineering work shall be constructed except by a constructor

or operated except by an operator licensed as such by the Council”.

During scrutiny of record related to the office of

Cantonment Board Clifton for the financial year 2017-18, it was observed

that an amount of Rs 9,793,754 was paid to M/s Hassan Eng.&

Contractors (Pvt) Ltd during the year on account of different works. The

above firm was de-registered by Pakistan Engineering Council w-e-f

01.01.2017.

The irregularity was pointed out by audit in November,

2018, The executive stated that the registration with PEC was pre-requisite

for enlistment of contractor with CBC and that the said contractor was

registered with PEC. The reply furnished by the executive was not tenable

as the PEC on its website reflected the status of the said firm as being de-

registered w.e.f. 01-01-2017


that relevant documents be provided to audit for examination.


directives, besides, fixing of responsibility against the person(s) at fault.

DP-S-279/2018-19

1.8.4 Irregular payment of drainage charges out of Cantt

Fund – Rs 2.574 Million

67

As per Rule-4 (iv) of Cantonment Account Code-1955,

”public monies should not be utilized for the benefit of particular person

or section of the community”.

During audit of Cantt Board Walton, it was observed that

an amount of Rs 2,574,000/- was paid vide voucher No. 178 dated 09-11-

2015 by Cantt Board Walton to Irrigation Department on account of

drainage service charges on account of Charrar Drain which passes

through DHA Lahore, under Board Resolution No. 36 dated 15-11-2014.

The bills of waste water were sent to DHA by Irrigation Department,

which were unjustifiably forwarded to Cantt Board by DHA vide letter

dated 05-06-2014. Audit is of the view that drainage services charges were

related to DHA and needed no forwarding to Cantt Board and payment

therefrom.


Cantt Board Walton replied that the case would be taken up with

concerned authority.


November, 2018 was

apprised that another bill for the subsequent period, received from DHA,

had been placed before the Board for decision keeping in view the Audit

observation. The Board decided to ask DHA for the payment of bills as

DHA is charging sewerage charges from its residents. DAC directed that

recovery be effected from DHA expeditiously. No further progress was

intimated to Audit till finalization of this report.

Audit recommends recovery of Rs. 2.574 million, besides,

taking measures to avoid recurrence of such lapse in future.

DP-N-181/2017-18

1.9 Recoverables / Overpayments – Rs 4,961.798

Million

1.9.1 Non-recovery of sky charges - Rs 1,645.754 Million

68

According to Government of Pakistan, Ministry of Defence

(ML&C Deptt) letter No. 1-4/Gen/Hoarding Policy/ML&C/2012 dated 4th

July, 2012, Sky Charges shall be recovered by respective Cantt Boards.

During audit of Cantt. Board Chaklala, it was observed that

Sky Charges of billboards / hoardings amounting to Rs 1,645,754,000/-

recoverable from 16 hoarding contractors were not effected.


The executive stated that notices for recovery of Sky Charges have been

issued to defaulters and recovery of objected amount will be made.


November, 2018 was

apprised by Cantt Board Chaklala that actual recoverable amount comes to

Rs 524,850,000. DAC pended the para and directed the Department that

policy for recovery of Sky Charges, Bill Boards and Hoardings be got

verified from MoD.

Audit recommends that the matter may be reconciled with

audit and actual recoverable amount be realized and got verified from

audit.

DP-N-41/2018-19

1.9.2 Non-recovery of cantonment taxes – Rs 1,096.027

Million

Section-92 of Cantonments Act, 1924, states that if a

person liable for payment of any tax does not, within thirty days from the

service of the notice of demand, pay the amount due, or show sufficient

cause for non-payment of the same to the satisfaction of the Executive

Officer, such sum, with all costs of the recovery, may be recovered under

a warrant, issued in the form set forth in Schedule II, by distress and sale

of the movable property of the defaulter.

During audit of following Cantonment Boards for the

financial year 2017-18, it was observed that an amount of Rs

69

1,096.027,686 was lying outstanding against different parties/properties on

account of house tax, conservancy tax and water charges, which was in

violation of rule stated above.

(Rs. in million)

S.No Name of Unit/ Formation DP No Amount

1 CB Karachi S-138, S-140 & S-141 387.109

2 CB Clifton, S-243 348.390

3 CB Quetta S-75 198.957

4 CB Faisal, Karachi S-61 121.030

5 CB Hyderabad S-106 26.300

6 CB Korangi Creek, Karachi S-173 6.095

7 CB Malir, Karachi S-280 & S-290 6.822

8 CB Pano Aqil S-264 1.324

Total 1096.027

Audit was of the view that due to slow pace of recovery

there accumulated arrears in huge amount.

Non-recoveries were pointed out by audit in August and

November, 2018. It was replied by the management that partial recoveries

had been made and efforts were afoot to recover the outstanding amount.


the executive to recover the amount in full and get the recoveries verified

from audit.

Audit recommends expeditious compliance of DAC

directives.

1.9.3 Non-realization of premium charges and composition

fee on unauthorized use of residential property as

commercial – Rs 848.045 Million

As per para-3(h) (General Conditions) of the Government

of Pakistan Ministry of Defence letter No. 3/6/D-12/(ML&C)/97-2007

dated 31st December, 2007, “usage of residential property for commercial

70

purpose will require NOC from the respective Garrison HQrs. Premium

shall be charged on revenue rate applicable for the said purposes. After

approval of conversion, the respective Cantt Board to charge due

composition fee as per existing rule and those who fail to pay the above,

their property will be resumed”.


financial year 2016-17, it was observed that properties as mentioned

against each Cantonment Board were held on lease for residential purpose.

However, these were being used for commercial purpose in violation of

above stated Government orders. This resulted into non-recovery of Govt

dues including premium, development charges and ground rent amounting

to Rs 848.045,000.

Audit is of the view that un-authorized change of purpose

without approval of competent forum showed weak controls of the

department entailing loss to the Cantt Fund due to non-imposition of

commercialization charges.

(Rs. in Million)

S. # DP No. Unit /

Formation

Property No. Amount

1 DP-N-230/2017-18 Cantt Board,

Rawalpindi

09 Residential Buildings at

Westridge Housing Scheme

Rawalpindi

438.935


Rawalpindi

Bungalow No. 32, Haider

Road Rawalpindi

99.670


Rawalpindi

293/A Jami Road, 5, 16 &

283/4 Raja Akram Road

Rawalpindi

207.869


Rawalpindi

Plot-3 Bung-113 Saddi

Road Rawalpindi

29.095


Abbottabad

Plot-12 Svy 160/18 Defence

officer Housing scheme

Abbottabad

72.476

Total 848.045


The executive replied that the properties were under the management of

71

concerned MEO. The reply was not acceptable as building plans for

residential purpose were approved by Cantonment Boards and it was their

responsibility to prevent un-authorized commercial use.


November, 2018 was

apprised that the properties objected by Audit are under the control /

management of MEO concerned. DAC directed that para be shifted to

concerned MEO for finalization of action. No further progress was

intimated to Audit till finalization of this Report.

The Audit recommends early regularization and recovery.

1.9.4 Non-realization of conservancy charges from the local

military authorities. - Rs. 365.505 Million

As per Section-98 of Cantonment Act-1924, the

Cantonment Board is liable to provide services for the collection, removal

and disposal of rubbish, filth, night soil and sludge from all places within

the control of local military authority. As per the conservancy agreement,

the military authority concerned makes payment to the Cantonment Board

for the above services.

During audit of following Cantt Boards, it was observed

that conservancy agreements were concluded between Station

Headquarters and Cantt Boards. However, outstanding dues on account of

conservancy charges amounting to Rs 365.505,000 against Army were

still outstanding since long. This resulted into loss to Cantt Fund of Rs

365,505,000.

(Rs. in million) S # DP No. Unit / Formation Amount

1 DP-N-113/2017-18 Cantt Board, Sialkot 39.225

2 DP-N-180/2017-18 Cantt Board, Multan 17.100

3 DP-N-244/2017-18 Cantt Board, Attock 6.609

4 DP-N-303/2017-18 Cantt Board, Gujranwala 64.450

5 DP-N-343/2017-18 Cantt Board, Kohat 30.572

6 DP-N-402/2017-18 Cantt Board, Peshawar 18.941

7 DP-N-18/2018-19 Cantt Board, Bahawalpur 42.940

72

8 DP-N-51/2018-19 Cantt Board, Lahore 101.505

9 DP-N-57/2018-19 Cantt Board, Jhelum 37.596

10 DP-N-95/2018-19 Cantt Board, Mardan 5.439

11 DP-N-179/2018-19 Cantt Board, Risalpur 1.128

Total 365.505

The irregularity was pointed out by Audit in 2016 & 2017.

The executives replied that the matter had been taken up with Army

authorities for the payment of outstanding dues.


2018 was reported nominal recoveries in few cases. DAC directed that

recovery be pursued with Army authorities vigorously. No further

progress was intimated to Audit till finalization of the report.

Audit recommends realization of outstanding cantonment

dues and verification by audit, besides, adoption of measures by the Cantt

Boards concerned for timely recovery.

1.9.5 Non-recovery of property tax of commercial building -

Rs 183.089 Million

According to section 92 (1) of the Cantonment Act-1924

“if the person liable for the payment of any tax does not, within 30 days

from the service of notice of demand, pay the amount due or show

sufficient cause of non-payment of the same to the satisfaction of the

Cantonment Executive Officer, such sum, with all costs of recovery, may

be recovered under warrant”.

During audit of Cantonment Board, Peshawar, it was

observed that property tax in respect of undermentioned properties

amounting to Rs183,089,000 was lying outstanding since long, which

needed recovery.

(Rs. in Million)

S # DP # Formation Property Detail Amount

1 DP-N-464/2017-18 Cantonment

Board, Peshawar

Deans Trade Centre

Peshawar

143.675

73


Board, Peshawar

State Bank of Pakistan,

Peshawar

39.414

Total 183.089

The irregularity was pointed out by Audit in 2016-17 &

2017-18. The executive replied that efforts were being made to recover the

amount. However, no further progress of recovery was intimated.


November, 2018 and

4th

December, 2018 was apprised that Rs 29,314,000 has been recovered

from the owner of Deans Trade Centre. Owners of the property have

approached civil court for status quo against Cantonment Board for

stoppage of sealing process. As regards SBP, they have been requested for

recovery of the property tax but no response was received. The case has

therefore been forwarded to Cantt Magistrate under section 259 of

Cantonment Act 1924. DAC directed that recovery made so far be got

verified besides intimation of progress of outstanding recovery and present

position of court case. No further progress was reported to audit till


Audit recommends immediate recovery of cantonment dues

and its verification by audit besides initiation of remedial measures to


1.9.6 Non-recovery of conservancy charges – Rs 160.761

Million

Under Rule 2(A)(1) of the Pakistan Cantonments Account

Code, 1955, it is laid down that the Executive Officer is the Principal

Executive Officer of the Board and all other officers and servants of the

Board are subordinate to him. He is the officer, who has been entrusted by

government with the responsibility of assessing and collecting cantonment

revenues. Further, according to Section 98 of Cantonments Act 1924, “a

Board may make special provisions for the cleansing of any factory, hotel,

club or group of buildings or lands used for any one purpose and one

management, and may fix a special rate and the dates and other conditions

74

for periodical payments thereof, which shall be determined by a written

agreement with the person liable for the payment for the conservancy or

scavenging tax in respect of such factory, hotel , club or group of

buildings or land”.


financial year 2017-18, it was observed that the municipal bodies provided

conservancy services regularly to Pakistan Army by concluding

agreements with Station Headquarters, but an amount of Rs 160,761,000

on account of conservancy charges was lying outstanding against Pakistan

Army up to June 30, 2018.

(Rs. in million)

S. No Name of Unit/ Formation DP No Amount

1 Cantonment Board Pano Aqil S-253 141.657

2 Cantonment Board Malir S-94 19.104

Total 160.761

Non-recoveries were pointed out by audit during July to

November, 2018. The executive stated that the case for recovery of arrears

had been initiated with army authorities. The executive at Sr. No 2 further

contended that the actual recoverable amount was Rs 13,041,000 instead

of 19,104,000.

Non-recovery of huge arrears reflected weak financial

management within the Cantonment Boards causing loss to cantonment

fund.


the executive at Sr. No 1 that conservancy charges be recovered from

Army authorities and record produced to audit for verification. In case of

Sr. No 2, the DAC directed to reconcile the recoverable amount with audit

and get the recovery verified from it. No progress in terms of recovery was

reported till finalization of this report.

75


directives.

1.9.7 Non- recovery of premium due to use of old grant

property for commercial purpose – Rs 114.849 Million

According to para 3(h) of Govt. of Pakistan/ Min of

Defence Rwp letter No.3/6/D-12(ML&C)/97-2007 dated 31.12.2007, any

un-authorized change of purpose (residential to commercial) in respect of

properties held on old grant terms cannot be regularized unless: (a) NOC

has been obtained from Sta HQrs/CB. (b) full market price of land is paid

as premium (c) in case of failure to comply with the above conditions the

property rights were to be resumed.

Further, according to Govt. of Pakistan /Min of Defence

letter No-55/305/Lands/ML&C/2007-P dated 13.8.2015, all grantees of

old grant properties were advised to regularize the cases of change of

purpose up to 31.12.2016.

During audit of Cantonment Board Rawalpindi, it was

observed that property No. 486 & 496, Adamjee Road, Saddar Rawalpindi

Cantt held on old grant was being used for commercial purposes by

constructing 55 shops, as evident from Cantonment Board, Rawalpindi

letter No. P-486 & 496/SB/L/5188, dated 20.04.2017. Audit observed that

neither premium, development charges and ground rent amounting to Rs.

114,848,651 were recovered nor property rights got resumed.


The executive replied that Government old grant conversion policy

expired on 31-12-2016. However, after extension of the policy, the case

for conversion of old grant properties into regular commercial lease would

be processed. After approval of the case, premium would be recovered.

Reply was not tenable as the owner did not avail the facility for

regularization of un-authorized use of property under the Government

policy. Therefore, property rights needed to be resumed.

76


November, 2018 was

apprised that Government policy for conversion of old grant cases into

regular leases have been extended for five years up to 31-12-2021.

Accordingly, public notices have been published in newspapers. DAC

directed that notices be issued to the concerned lessees with direction to

get the lease regularized. No further progress was reported to audit till


Audit recommends that either properties be resumed or

regularized through recovery of cantonment dues, besides, holding of

inquiry for fixing responsibility on person(s) at fault.

DP-N-341/2017-18

1.9.8 Non-recovery of Sales Tax on services – Rs 104.150

Million

A) According to Sindh Sales Tax Act No XII of 2011, issued

by Sindh Revenue Board (SRB), Government of Sindh, as also

implemented through Notification No. SRB/Com-III/AC (Unit-

27)/Tender/JS/2016-17/ 00595 dated 20-6-2017, Sales Tax would be

charged @ 10% w.e.f 01-07-2014 on janitorial services.


financial year 2017-18, it was observed that Sales Tax on conservancy

services amounting Rs 66,302,541 was not recovered from the

contractors‟ payments.

(Rs in million)


1. Cantonment Board Clifton S-256 47.277

2. Cantonment Board Faisal S-53 10.800

3. Cantonment Board Malir S-284 8.225

T o t a l 66.302

77

Audit was of the view that due to non-recovery of Sales

Tax, public exchequer was deprived of hefty revenue on account of

recoverable tax.

Non-recoveries were pointed out by audit in August and

September, 2018. The executive at Sr. No1 submitted an evasive reply.

The executive at Sr. Nos. 2 and 3 replied that the Sindh Sales Tax on

Services was not applicable over Federal organizations. The contention of

the management was not tenable as the Sales Tax on Services was a

provincial subject and the tax was recoverable on such services in the

province.


December, 2018. The executive at Sr. No 1 replied that the issue was

under deliberation at MoD. The executive at Sr. Nos 2 and 3 replied that

the ML&C Department vide letter dated 06-08-2018 had directed all the

CEOs not to collect/deduct/remit amount on account of Sales Tax to Sindh

Revenue Board, which was not understood.

The DAC pended the DP till formulation of policy/decision

at MoD level, whereas the audit suggested recovery of tax due as per

rules/instructions of the provincial government. Further progress in terms

of recovery was not reported to audit till finalization of this report.


amount along-with fixation of responsibility against the person(s)

concerned.

B) According to Balochistan Sales Tax on Services Act, 2015,

Schedule II, Part-B, services provided or rendered by persons engaged in

contractual execution of work or furnishing supplies are liable to pay 15%

Sales Tax on their rendered services.

78

During audit of Cantonment Board Quetta for the year

2017-18, it was observed that Sales Tax on services @ 15% amounting Rs

37,848,000 was not recovered from the contractors‟ payments.



recoverable tax.

Non-recoveries were pointed out by audit in August 2018.

The executive however furnished an evasive reply.


December, 2018 wherein the executive repeated their earlier evasive

stance.

The DAC however pended the DP till formulation of



progress in terms of recovery was not reported to audit till finalization of

this report.


on services.

DP-S-77/2018-19

1.9.9 Non-recovery of property tax – Rs 82.912 Million

As per Cantonment Act 1924 Section 64, “annual value”

means (a) In the case of railway stations, hotels, colleges, schools,

hospitals, factories and any other buildings which a [Board] decides to

assess under this clause, one-twentieth of the sum obtained by adding the

estimated present cost of erecting the building to the estimated value of the

land appertaining thereto. Section 68 of Cantonment Act, 1924 provided

that the Board shall, at the same time, give public notice of a date, not less

79

than one month thereafter, when it will proceed to consider the valuations

and assessment entered in the assessment list, and, in all cases in which

any property is for the first time assessed or the assessment is increased, it

shall also give written notice thereof to the owner and to any lessee or

occupier of the property (Section 90 of Cantonment Act,1924).Further,

under Section-92 (1) of Cantonment Act 1924, it is laid down that if the

person liable for the payment of any tax does not, within thirty days from

the service of notice of demand, pay the amount due or show sufficient

cause for no-payment of the same to the satisfaction of the executive

officer, such sum with all costs of recovery, may be recovered under a

warrant.

During audit of accounts of the following Cantonment

Boards for the year 2017-18, it was observed that the ARV on account of

02 properties was not finalized since long, which resulted in non-recovery

of property/ conservancy tax from the facilities.

(Rs in million)

S. No DP No Name of Unit/

Formation

Description of activity Amount

01 DP-S-73 Cantonment Board

Quetta

Fauji Foundation School 77.440

02 DP-S-90 Cantonment Board

Faisal

M/s Megaplex Cinemas (Pvt) Ltd

(Nueplex Cinema)

5.472

Total 82.912

When the matter was pointed out by audit in August, 2018

the executive at Sr. No 01 replied that the due amount from Fauji

Foundation School would be recovered by adopting all the legal means.

The executive at Sr. No 02 informed that the notice was issued to M/s

Megaplex for the purpose.

The reply furnished by the executive was not tenable as no

serious effort was made for recovery of the cantonment dues.

80


December, 2018. The DAC directed the executive at Sr. No 1 that the

action regarding recovery of property tax be expedited. The executive at

Sr. No 2 was advised to furnish revised reply along-with proof of class of

land as A-1 or otherwise for examination by audit and effect recovery

from the concerned as per rules.


directives.

1.9.10 Non-recovery of rent of hoardings from the advertisers

- Rs 70.285 Million

Under Section-259 of Cantt Board Act, 1924, any tax

or any other money recoverable by a board may be recovered,

together with the cost of recovery either by suit or, an application to

Magistrate having jurisdiction in the Cantt.

During audit of accounts of Cantonment Board Clifton for

the financial year 2017-18, it was observed that a sum of Rs 70,285,530 on

account of hoarding charges was lying outstanding against different

advertisers since long.

Audit was of the opinion that non-recovery of hoarding

charges from the advertisers indicated weak financial management and

internal controls within the formation.

The irregularity was pointed out by audit in August, 2018.

The executive replied that the notices had been served to the defaulters for

recovery of the said dues.


December, 2018 wherein it was replied that necessary recovery suit in

light of Section 259 of the Cantonment Act 924 had been filed. The DAC

directed the executive to recover the amount due within 6 months.

81

However, no progress in terms of recovery was reported to audit till


Audit recommends for an expeditious implementation of

DAC's directives.

DP S-57/2018-19

1.9.11 Non-recovery of cantonment dues on account of

premium - Rs 50.791 Million

Under Section-259 of Cantt Board Act, 1924, any tax or

any other money recoverable by a board may be recovered, together with

the cost of recovery either by suite or, an application to Magistrate having

jurisdiction in the Cantt.

During audit of Cantonment Board, Peshawar, it was

observed from record that an amount of Rs. 50,791,050/- on account of

premium was lying outstanding against owners of shops and flats, which

needed recovery.


The executive authority stated that a sum of Rs 8,045,500/- was recovered

and balance amount of Rs 50,791,050/- of premium would be recovered.

Reply was not acceptable, as required action for recovery of outstanding

amount was not initiated.


November, 2018 was

apprised that recovery of Rs. 30,002,000 has been made. DAC directed

that balance amount i.e. Rs. 20,789,000 be recovered within three months.

No further progress was reported to audit till finalization of this report.

Audit recommends early recovery of the whole amount and

its verification from audit, besides, adoption of remedial measures to avoid

such lapses in future.

DP-N-449/2017-18

82

1.9.12 Non-recovery of hoarding charges – Rs 43.114 Million

Under Section-259 of Cantt Board Act, 1924, any tax or


the cost of recovery either by suite or, an application to Magistrate having

jurisdiction in the Cantt.

During audit of the accounts of following Cantonment

Boards for the year 2016-17, it was observed that a sum of Rs 43,114,000

on account of hoarding charges were lying outstanding, which needed

recovery.

(Rs. in Million)


1 DP-N-206/2017-18 Cantt Board, Rawalpindi 23.628

2 DP-N-317/2017-18 Cantt Board, Sialkot 2.800

3 DP-N-01/2018-19 Cantt Board, Lahore 16.686

Total 43.114

The irregularity was pointed out by Audit in July-August

2017. The executive replied that concerned Army authorities had allowed

the hoardings and hence recovery is due from them.


November, 2018

directed that recovery be pursued with concerned Army authorities and

updated position be provided in three months besides clarification from

MOD in A-I land policy. However, no further progress was reported to


Audit recommends for expeditious implementation of DAC

recommendations, besides, initiation of remedial measures to avoid such

lapses in future.

1.9.13 Non-recovery of premium on auction- Rs 39.469 Million

According to Rule-23 read in conjunction with Rule-47 of

Cantonment Land Administration Rules – 1937, “the successful bidder

83

shall be required to deposit immediately 10 percent of the amount of his

bid and to sign an agreement consenting to forego the deposit in case the

balance of the price is not paid within thirty days of the confirmation of

the auction”.

During audit of Cantonment Board Pano Aqil for the

financial year 2017-18, it was observed that a sum of Rs 39,469,500 on

account of premium against auction of 4th

batch of plots in Bazar

area/Defence Housing Scheme Pano Aqil Cantt was lying outstanding

against the allottees which required recovery and its deposit into

cantonment fund.

Non-recoveries were pointed out by audit in August, 2018.

The executive replied that the complete premium amount would be

recovered after obtaining government sanction.


December, 2018 wherein the executive repeated its earlier stance. The

DAC directed that relevant documents be provided to audit for

verification/examination.

Audit recommends expeditious recovery of the premium

amount and its deposit into cantonment fund.

DP-S-273/2018-19

1.9.14 Non-return of unspent amount – Rs 34.267 Million

According to Rule-4 (1) of Cantonment Accounts Code

1955, “every public officer is expected to exercise the same vigilance in

respect of expenditure incurred from public money as a person of ordinary

prudence would exercise in respect expenditure of his own money”.

Further, under Rule-47(e) (v) of Financial Regulations Volume-I 1986, the

unexpended portion of any existing grant shall lapse on 30th of June each

year.

84

During scrutiny of record relating to Military Estate Office,

Hyderabad for the financial year 2016-17, it was observed that private

land measuring 85 Acres, at Deh Lakhmir Taluka Nawabshah District,

Shaheed Benazirabad was acquired for PAF. An amount of Rs 85,501500

was paid for the land by MEO Hyderabad to Land Acquisition Collector

(LAC) Nawabshah. However, only Rs 49,234,375 was expended by the

LAC and the balance amount of Rs 34,267,125 which was required to be

deposited into government treasury as being unspent/unutilized was not

refunded by LAC Nawabshah to MEO Hyderabad.

The irregularity was pointed out by audit in February, 2018

but no reply was furnished by the executive.

Audit was of the view that non-recovery of unspent money

from LAC indicated weak financial management at the end of the

executive.


December, 2018 wherein it was apprised that the LAC Nawabshah had

been asked to return the remaining amount of Rs 34,267,125 to the MEO

Hyderabad. The DAC directed that the matter regarding refund of amount

be pursued vigorously and the amount retrieved be deposited into

government treasury and record got verified from audit. No progress in

terms of recovery was reported to audit till finalization of this report.

Audit recommends expeditious compliance of DAC‟s

directives.

DP S-02/2018-19

1.9.15 Non-recovery of composition fee due to un-authorized

construction – Rs 25.676 Million

As per Section 178 (a) of Cantonment Act, 1924 no person

shall erect a building on any land in a Cantonment without getting

85

building plan sanctioned by the Board. Further Govt. of Pakistan Ministry

of Defence vide their letter No. 75/853/Lands/92/4970/D-/ML&C/94

dated 06-11-1994, provides that unauthorized construction within the

limits of a Cantt is an offence and Board is empowered to demolish the

unauthorized construction or regularize it on payment of Composition Fee

which in case of commercial construction should not be less than 10% of

the assessed capital cost of land & building.

During audit of Cantonment Board Rawalpindi, it was

observed that owners of properties as mentioned against each carried out

unauthorized constructions without approved building plan from the

concerned Board, which resulted into non-recovery of composition fee of

Rs 25,676,000.

(Rs. In million)

S # DP # Formation Property Amount

1 DP-N-232/2017-18

Cantonment

Board Rawalpindi

Plot Khasra No.3419/647

Moza Chur Harpal

Kh: No. 772, 773 Mouza

Siham Rawalpindi

5.416


Board Rawalpindi

41 properties at

Rawalpindi

20.260

Total 25.676

The irregularity was pointed out by Audit in 2017. The

executive replied that in case of Sl No. 1, owners of the properties had

submitted revised building plans along with willingness for regularization

of unauthorized construction which has been placed before the Board.

After approval of the Board, recovery will be made. Whereas, in the other

case, executive agreed to recover the amount.


November, 2018 was

apprised that in case of Sl No. 1, matter was placed before Board, which

86

resolved that 30 days notice be served upon owners for restoration of

parking failing which demolition of unauthorized structure be made.

Accordingly a notice was served but no response received from owner.

Afterwards local police authority has been approached for provision of

contingent for demolition. However, police did not respond and hence

shops were sealed. DAC directed that documents relating to action taken

by the Board be got verified from audit and to pursue the case further as

per rules in vogue. Whereas in the second case, executive apprised that Rs

7,288,000 had been recovered. DAC directed for verification of the

recovered amount and recovery of balance amount within 8 months. No


Audit recommends immediate recovery of composition fee

or demolition of the un-authorized construction besides investigation into

the matter to fix responsibility on the person(s) at fault.

1.9.16 Non-deposit of government taxes into treasury - Rs

18.218 Million

Para-2 (6) of Cantonment Account Code, 1955 provides

that executive officer is responsible for enforcing financial order and for

observance of all relevant rules both by himself and his subordinates.

Further, Section 160 of Income Tax Ordinance 2001 stipulates that any tax

that was deducted shall be paid to the Commissioner by the person making

the deduction within the time and in the manner as may be prescribed.

Likewise, Section 161 of Income Tax Ordinance 2001 provides that where

a person fails to pay the tax to the Commissioner as required under this

Section, the person shall be personally liable to pay the amount of tax to

the Commissioner who may pass an order to that effect and proceed to

recover the same.

During scrutiny of record pertaining to the following

Cantonment Boards for the financial year 2017-18, it was observed that

87

the formations withheld Rs18,218,818 on account of Income Tax from the

contractors being withholding agents but the said amounts were not

remitted to FBR, which was not in order.

(Rs in million)


1 Cantonment Board Korangi Creek S-183 9.509

2 Cantonment Board Hyderabad S-104 8.709

T o t a l 18.218

When the matter was pointed out by audit in August, 2018

the executive stated that the pointed out recovery would be remitted to

FBR.

The DPs were discussed in DAC meeting held in

December, 2018. The DAC directed that the total withheld amount on

account of tax be remitted into government treasury immediately and such

practice should not be repeated in future. No further response in terms of

proof of remittance to FBR was reported to audit till finalization of this

report.


directives along-with fixation of responsibility against the concerned.

1.9.17 Non-recovery of Income Tax – Rs 12.699 Million

Under Rule 2(A)(1) of the Pakistan Cantonments Account

Code, 1955, it is laid down that the "Executive Officer is the principal

officer of the Board and all other officers and servants of the Board are

subordinate to him. He is the officer, who has been entrusted by

government with the responsibility of assessing and collecting

cantonment revenues". Further, according to Section 236 (A) of Income

Tax Ordinance 2001, the newly enhanced tax rate on account of advance

tax on sales by auction is 10% for filer and 15% on non-filer.

88


Boards for the year 2017-18, it was observed that a sum of Rs 12,699,250

on account of advance tax against auction of plots/shops and services was

lying outstanding against different parties.

(Rs in million)

S No. DP No. Name of Unit/ Formation Amount

01 DP-S- 258/2018-19 Cantonment Board Pano Aqil 6.578

02 DP-S- 174/2018-19 Cantonment Board Hyderabad 5.576

03 DP-S- 233/2018-19 Cantonment Board Hyderabad 0.545

Total 12.699

The matter was pointed out by audit in August and

September, 2018. The executive at Sr. No 01 replied that the advance tax

would be applicable once the lease agreements were finalized and

complete amount of bid money was successfully recovered as per

schedule, while the executive at Sr. Nos 02 and 03 agreed to recover the

amount of Income Tax from the parties. Reply furnished by the executive

is not tenable as they should have recovered the tax due in a timely

manner.


December, 2018. The DAC directed the executive to get the recoverable

amount reconciled with audit and effect recovery of the amount due and

get the record verified from audit expeditiously.

Audit recommends compliance of DAC`s directives on

priority.

1.9.18 Non recovery of cantonment dues from the contractor -

Rs. 11.520 Million

According to Rule 14 (2) of Pakistan Cantonment Accounts

Code, 1955, remission of money due over one thousand rupees in respect

of miscellaneous contracts for special reasons be sanctioned by the

government in each individual case.

89

As per clause 3 of agreement for Cattle Mandi executed on

1st December, 2016 by Cantonment Board Okara with Muhammad Ilyas

Qureshi, annual payment of Rs. 65,100,000/ as contract money will be

paid in equal monthly installments in advance. If the contractor fails to

deposit outstanding dues, his contract will be cancelled and the collection

rights of cattle mandi shall be carried out by other means at the risk and

cost of the contractor.

During audit of Cantt Board Okara, it was observed that

cantonment dues up to June 2017 i.e. Rs.11,520,000/- as was evident from

Cantonment Board Okara Cantt letter No. 181/CA/114/OK/2100 dated 3rd

July 2017 were not recovered from Cattle Mandi contractor. Moreover,

required action under the terms and conditions of the agreement was not

taken. Further, a case of rebate was forwarded to DG ML&C.

The irregularity was pointed out by audit in July, 2017. The

executive replied that after approval of 20% rebate by the Board, the case

was submitted to DG ML&C and the net amount would be recovered

accordingly. The executive reply was not convincing as the cantonment

dues were required to be recovered as per contract schedule.


November, 2018 was

apprised that 20% rebate has been granted to the contractor therefore,

recoverable amount against the contractor stands regularized. DAC

directed that relevant record/documents regarding grant of rebate under

rules, be provided to audit. However, no further progress was intimated till


Audit recommends regularization of the matter from the

Federal Government as under rule 14 of Cantonment Accounts Code,

1955 sanction from the Government was required which was not done.

DP-N-121/2017-18

1.9.19 Non recovery of BTS tower rent - Rs 11.352 Million

90

According to Para-92 (1) of the Cantonment Act-1924 “if

the person liable for the payment of any tax does not, within 30 days from

the service of notice of demand, pay the amount due or show sufficient

cause of non-payment of the same to the satisfaction of the Cantonment

Executive Officer, such sum, with all costs of recovery may be recovered

under warrant”

During audit of Cantonment Board Peshawar, it was

observed that a sum of Rs 11,351,635/- on account of tower fee in respect

of six BTS Towers for the period 2013-14 to 2016-17 was outstanding

against Warid Telecom Company, which needed immediate recovery.


The executive replied that case was referred to Secretary Cabinet Division,

Government of Pakistan, Islamabad in the light of court decision and

would be decided accordingly. However, further progress in the matter

was not intimated to Audit.


November, 2018 was

apprised that concerned telecom company has been requested time and

again for recovery of BTS tower fee. DAC directed to recover the amount

within two weeks. No further progress was reported to Audit till


Audit recommends immediate recovery of cantonment dues

and its verification by audit besides initiation of remedial measures to


DP-N-461/2017-18

1.9.20 Less deduction of Income Tax from conservancy

contractors - Rs 9.133 Million



rendering or providing of services is liable to deduct tax from the gross

amount of the bills at prescribed rates.

91


Boards for the financial year 2017-18, it was observed that Income Tax

was deducted from the net amount of the bills of the contractors after

deduction of salaries instead of gross amount which resulted in less

recovery of Income Tax amounting to Rs 9,133,563.

(Rs in million)


1 Cantonment Board Faisal S-52 8.327


T o t a l 9.133

The less recovery of Income Tax was pointed out by audit

in August, 2018. The executive furnished an evasive reply. Audit held the

view that the Income Tax was recoverable on gross amount whereas the

Cantonment Boards deducted Income Tax after deduction of salaries of

sanitary workers, which was not in order.


December, 2018. The DAC directed the executive at Sr. No 01 that the

recovered amount be got verified from audit and the plan for balance

recovery be provided to audit and remaining recovery effected within six

months. While in case of Sr. No 02, the DAC directed that the recoverable

amount be reconciled with audit and Income Tax be recovered on gross

amount as per rules. No progress in terms of recovery was reported to


Audit recommends recovery of Income Tax as per rules on

priority.

1.9.21 Non-recovery of Stamp Duty from contractors – Rs

8.810 Million

As per Section 35 of Stamp Act 1899, no instrument



92






Contrary to above rule, the record pertaining to the

following Cantonment Boards for the year 2017-18 showed that a sum of

Rs 8,810,683 on account of Stamp Duty was not recovered by the

Cantonment Boards against different contract agreements.

(Rs in million)

S.No Name of Unit/Formation DP No Amount

1 Cantonment Board Clifton S-249 6.257

2 Cantonment Board Faisal S-60 1.134


4 Cantonment Board Quetta S-76 0.599

T o t a l 8.810

The non-recovery was pointed out by audit in August to

November, 2018. The executive at Sr. No 01 replied that the Finance Act

2009 of Sindh Government was not applicable on Cantonment Boards,

whereas the executive at Sr. Nos 2 to 4 agreed to recover the Stamp Duty.


DPs till formulation of policy/decision on recovery of Stamp Duty at MoD

level, whereas the audit suggested recovery of the amount of Stamp Duty

on priority. No progress in terms of recovery of Stamp Duty was reported

to audit till finalization of this report.

Audit recommends for recovery of provincial duty as per

rules on priority.

1.9.22 Less recovery of scrutiny fees – Rs 8.491 Million

93

According to Cantonment Act, 1924 Rule 178A, “No

person shall erect or re‑erect a building on any land in a cantonment,

except with the previous sanction of the Board, nor otherwise than in

accordance with the provisions of this Chapter and of the rules and

bye‑laws made under this Act relating to the erection and re‑erection of

buildings”. Likewise, according to Cantonment Board Resolution No. 16

dated 4-11-2011, scrutiny fee at a uniform rate of Rs 15/- Per sqft will be

charged and security fee @ 1% of the cost of construction will also be

charged.

During audit of record related to the office of Cantonment

Board Malir for the year 2017-18, it was observed that an amount of Rs

8,491,784 was less recovered on account of scrutiny fee from the owners

of 2 properties. Audit was of the view that less recovery of the fee resulted

in loss of revenue to the cantonment fund.


The executive replied that the amount would be recovered.


that the amount be recovered and record produced to audit for verification.

Audit recommends expeditious recovery of amount due and

its verification by audit.

DP-S-287/2018-19

1.9.23 Non recovery of fine from commercial properties due to

illegal water connections – Rs 7.175 Million

Under section 259 of the cantonment Act 1924 “any tax or


the cost of recovery either by suit or an application to Magistrate having

jurisdiction in the cantt.”


forty four (44) illegal water connections were installed at commercial units

94

from Cantt Board water supply line. The board vide CBR No. 40 dated

29.4.2016 regularized un-authorized connections subject to recovery of

fine amounting to Rs. 7,175,000/-. However, no recovery was made by the

Cantt Board.

The irregularity was pointed out by Audit in August, 2016.

The executive authorities agreed to take necessary action.


November, 2018 was

apprised that survey of all properties will be conducted and after

completion of survey, recovery action will be initiated. DAC directed that

process of survey / regularization of illegal water connections be

completed within one month and recovery effected. No further progress

was intimated to Audit till finalization of this report.

Audit recommends implementation of the DAC directive,

besides, investigation of the matter to fix responsibility on the persons at

fault.

DP-N-204/2017-18

1.9.24 Non-deduction of Income Tax –Rs 3.900 Million

According to Section 153 (1) (c) of Income Tax Ordinance

2001, every prescribed person making a payment in full or part including a

payment by way of advance to a resident person or permanent

establishment in Pakistan, on the execution of a contract, other than a

contract for the sale of goods or the rendering or providing of services

shall, at the time of making the payment, deduct tax from the gross

amount payable at the rate of 7.5 % from filer and 10 % from non-filer.

During scrutiny of record relating to Cantonment Board

Quetta for the financial year 2017-18, it was observed that 3 of the

contractors were paid an amount of Rs 39,000,000 against different works.

However, Income Tax @ 10% amounting to Rs 3,900,000 was not

deducted from the payments.

95

The matter was pointed out by audit in August, 2018. The

executive replied that the tax would be deducted from the final bill.

Audit was of the view that the tax should have been

deducted at source from the payments which indicated poor financial



that proof regarding filer status of the contractors be provided to audit. In

case of non –filer, the pointed out amount of Income Tax be recovered

from the contractors and record produced to audit. No further response on

the matter was reported by executive till finalization of this report.

Audit recommends early recovery of Income Tax as per

rules.

DP-S-70/2018-19

1.9.25 Non-recovery of composition fee – Rs 3.004 Million

According to Section 185 of Cantonments Act, 1924, a

Board may direct the owner, lessee or occupier of any land in the

cantonment to stop the erection or re-erection of a building in any case in

which the Board considers that such erection or re-erection is an offence

under Section 184. The Board may direct the alteration or demolition of

the building or accept, by way of composition, such sum as it thinks

reasonable. Further, Government of Pakistan Ministry of Defence vide

their letter No. 75/853/Lands/92/4970/D-2/ML&C/94 dated 6-11-1994

stated that “unauthorized construction within the limits of Cantonment

Board is an offence and the Board is empowered to demolish the

unauthorized construction or regularize it on payment of composition fee”.

During audit of record of Cantonment Board Hyderabad for

the financial year 2017-18, it was observed that the owner of the property

96

No 14 & 15 (Survey No 41) Saddar, Hyderabad Cantt carried out

unauthorized construction work. The composition fee was not recovered

from the lessee.

Non-recovery was pointed out by audit in August, 2018.

The executive replied that they had directed the lessee to deposit the

amount. Audit was of the view that the Cantonment Board could not

pursue the matter of recovery of composition fee meticulously, which

reflected weak internal controls.


informed that the lessee of the property had been approached for deposit

of composition fee. The DAC directed that the recovery of the

composition fee be expedited and it be got verified from audit. No

progress in terms of recovery was reported to audit till finalization of this

report.

Audit recommends expeditious implementation of DAC‟s

directives along-with fixation of responsibility against the concerned

DP-S-100/2018-19

1.9.26 Non-recovery of Transfer of Immoveable Property Tax

- Rs. 1.784 Million

According to Section 60 of Cantonment Act, 1924, the

Board may, with the previous sanction of the Federal Government, impose

in any cantonment any tax which under any enactment for the time being

in force, may be imposed in any municipality in the Province wherein

such cantonment is situated.

According to S.R.O.382(1)/94 dated 3-5-1994, Federal

Government imposed a tax on transfer of immoveable property (lands and

buildings) payable by the transferee at the rate of three percent of the

consideration money of such property as recorded in the sale deed or as

97

assessed by the Cantonment Executive Officer for the purpose of

assessment of tax as market value of the property, whichever is higher.


Punjab Co-operative Housing Society Limited purchased a piece of land

measuring 09 Kanal, 08 Marlas. However, Transfer of Immoveable

Property tax amounting to Rs. 1,784,400/- was not recovered from the

society.


It was replied by the executive that amount would be recovered at the time

of transfer of property. The reply is not agreed to as all the formalities had

already been completed.


November, 2018 was

apprised that the Society has been approached for provision of relevant

record. However, no response has been received. DAC directed that matter

regarding recovery of TIP tax be finalized within two months. No further

progress was intimated to Audit till finalization of this report.

Audit recommends recovery of Cantonment taxes and


DP-N-115/2017-18

1.9.27 Non-recovery of GST from suppliers – Rs 1.019 Million





carried on by the person.

During audit of Cantonment Board Clifton for the financial

year 2017-18, it was observed that an amount of Rs 7,016,805 was

expended by the formation on procurement of various stores‟ items.

98

However, GST amounting to Rs 1,019,535 was not deducted from the

suppliers‟ payments.

Non-recovery was pointed out by audit in November, 2018.

The executive agreed to recover the 1/5th

amount of GST in due course of

time. The audit is of the view that the 1/5th

amount of GST was deductible

by Board as the withholding agent only at the time of payment and the

remaining 80% amount was to be remitted to FBR by the supplier through

Sales Tax return. The copy of invoice was to be obtained from the supplier

by the Board in proof of deposit of full amount of GST into government

treasury, which was not done.

The DAC vide meeting held in December 2018, was

informed that the actual recoverable amount was Rs 412,000 which would

be deducted from the concerned suppliers. It was further informed that the

suppliers had also been asked to provide documentary evidence in support

of 80% GST amount with FBR. The DAC directed that recoverable

amount be reconciled with audit within two months.

Audit recommends expeditious recovery of GST and its

deposit into government treasury.

DP-S-262/2018-19

99

1.10 Loss to State – Rs 6,660.941 Million

1.10.1 Non-recovery of Cantonment Board dues against

commercial buildings – Rs 5,235.056 Million.

According to Section 178-A of Cantonment Act, 1924, “No

person shall erect or re-erect a building on any land in a cantonment,


accordance with the provisions of this Chapter and of the rules and bye‑

laws made under this Act relating to the erection and re‑erection of

buildings”. Further, according to minutes of meeting held on 15th June,

2015 at MoD under the chairmanship of Additional Secretary II(para d), it

was decided that building plan/ maps of the buildings to be constructed on

A-1 land for commercial purposes will be approved by the Cantonment

Board concerned. Likewise, according to Cantonment Board Resolution

No. 4 dated 1. 9. 2016, the rates/ fees fixed for approval of building plan

and development charges were to be recovered from the parties/ end-users

as per approved recoverable rates.

During scrutiny of record relating to Cantonment Board

Quetta for the financial year 2017-18, it was observed that 20 different

properties covering shopping malls, schools, hospitals and others were

constructed on A-1 land without approval of their building plans by the

Cantonment Board. Besides, requisite fees/ charges which were

recoverable by the Cantonment Board amounting to Rs 5,235,056,000

were not recovered.


executive stated that the A-1 land was under the control of Military Estate

Office and that the army authorities were not submitting building plans for

approval. Reply furnished by the executive was not tenable as the approval

of building plans was the prime responsibility of the Cantonment Board

within its defined limits.

100


DP till revision of A-1 Land Policy, whereas the audit suggested recovery

of Cantonment Board dues on priority. No further response in terms of

proof of recovery was reported to audit till finalization of this report.


directives along-with recovery of Cantonment Board dues on priority.

DP-S-69/2018-19

1.10.2 Irregular deposit of government receipts into QMG’s

Fund – Rs 757.715 Million

As per Article 78 of the Constitution of Islamic Republic of

Pakistan, receipt of any kind is required to be deposited into Federal

Consolidated Fund. Furthermore, as per Rule 11 of CLAR 1937, all

receipts from land entrusted to the management of the Military Estates

Officer shall be credited in full to the Central Government.

During scrutiny of record relating to MEO Karachi, it was

observed that an amount of Rs 757,715,850 was collected on account of

premium, conversion & sale/lease proceeds in respect of different

properties and deposited into QMG‟s fund.

Audit was of the view that the deposit of the said amount

into QMG‟s fund was irregular as the entire amount of receipts was

required to be deposited into government treasury as per rules.

The matter was pointed out by audit in May-2018. The

executive replied that the funds were deposited into the QMG‟s fund

under the directions of Ministry of Defence conveyed vide letter No.F-

2/18/D-12/ML&C/2003 dated 11-11-2003. Reply furnished by the

executive was not tenable as government receipts could not be diverted for

the indicated purpose.

101

The DAC vide meeting held in December, 2018 advised the

management to submit revised reply to the DPs, which was received

immediately after discussion on 19-12-2018. The executive repeated their

earlier stance in the fresh communication. Audit opined that the deposit of

the said amount into QMG‟s Fund was irregular as the total amount of

receipts needed to be deposited into government treasury on priority. No

further response on the matter showing deposit of amount into central

treasury was reported to audit by executive till finalization of this report.

Audit recommends early deposit of total receipts into

government treasury as per rules.

DP-S-74, S-79, S-81 & S-97/ 2018-19

1.10.3 Non-recovery of cost of land from Punjab Highway

Department – Rs 449.65 Million

According to Rule 7 of CLA Rules 1937, no alteration in

the classification of land which is vested in the state or in the Board shall

be made except by the Federal Government. Further Note 3 below the Rule

ibid stipulates that “the Government will be the sole judge whether they

wish to retain any particular land or not. Should any land in class B (4) be

required by a Provincial Government and the Government of Pakistan

agreed to transfer it, the amount payable will in all cases be its market

value at the date of transfer”.

During audit of Military Estate Office Lahore, it was

observed that 19 kanals 11 Marlas was used by the Punjab Highway

Authority for construction of overhead bridge and road after obtaining

NOC from GHQ QMG Branch Qtg & Lands Dte vide letter

No.5631/342/180/Land-1V0IRD Dated 20/03/2012. However, neither

Government sanction was obtained for use of the land nor any

compensation was deposited into Federal Government treasury. The

omission resulted into huge loss to the state amounting to Rs

449,650,000/- (391 Marlas @ Rs1,150,000/- per marla).

102


The executive replied that land in question was classified as A-1 land and

comes under the direct control of Military authorities. The case was being

taken up with Military authorities for compensation of amount at market

rate. Reply was not satisfactory because the land was transferred to Punjab

Highway Authority without obtaining approval of the Federal Government

besides cost of land was also not recovered from the provincial

government.


December, 2018 was

apprised that efforts were in hand for expeditious disposal of the case.

DAC directed that financial effect may be revised as per current market

value and matter be finalized within 6 months.

Audit recommends investigation into the matter to fix

responsibility for transfer of land without obtaining Govt. approval,

besides, recovery of cost of land at current market rate as per

recommendation of DAC.

DP-N-201/2018-19

1.10.4 Loss to Cantt Fund due to un-authorized use of

Cantonment Board land - Rs 125.503 Million

According to the Clause 187 of the Cantonment Ordinance

2002, no person shall make an encroachment moveable or immovable on

an open space or land vested in or managed, maintained or controlled by

local government.

A) During audit of Cantt Board D.I.Khan, it was observed that

cantonment land (Class-C) measuring 5 kanals 7 marlas valuing Rs.

45,600,000/- was encroached by local army authorities as evident from

Military Police, D.I. Khan letter No. 251/Q-20E10Z dated 03-11-2015 and

Cantonment Board D.I.Khan letter No. 4-14/Land/14873 dated 04-06-

2015. Audit was of the view that encroached C land needs to be vacated.

103

The irregularity was pointed out by Audit in February

2017. The executive replied that security authorities have made pickets on

the said land. Efforts would be made for vacation of said premises. The

reply was not satisfactory as a portion of land placed under observation

was being used as parking area and jogging tracks. As such re-possession

of land from concerned army authorities was required.

B) As per Cantonment Board Wah letter No.

IV/Misc/G.Land/III dated 13-07-2016 18.56 kanals B-4 land comprising

survey No.108 situated at 27-Area was unauthorizedly occupied by

University of Wah for construction of boys hostel. Audit was of the view

that encroachment of above land was a clear violation of rules which

resulted into loss to Cantonment fund amounting to Rs. 79,903,456/-

(18.56 Kanals or 371.34 Marlas x Rs. 215,176/- per Marla).


2017. The executive replied that management of University of Wah

encroached upon Cantt Board B-4 land comprising survey no.108

measuring 18.56 Kanals situated at 27 Area by constructing hostel since

long. Cantonment Board Wah vide letter No. IV/Misc/G.Land/III dated

13-7-2016 requested Station Headquarter POFs Wah Cantt to direct the

management of University of Wah to vacate the encroached Government

land or apply on Sch-V of CLA Rules, 1937 for leasing of said

encroached land for obtaining necessary Government sanction.


November, 2018 was

apprised that concerned authorities were repeatedly requested for vacation

of land. DAC directed against (A) that Army Authorities be approached

through Ministry of Defence for vacation of land and against (B) DAC

directed Cantonment Board to take up the matter with POF authorities and

ML&C Department to take up the case with MoDP for swap over of land

besides representative of MoDP be called in next DAC meeting. No


104

Audit recommends implementation of DAC directives

besides adoption of remedial measures.

DP-N-291 & 565/2017-18

1.10.5 Un-authorized retention of 15% share of provincial

government from house tax - Rs 69.539 Million

As per provision contained in Presidential Order No.13 of

1979, the Cantonment Boards were authorized to levy and collect the tax

assessed on annual rental value of buildings and land w.e.f. 13.11.1977,

subject to the condition that 15% of the net proceeds of the tax is payable

by the Cantonment Board to the Provincial Govt.

During audit of Cantonment Board Peshawar, it was

observed that Rs 69,538,827/- being 15% share of property tax collected

by the Cantonment Board during financial year 2013-14 to 2016-17, was

not paid to the Provincial Government. This resulted into unauthorized

retention of Rs 69,538,827.

The irregularity was pointed out by Audit in August 2017,

the executive replied that due to non-availability of funds 15 % share of

provincial government from House Tax was not paid.


November, 2018 was

apprised that a sum of Rs 6,500,000 has been paid to the provincial

government. DAC directed that amount paid so far be got verified and

balance amount i.e. Rs 63,038,827 be paid in installments. DAC further

directed that plan of payment of balance amount be provided to audit.

However, no further progress was intimated to Audit till finalization of the

report.

Audit recommends immediate payment of outstanding

provincial government share and its verification by audit besides

improvement in financial management to avoid such lapses in future.

DP-N-459/2017-18

105

1.10.6 Non-recovery of conservancy tax from housing

societies - Rs 12.535

Section 68 of Cantonment Act, 1924 provided that the

Board shall, at the same time, give public notice of a date, not less than

one month thereafter, when it will proceed to consider the valuations and

assessment entered in the assessment list, and, in all cases in which any

property is for the first time assessed or the assessment is increased, it

shall also give written notice thereof to the owner and to any lessee or

occupier of the property (Section 90 of Cantonment Act,1924).Further,

according to Government of Pakistan SRO 1514(I)/74 dated 13th

December, 1974 conservancy tax @ of 4% on the annual letting value of

buildings and lands situated within the Cantonment of Drigh Road is to be

charged from the occupiers of the properties.

During audit of accounts of Cantonment Board Faisal for

the financial year 2017-18, it was observed that recovery on account of

conservancy tax of under-mentioned housing societies was not started till

date which resulted in loss to the Cantonment Fund of Rs 12,535,896 per

annum.

(Rs in million)

S.No Name of society/ housing

scheme

No of assessed

units/Properties

Amount

1 ASKARI-IV 1536 4.807

2 A.F.O.H.S 571 3.939

3 A.O.H.S 53 0.731

4 OVERSEAS 360 0.566

5 N.H.S 199 2.492

Total 12.535

106

The loss was pointed out to the executive by audit in

August, 2018. The executive replied that the notices for recovery of

conservancy tax were being issued.


the management for recovery of conservancy tax expeditiously and its

verification by audit. No further progress in terms of recovery was


Audit recommends for expeditious compliance of DAC‟s

directives.

DP-S-64/2018-19

1.10.7 Non-recovery of scrutiny/ security fees- Rs 10.943

Million

According to Section 178-A of Cantonment Act, 1924, “No

person shall erect or re‑erect a building on any land in a cantonment,


accordance with the provisions of this Chapter and of the rules and bye‑

laws made under this Act relating to the erection and re‑erection of

buildings”. Further, under Section-92 (1) of Cantonment Act 1924, it is

laid down that if the person liable for the payment of any tax does not,

within thirty days from the service of notice of demand, pay the amount

due or show sufficient cause for no-payment of the same to the satisfaction

of the executive officer, such sum with all costs of recovery, may be

recovered under a warrant. Likewise, according to Cantonment Board

Resolution No. 16 dated 4-11-2011, scrutiny fee at a uniform rate of Rs

15/- Per sqft will be charged and security fee @ 1% of the cost of

construction will also be charged.

During review of record relating to Cantonment Board

Malir for the financial year 2017-18, it was observed that 130 of the

107

houses/ flats located in AFOHS and Askari-V were assessed in 2017-18

but scrutiny& security fees amounting to Rs 10,943,421 was not recovered

from the owners of the properties.


executive stated that the notices for recovery were being issued to the

concerned. Reply furnished by the executive was not tenable as they

should have pursued the Cantt Board‟s recovery meticulously.


DP and directed the department to take up the case with PAF/ Army

authorities for seeking their stance on the issue. No further response on the

matter showing deposit of amount into Cantt Fund was reported to audit

by executive till finalization of this report.

Audit recommends early recovery of Cantt Board dues

from the concerned.

DP-S-288/2018-19

1.11 Mis-procurement of stores – Rs 180.909 Million


Million

According to Rule 12(1-2) of Public Procurement Rules-

2004, “Procurements over one hundred thousand rupees and up to the limit

of Rs 2.000 million shall be advertised on the authority‟s website. Further,





Boards for the period 2017-18, it was observed that contracts involving

different works valuing Rs 180,909,000 were awarded to different

108

contractors without advertisement through PPRA‟s website and

newspapers.

(Rs in million)

S No DP No. Name of Unit / Formation Amount

1. DP-S-131/2018-19 Cantonment Board Hyderabad 178.400

2. DP-S-274/2018-19 Cantonment Board Clifton 2.509

Total 180.909

Audit was of the view that no wider competition was

generated in the public spending, transparency was not maintained in the

procurement and the value for money was not fully achieved in the

process, which indicated weak financial management and poor internal

controls.

The irregularity was pointed out by audit in August &

November, 2018. The executive at Sr. No 01 replied that the PPRA rules

were followed which was however not substantiated. The executive at Sr.

No 02 replied that due to urgency of work involving safeguard of main

bulk supply pipeline, the deployment of security guards was unavoidable

and therefore the process of tendering was not adopted. Reply was not

tenable as procurement so made was without competition and was non-

transparent.


the executive at Sr. No. 01 that relevant documents be produced to audit

for verification, while in case of Sr. No 02, the DAC directed that a fact-

finding inquiry be conducted and record produced to audit for

examination. No further progress on the matter was reported to audit till




110

Pakistan Air Force

1.12. Irregular / Unauthorized expenditure – Rs

24,260.090 Million

1.12.1 Irregular outsourcing/ execution of project work - Rs

23,745.350 Million.

As per Para 2, 3 and 4 of DSR, 1998 (General Rules for

MES), only MES shall carry out engineering services work both Capital

and Maintenance for the Armed Forces of Pakistan like Army, Navy and

Air Force. Further, Para 98 of DSR 1998 provides that the Director

Planning and Works, Engineer-in-Chief, General Headquarters (GHQ)

will be responsible for design, consultancy, inspection and evaluation of

all development works of Defence Services and as per Para 3(a), table “C”

the Director Works and Chief Engineer of MES (Air) is responsible for

planning, designing, contracting and execution of all works of the Air

Force. Likewise, according to Rule-6(a) of Financial Regulations Volume-

I, 1986, “Every officer should exercise the same vigilance in respect of



(b)” No authority shall exercise its power of sanctioning expenditure to

pass an order which will, directly or indirectly, be to its own advantage”.

During scrutiny of record pertaining to Project Bholari for

the financial year 2016-17, it was observed that an amount of Rs

23,745,350,000 was allotted for construction and development of PAF

Base Bholari at Hyderabad, Sindh through Government of Pakistan,

Ministry of Defence, Rawalpindi letter No. 12/51/D-10(AF-II)/14 dated

5th

October, 2015. The expenditure for the project was subject to

observance of rules, regulations and instructions of Government of

Pakistan, as issued from time to time. The review of record also showed

that the management, contrary to above rules, hired the services of a

private consultant M/s Kashif Aslam & Associates for consultancy in the

111

subject work and a Resident Engineer was appointed for work supervision

and execution. As per rules, this work was mandated to MES (Air)

through E-in-C at Rawalpindi, which was avoided.

The record further disclosed that after hiring of the above

consultancy contract, the CPD Project Bholari vide letter no

AHQ/78781/5/Bhol dated 05-10-2015 approached E-in-C Branch DD & C

Dte. Rawalpindi for seeking NOC for hiring of the already hired above

private consultant for the job, which was regretted by the E-in-C, Branch

on the plea that the NOC was provided only for the projects which were

undertaken by MES, and concluded by E-in-C Branch and that as the

subject project was being directly undertaken by AHQ, therefore, no NOC

was required from E-in-C Branch.


The executive furnished an irrelevant reply.


that relevant documents along-with a copy of government approvals

(NOC) and Board proceedings for undertaking of work by other than MES

authorities, duly approved by the competent authority, be provided to audit

for examination.


fixation of responsibility at multiple-levels and regularization of

expenditure already incurred.

DP-S-150/2018-19

1.12.2 Un-justified sanction of works in the name of emergent

need – Rs 230.556 Million

According to Para-17(a)(c) of DSR, 1998, “unexpected

circumstances may arise which make it imperative to short-circuit from

normal procedure. Such circumstances may arise from operational military

112

necessity or on urgent medical grounds when reference to the appropriate

CFA would entail dangerous delay. If such circumstances arise, any of the

authorities detailed in Table-A may order the commencement of a work by

functioning in order „writing‟ to the engineer office concerned and

forwarding immediately and a copy of his order to superior engineer

authority with his reasons for giving the orders and the engineer officer‟s

estimates of the liability incurred. In all cases which may arise above the

earliest possible steps must be taken to regularize matters by normal action

contemplated by these Regulations”.

During scrutiny of record pertaining to GE (Air) Korangi

Creek Karachi for the year 2017-18, it was observed that contracts of 16

construction works (residential and non-residential)valuing Rs

230,556,147 were sanctioned by DCAS Admin invoking para-17 of DSR,

which was apparently its misuse as the works did not involve operational

military necessity or urgent medical requirement as required in above rule

provisions.

Audit was of the opinion that the authority avoided normal

procedures without sufficient justification which exhibited weak financial

management and internal controls.


The executive replied that the works were of priority and would be

regularized in due course of time.


that detailed justification/necessity of urgent/emergent works be provided

to audit along-with a copy of sanction and regularization status of works.

No further progress on the matter was reported to audit till finalization of

this report.

Audit recommends an expeditious implementation of DAC

directives.

DP-S-127/2018-19

113

1.12.3 Un-authorized booking of expenditure of abnormal

repairs – Rs 138.679 Million

According to Government of Pakistan Ministry of Defense

Rawalpindi letter No: 2/21/D-15/2001 dated 12-06-2006, abnormal

repairs, renewals and replacements costing more than Rs: 6.000 Million

requires Government sanction.

During audit of GE (Air) Base Nur Khan Chaklala, it was

observed that undermentioned contracts valuing Rs 138,679,000 were

concluded for rehabilitation / improvement of different residential building

at the Base. However, the expenditure was booked against major head F-

0/211/01 (Residential accommodation) instead of relevant head of work

for abnormal repair head (1/762/09).

(Rs in million)

Sr # CA # Nature of Work Amount

1 CEAF-NZ 32/2016 Rehabilitation of “D” type bungalow 6.948

2 CEAF-NZ 50/2016 Rehabilitation of 2x A/men blocks 14.839

3 CEAF-NZ 97/2016 Rehabilitation of MES office 8.089

4 CEAF-NZ 1/2017 Rehabilitation of OPS support

Infrastructure

16.137

5 CEAF-NZ 19/2017 Rehabilitation of A/men Qtrs 9.815

6 CEAF-NZ 26/2017 Rehabilitation of Sewerage system 13.349

7 CEAF-NZ 35/2017 Rehabilitation of “E” type block 9.160

8 CEAF-NZ 53/2017 Rehabilitation of W/S network 9.829

9 CEAF-NZ 55/2017 Rehabilitation of drainage system 19.77

10 CEAF-NZ 151/2017 Rehabilitation of road infrastructure at

Jinnah Camp

20.220

11 CEAF-NZ 181/2017 Rehabilitation of road infrastructure 10.5

Total 138.679

The irregularity was pointed out by Audit in December,

2017. The executive replied that Air HQ Islamabad has obtained approval

from Government of Pakistan Ministry of Defence for each work costing

Rs. 6,000,000. Reply was not correct because the expenditure was booked

against capital work instead of abnormal repair.

114


November, 2018

observed that the rehabilitation work is not covered under new work /

capital work and directed for regularization of the expenditure. No further


Audit recommends regularization of the expenditure and its


DP-N-570/2017-18

1.12.4 Un-authorized construction of MOQs against the

sanction for BOQs - Rs. 88.239 Million

As per para-94 of Defence Services Accommodation

Scales, one bed room with bath, one dressing room and one sitting room is

authorized in BOQs (F-Type). Whereas, as per para-98 2 bed rooms are

authorized in E type MOQs.

During audit of following Garrison Engineer (Air), it was

observed that admin approval for the “Construction of F Type BOQs” was

accorded by AHQ. However, it was observed from the relevant drawings

that actually MOQs were constructed comprising two bed rooms, two

baths, one common / living room, servant room and two verandah against

the sanction of BOQs, which required revised admin approval according

to the work (MOQs) actually executed at site.

(Rs. in million)

S # DP No. Formations Amount

1 DP-N-579/2017-18 GE (Air) AHQ Peshawar 21.203

2 DP-N-476/2017-18 AGE (Air) Lower Topa 10.303

3 DP-N-553/2017-18 GE (Air) Lahore 35.978

4 DP-N-135/2018-19 GE (Air) AHQ Peshawar 20.755

Total 88.239

The irregularity was pointed out by Audit in 2015-16,

2016-2017 and 2017-18. The executive replied that regularization action

would be intimated to Audit. Whereas, in case of S No. 4, executive

replied that work was executed as per specifications provided in

115

Accommodation Scales. Reply was not convincing as the work was

carried out in violations of sanctions.


November and 4th

December, 2018 was apprised that F type BOQs were constructed and not

MOQs as per para 94 of Defence Services Accommodation Scale 2000,

according to which 03 bed rooms 02 bath rooms are authorized. The DAC

directed that authorizations as per rules may be reconciled with Audit.

However, no reconciliation has been made till finalization of this report.

Audit recommends that revised sanctions of MOQs as

actually constructed at site be obtained from competent authority and

verified from Audit besides adoption of remedial measures to avoid such

lapses in future.

1.12.5 Un-authorized receipt of allied charges – Rs 30.202

Million.

According to Sl No. 9 of Annexure-A to Rule-9 of FR Vol-

I, 1986, sanction of Government of Pakistan is required in case of any

change in procedure

According to Para 442 of MES Regulations, 1998 GE is

responsible for making demands for payment of all revenues and taking

steps for its prompt recovery.

During audit of following formations, it was observed that

a sum of Rs 30,202,000 was recovered by the base authorities from the

airmen during the period 2016-17 and taken on cash book which was

unauthorized as the same was the responsibility of GE (Air).

(Rs. In million)

S # DP # Formation Amount

1 DP-N-150 -2018-19 PAF Base Rafiqui 19.531

2 DP-N-69 -2018-19 PAF Base Mianwali 10.671

Total 30.202

116

The irregularity was pointed out by Audit in June 2018.

The Base Authorities replied that in accordance with the Rule 40 Chapter

VII of Defence Services Regulations, (Quarter & Rent 1985), the office of

Unit Accountant on the basis of occupation returns and the reports

prescribed submit monthly rent bills through Web Based System

(including charges for electricity and water charges) to pay authority

concerned. And that the amount is deducted at source from the pay and

taken on cash book for subsequent adjustment against next recoupment of

imprest, where after accounting is made under MAG code head 01/786/07

followed by allotment of TE number through DCAAF Lahore Cantt.

Reply was not agreed as in GE (Air) office separate heads of accounts i.e.

1/786/04(rent), 1/786/06(water) and 1/786/07(electric) were allotted for

the purpose, so recovery of rent and allied charges by the base authorities

was unauthorized.


November and 4th

December, 2018 was apprised by PAF authorities that due to non-

availability of appropriate mechanism and to ensure 100% recovery of the

dues, system of UAGE was linked with the salary system of PAF. As such

the recovery is made through monthly salary of the concerned personnel

and the amount is taken on cash book before being booked under relevant

code head allotted by MAG. DAC directed that relevant record alongwith

complete procedures of recovery and its book adjustment with DCAAF

may be got verified from Audit within two weeks. No further progress was


Audit recommends reconciliation of the government

receipts and its proper adjustment and accounting in accounts besides

approval of the procedures from the Government.

1.12.6 Unauthorized procurement of water beyond permissible

limit - Rs 16.817 Million

Para-5 of Appendix “K” of DSR 1998 puts limit of Rs 5

million per annum on agreements or memoranda for taking a supply of

117

electric energy, gas or water from an outside source for military buildings,

when the annual payment in the case of each station does not exceed Rs 5

million. Further, according to Rule-6(a) of Financial Regulations Volume-

I, 1986, “Every officer should exercise the same vigilance in respect of



During scrutiny of record relating to GE (Air) Korangi

Creek for the year 2017-18, it was observed that the contract bearing

No.53/20-18 for procurement of fresh water through bowzers was

executed with M/s Shamraiz Water Tanker Suppliers as per permissible

limit fixed in the DSR-1998 provisions. The review of record further

showed that, in addition to above, supply of fresh water through tanker

amounting to Rs 16,816,799 was unauthorizedly obtained from KW & SB

@ Rs 1 per gallon without government sanction for the purpose. Record

reflecting consumption of water procured from KW & SB was also not

produced to audit for examination. This resulted into unauthorized

procurement of water amounting to Rs 16,816,799.


The executive replied that the PAF Korangi Creek was located at the tail

end of water supply pipeline of KW & SB and that the Base was receiving

short supply of water and that in order to control the acute shortage, the

fresh water was being procured through water tankers from KW & SB on

payment. Reply furnished by the executive was not tenable as they did not

obtain government approval for additional outsourcing of water from the

supplier.


December, 2018. The DAC directed that relevant record in rebuttal of DP

along-with water consumption details may be provided to audit for

examination. No further progress on the matter was reported to audit till


118

Audit recommends implementation of DAC‟s directives

along-with fixation of responsibility and regularization of expenditure

already incurred.

DP-S-145/2018-19

1.12.7 Irregular issuance of special work sanctions- Rs 5.360

Million

According to Para-2 and 21(2) of DSR, 1998, “services not

falling within authorized works are referred to as “special works”. Special

works should NOT be approved if the effect would be to introduce a new

practice or change of scale. According to Table- A of Para-25 and Para-

389 of DSR 1998, as amended vide MoD letter No. 2/12/D-15/2001 dated

12-6-2006, the power of administrative sanction of Base Commander is up

to Rs 1.00 million. Further, under Para-27 of DSR 1998 “No project will

be split up merely to bring it within the powers of an approving authority.

According to the Government of Pakistan, Ministry of Defence letter No

12/51/D-10(AF-II)/14 dated 5th

October 2015 stipulates that Bholari

Development Board shall exercise full administrative, financial and

technical powers within the scope of the project and that all matters related

to infrastructure development shall be regulated and decided by the Board.

During scrutiny of record relating to PAF Base Faisal for

the year 2016-17, it was observed that 06 minor work sanctions regarding

provision of containers used as office/residential accommodation at PAF

Base Bholari amounting to Rs 5,360,000 issued by the Base Commander

PAF Base Faisal were irregular as:

a) Provision of pre-fabricated containers used as

office/residential accommodation was a new practice/

change of scale which fell under the category of special

works which required Government of Pakistan sanction.

119

b) The expenditure was sanctioned by the Base Commander in

transgression of financial authority vested in him.

c) Out of 06, 05 minor work sanctions were issued on 08-03-

2017 in piecemeal to avoid the sanction of higher authority.

d) Bholari Base was authorized for all expenditure through

their own approved allotment under the Bholari

Development Board. However, this expenditure was

incurred by GE(Air) Faisal beyond its mandate.


executive didn‟t furnish any reply.


informed that the AHQ tasked the nearby base to provide support to any

other unit/ base and therefore the GE (Air), Faisal was tasked for provision

of pre-fabricated containers and admin approvals involving different

nature of works were issued accordingly. The DAC directed that relevant

record be provided to audit for examination. No further progress on the

matter was reported to audit till finalization of this report.

Audit recommends implementation of DAC directives and

regularization of expenditure already incurred.

DP S-151/2018-19

1.12.8 Non-execution of work against advance paid -Rs 4.891

Million

According to Para-408 to 417 of DSR, 1998, "there is no

provision of advance payment to contractor except secured advance".

Under Rule – 47(c) of Financial Regulations Volume-I 1986, “the most



120

During scrutiny of record pertaining to GE Air (Faisal), it

was observed that admin approval of AHQ dated 28-02-2011 was

accorded for revamping of Sui Gas network at PAF Base Faisal for Rs

23,178,125. Accordingly, the management paid to SSGC Rs 6,977,800 on

11-03-2011 against supply of meters. The review of record further showed

that despite lapse of 7 years, only 784 meters were installed in residences

at PAF Base Faisal out of a total of 2622 meters. Remaining 1838 meters

were not installed by the SSGC despite repeated written requests by the

formation. The advance payment of Rs 4,891,377 thus stood blocked

without completion of the job since long, which was in violation of rule

stated above.


2018. The executive replied that the internal Sui Gas network along-with

meters had been completed and the work completion report had been

submitted to the SSGC for further installation of Sui Gas meters. The

executive also informed that the matter had been taken up at a higher level

for completion of the balance work at the earliest.


that details in terms of adjustment of advance to SSGC be provided to

audit for examination, which were not provided till finalization of this

report.


fixation of responsibility and regularization of expenditure already

incurred.

DP-S-291/2018-19

121

1.13 Recoverable / Overpayments – Rs 189.509 Million

1.13.1 Non-recovery of Stamp Duty from contractors –

Rs 50.320 Million

As per Section 35 of Stamps Act 1899, no instrument





per Government of Sindh Finance Act 2009, “Stamp Duty of Thirty five



During scrutiny of record of following units, it was

observed that a sum of Rs 50,320,325 on account of Stamp Duty was not

recovered by the formations against different contract agreements

executed.

(Rs in million)

S No Name of Unit/Formation DP No. Amount

1 Project Bholari, Hyderabad S-116 39.175

2 GE (Air) Masroor, Karachi S-247 7.616

3 GE (Air) Samungli S-41 2.260

4 GE (Air) Korangi Creek, Karachi S-99 1.269

T o t a l 50.320


October, 2018. The executive at Sr. No 1 replied that the matter would be

dealt in the light of clarification. The executive at Sr. No 2 did not discuss

the audit observation. The executive at Sr. No 3 replied that there was no

practice of recovery of Stamp Duty in MES, while the executive at Sr. No

replied that the Stamp Duty pertained to Government of Sindh and was not

122

applicable on MES formations working under MoD. The contention of the

management was not tenable as recovery was not effected.


DP till formulation of policy/decision on recovery of Stamp Duty at MoD

level, whereas the audit suggested recovery of Stamp Duty in question on

priority. No progress in terms of recovery of Stamp Duty was reported to



expeditiously.

1.13.2 Non-recovery of allied charges from consumers – Rs

33.198 Million

According to Para-442 of DSR, 1998, “The GE is



During audit of following MES (Air) formations for the



(Rs. in million)

S No. Name of Unit/Formation DP No. Amount

1 GE (Air) Korangi Creek S-33 10.407

2 GE (Air) Masroor S-252 7.923

3 GE (Air) Shahbaz S-03 7.601

4 GE (Air) Faisal S-37 4.747

5 GE (Air) Faisal S-293 2.126

6 GE (Air) Samungli S-26 0.394

T o t a l 33.198


indicated weak financial management.

123


October 2018. No reply was furnished by the executive at Sr. Nos 1 and 4.

The executive at Sr. No. 2 did not discuss the audit observation. The

executive at Sr. No. 3 replied that the electric bills of Fazaia College had

been forwarded for recovery. The executive at Sr. No. 5 submitted evasive

reply. The executive at Sr. No. 6 replied that the building was not on

charge of MES. They further informed that the said recoveries had been

intimated to Provost Sqn of PAF Base Samungli.




so far be got verified from audit and balance amount recovered



Audit recommends expeditious recovery of amount on

account of allied charges and its verification by audit.

1.13.3 Non recovery of electricity consumption charges from

Air University – Rs 31.672 Million

Under Para 442 & 445 of Defence Services Regulations for

MES-1998, Garrison Engineer is responsible for making monthly

demands and prompt realization of rent and allied charges from the users

of military buildings and allied services.

During audit of Garrison Engineer (Air) Maintenance

Islamabad, it was observed that an amount of Rs 31,671,943/- on the

accounts of electricity consumptions charges for the period from June

2014 to June 2017 was outstanding against Air University Islamabad

Block A to C, and old TTI building, which needed recovery.


executive replied that this office prepared electric bills as per meter

124

reading of actual consumption of all consumers and forwarded to UA GE.

Reply was not convincing as GE was responsible for making monthly

demands and prompt realization of rent and allied charges from the users.

Early action needed to be taken for prompt realization of Government

dues.


November, 2018

directed for recovery of electricity charges from Air University within one

month. No further progress was reported to Audit till finalization of this

report.

Audit recommends recovery of the amount involved,

besides, adoption of remedial measures to avoid such lapses in future.

DP-N-508/2017-18

1.13.4 Non-recovery of Sales Tax on goods– Rs 27.593 Million





carried on by the person. Further, as per Rules 2(2) and (3)of the Sales

Tax Special Procedure (Withholding) Rules, 2007 under S.R.O.

660(1)/2007, Islamabad, the 30th June, 2007, "A withholding agent shall

deduct an amount equal to one-fifth of the total Sales Tax shown in

the Sales Tax invoice issued by the supplier and make payment of the

balance amount to him."

During audit of Project Bholari, Hyderabad for the

financial year 2016-17, it was observed that an amount of Rs 189,910,309

was expended by the formation on GST applicable goods through different

contracts but GST on goods amounting to Rs 27,593,804 was not deducted

from the contractors‟/suppliers‟ payments.

125


Tax, government exchequer was deprived of hefty amount of revenue on

account of recoverable tax.

Non-recovery was pointed out by audit in May 2018. The

management informed that the GST of Rs 2,015,087 was deposited by the

contractor, which was a partial recovery.

The DAC vide meeting held in December 2018 was

informed that the contractor had been approached for provision of challans

of tax deposited. The executive also intimated that the recovery of GST on

furniture items would be ensured at the time of payment. The DAC

directed that the proof of recovery of GST against supply of goods be

provided to audit for examination. Relevant record was not produced to


Audit recommends early recovery of Sales Tax amount due


DP S-124/2018-19


25.852 Million



rendering or providing of services is liable to deduct “income” tax from

the gross amount of the bills at prescribed rates.

During audit of following MES (Air) units for the year


was less deducted from various contractors‟ payments in violation of

above rule.

(Rs in million)

126


1. GE (Air) Masroor, Karachi S-255 25.262

2. GE (Air) Korangi Creek S-149 0.590

T o t a l 25.852

Non-recovery of government dues reflected weak financial

management, which deprived government of potential revenue.

Non-recoveries were pointed out by audit during August &

October, 2018. The executive replied that the contractors were filers.

Reply furnished by the executive was not substantiated by relevant

documentary evidence.

The DAC vide meeting held in December 2018 directed

that proof regarding filer status of the contractors be provided to audit for

verification. In case of non –filer, the difference of Income Tax be

recovered from the contractors and record produced to audit for

verification. No further response in terms of recovery was reported by


Audit recommends implementation of DAC directives /

recovery of Income Tax as per rules on priority.

1.13.6 Less recovery of water charges from consumers – Rs

15.367 Million

As per Rule 1, Annex A (to Appendix „O‟) of DSR 1998,

the All-Pakistan flat rate for water charges will be as notified from time to

time in Joint Services Instruction (JSI) or other government orders.

Further, according to Notes at the end of Rule 2 of Annexure-A (Appendix

„O‟) of DSR 1998, any increase of rates as and when notified/imposed by

the Provincial Government/ supplying agency shall be recovered in

addition to the rates specified in this rule.

During audit of following MES (Air) formations for the

period 2016-18, it was observed that water charges were paid to Karachi

127

Water & Sewerage Board (KW&SB) @ Rs 100/- &Rs 142/- per 1000

gallons whereas the recovery was made from consumers at nominal rates.

This was in contravention of above rule and resulted in less recovery of Rs

15,367,240.

(Rs in million)


1 GE (Air) Korangi Creek, Karachi S-132 10.101

2 GE (Air) Masroor, Karachi S-21 5.266

T o t a l 15.367

Audit was of the opinion that less recoveries were due to

poor financial management and weak internal controls.

The recoveries were pointed out by audit in December

2017 & August 2018. The executive at Sr. No1 submitted irrelevant reply.

The executive at Sr. No. 2 did not discuss the audit observation.


informed by executive at Sr. No. 1 that the recovery was already being

made at higher rates whereas, the executive at Sr. No. 2 replied that the

recovery was being made at revised rates approved by the Board. The

DAC directed the executive at Sr. No. 1 that the Board of Officers be

convened and rates of water charges revised as per rules within two

months. The executive at Sr. No. 2 was directed to produce record

involving recovery as per Board‟s recommendations to audit for

verification. No record showing recovery was produced to audit till


Audit recommends early compliance of DAC directives/

recovery of water charges as per policy.

128

1.13.7 Non-recovery of House Rent Allowance (HRA) – Rs

3.972 Million






accommodation may not be paid 45% house rent allowance and 5% of


civilian set-up. Further, Rule-24(c) of Quarters & Rents 1985 provided

that a married officer shall be allotted married accommodation if his

family is residing with him, if his family is not residing with him he may

only be allotted single accommodation.

During audit of accounts of PAF Base Faisal, Karachi for

the financial year 2016-17, it was observed that PAF officers were

availing of the facility of government married accommodation and also

drawing HRA. This resulted in irregular payment amounting to Rs

3,972,695.

Audit was of the opinion that the payment of HRA to the

officers availing government accommodation tantamounted to causing

recurring financial loss.

Non-recovery was pointed out by audit in June, 2018 which

was not replied.


informed that the officers were residing in below standard accommodation

and therefore only 5% of their basic pay was being recovered, which was

however in negation of rules quoted above. The DAC pended the DP till

finalization of HRA policy at MoD level, whereas the audit recommended

recovery of HRA as per government instructions on priority. No further

129

progress in terms of recovery was reported to audit till finalization of this

report.

Audit recommends early recovery of HRA as per rules.

DP S-177/2018-19

1.13.8 Non-recovery of Sales Tax on Services – Rs 1.535

Million

According to Sindh Sales Tax Act No XII of 2011, issued

by Sindh Revenue Board (SRB), Government of Sindh, circulated vide

Notification No. SRB/TP/51/2016/212146 dated: 08th

March 2017, Sales

Tax would be charged @ 13% on contractors‟ services.

During audit of PAF Base Faisal for the year 2016-17, it

was observed that Sales Tax on Services amounting Rs 1,535,393 was not

recovered from the contractors‟ payments. Audit was of the view that due

to non-recovery of Sales Tax on Services, public exchequer was deprived

of hefty amount of revenue on account of recoverable tax.

Non-recoveries were pointed out by audit in June, 2018.

The executive replied that the PAF was a federal department and FBR

taxation rules were applicable and that the SRB‟s GST was not applicable

on hiring of civil transport and conservancy contracts. The contention of

the management was not tenable as the Sales Tax was a provincial subject

and tax was recoverable on services in the province.


informed that the issue was already under consideration amongst the office

of MAG, FBR and MoD. The DAC pended the DP till formulation of



130

progress in terms of recovery was not reported to audit till finalization of

this report.


on services.

DP-S-192/2018-19

1.14 Loss to State – Rs 246.340 Million

1.14.1 Non-recovery of electricity charges - Rs 138.922 Million

According to Rule-6 (a) of Financial Regulations Volume-I




During audit of GE (Air) Korangi Creek for the year 2017-

18, it was observed that an amount of Rs 138,922,825 was paid by the

formation to K-electric on account of electricity charges against bulk

supply of electricity without determining the free allowance of electricity

by the Board for the formations and without recovering the amount from

the consumers beyond free authorization.


executive stated that the electricity charges were being recovered as per

actual consumption/meter-reading and that the remaining units were

consumed at the Base for operational purposes for which no recovery

could be made. Reply furnished by the executive was not tenable as the

copy of Board`s recommendations/ findings authorizing free consumption

of electricity for operational use and for individual recovery were not

shared with audit.

The DP was discussed in DAC meeting held in December,

2018, wherein the executive repeated their earlier stance. The DAC

however directed that the Board findings/recommendations be provided to

131

audit for examination and irregular consumption of electricity be got

regularized/ recovered. No further response on the matter was reported till



directives.

DP-S-109/2018-19

1.14.2 Unjustified overpayment to contractors - Rs 65.312

Million.

According to Rule 6 (a) FR Volume I 1986, “Every officer

should exercise the same vigilance in respect of expenditure incurred from

government revenue as a person of ordinary prudence would exercise in

respect of the expenditure of his own money”.(b) “No authority shall

exercise its power of sanctioning expenditure to pass an order which will,

directly or indirectly, be to its own advantage”. Further, under Rule 27.1

of Standard Form of Bidding Documents (Civil Works) 2007 of Pakistan

Engineering Council, Islamabad, “bids determined to be substantially

responsive will be checked by the employer for any arithmetic errors.

Errors will be corrected by the Employer.”

During scrutiny of record pertaining to the Project Bholari

for the financial year 2016-17, it was observed in BOQs of different

contracts that the items of similar/ same nature were procured by the

management at different rates. Likewise, quantity of material/store

consumed in similar nature of jobs was dissimilar. The sample check of

only 06 contracts reflected rate difference and enhanced quantity usage

worth Rs 65,312,135.

Audit was of the view that these errors were intentionally

allowed to provide undue favoritism to the contractors. Such nature of

errors was not objected to by the management, the Resident Engineer, the

132

Director Finance and the Internal Auditor of the Project, which was not

understood. The expenditure thus incurred stood as a loss to the state in

light of rules quoted above.

When pointed out by audit in May, 2018 the executive

stated that the said discrepancies would be discussed with the concerned

authorities and appropriate course of action undertaken in BOQ

items/rates. The discrepancies involved in rates of similar nature items and

enhanced quantity of material used in different works/jobs were not

removed despite management`s assurance.

The DP was discussed in DAC meeting held in December,

2018. The DAC directed that relevant documents in rebuttal of DP proving

no loss to the state be produced to audit for examination. No further

response on the matter was reported by executive till finalization of this

report.


directives along-with rationalization of rates in all the contracts.

DP-S-165/2018-19

1.14.3 Non-recovery of allied charges - Rs 35.122 Million

As per Para 442 of DSR, 1998, Garrison Engineer is

responsible for making demands for all revenues and its realization into

government treasury.

During scrutiny of record pertaining to GE (Air) Korangi

Creek, it was observed that an amount of Rs 35,122,307 was outstanding

against Golf Club and Chalet authorities on account of allied charges

(electricity & water) since January, 2013. It was further observed from

record that the allied charges‟ bills were regularly being issued to the

133

consumers but the utilities were not disconnected despite persistent non-

payment (un-metered connections fed at government expense).


The executive stated that recovery was under process. Reply furnished by

the executive was not tenable as no serious effort was made for recovery

of the government dues and nor was the reply substantiated by relevant



that the recoverable amount may be reconciled with audit and recovery

effected from the concerned consumers expeditiously. No further response

on the matter was reported by executive till finalization of this report.

Audit recommends expeditious recovery of amount from

the consumers and its verification by audit along-with fixing responsibility

against the concerned.

DP-S-105/2018-19

1.14.4 Non-recovery of conveyance allowance - Rs 3.840

Million

Under Rule-6(a) of Financial Regulations Volume-I 1986,

it is laid down that "Every officer should exercise the same vigilance in

respect of expenditure incurred from government revenue as person of

ordinary prudence would exercise in respect of the expenditure of his

own money. (b) No authority shall exercise its power of sanctioning

expenditure to pass an order which will, directly or indirectly, be to its

own advantage”. Further, according to Government of Pakistan, Finance

Division Regulations Wing letter No.F.3(1)-R-5/2010 dated 03-07-2012,

the rates of Conveyance Allowance for the Civil Servants of the Federal

Government in BPS 16-19 as well as Armed Forces Personnel were

revised up to Rs 5000/pm.

134

During audit of PAF Base Faisal for the year 2016-17, it

was observed that 64 vehicles were under the use of officers of the base

who also received conveyance allowance amounting to Rs 3,840,000

during the year. The record relating to Pay & Allowances of the officers

reflecting recovery of the conveyance allowance in lieu of government

transport was demanded, but the same was not produced to audit for

examination.

The irregularity was pointed out by audit in June, 2018, but

no reply was furnished by the executive.


that relevant record be provided to audit for examination. No further

response on the matter was reported by executive to audit till finalization

of this report.

Audit recommends expeditious recovery of conveyance

allowance and its verification by audit.

DP-S-186/2018-19

1.14.5 Award of contract at lower discount rate - Rs. 3.144

Million

Rule 6 (d) of the Financial Regulation Vol-I, 1986 specifies

that Government revenues shall not be utilized for the benefit of a

particular person or a section of the community. Further, according to

Rule 38 of Public Procurement Rules, 2004 “The bidder with the lowest

evaluated bid, if not in conflict with any other law, rule, regulation or

policy of the Federal Government shall be awarded Procurement

Contract”

During audit of PAF Hospital Mushaf, Sargodha, it was

observed that contract for daily local purchase of NIV / lifesaving

medicines for the financial year 2015-16 was awarded to M/S SMS

135

Shaheen Foundation PAF Rawalpindi at 18.26% discount instead of award

of contract to M/S Photon Pharma, Sargodha at its offered discounted rate

of 20.78%. Audit was of the view that an undue favour was extended to

M/S SMS Shaheen Foundation which resulted into a loss of Rs 3,144,901

to national exchequer.

The irregularity was pointed out by the Audit in November,

2016. The executive replied that M/S Photon Pharma agreed to supply

hundred items only. The reply was not acceptable as quotation of M/S

Photon Pharma Sargodha was based on 20.78 % discount rate and it was

not restricted to the supply of 100 medicines. Further, the above

mentioned plea of executive was not on record of procurement

proceedings. Furthermore, reasons for acceptance of 2nd

lowest bid was

also not mentioned in comparative statement which was mandatory under

Rule 35 of Procurement Rules 2004.


November, 2018

directed for verification of letter of M/s Photon regarding his ability to

provide only 100 lifesaving medicine within one month. No further


Audit recommends an inquiry into the matter for fixing

responsibility besides regularization of amount of loss sustained by state

and adoption of remedial measures to avoid such lapses in future.

DP-N-144/2017-18


1.15.1 Irregular award of work - Rs 10,004 Million

According to Rule -2 (1) (c) of PPRA Rules-2004

“competitive bidding” means a procedure leading to the award of a

contract whereby all the interested persons, firms, companies or

organizations may bid for the contract and includes both national

competitive bidding and international competitive bidding”. Rule – 4 of

PPRA states, “Procuring agencies, while engaging in procurements, shall

136

ensure that the procurements are conducted in a fair and transparent

manner, the object of procurement brings value for money to the agency

and the procurement process is efficient and economical”. Further,

according to Rule 29 of PPRA Rules –2004 “Procuring agencies shall

formulate an appropriate evaluation criteria listing all the relevant

information against which a bid is to be evaluated”. Likewise, according

to PPRA Rule 35, “procuring agencies shall announce the results of bid

evaluation in the form of a report giving justification for acceptance or

rejection of bids at least ten days prior to the award of procurement

contract”.










Authority. [F.No. 2/1/2008/PPRA-RA.III]. Rule 50 of PPRA rules 2004

stipulates that any unauthorized breach of these rules shall amount to mis-

procurement.

During audit of accounts of Project Bholari for the period

2016-17, it was observed that a pre-qualification notice seeking

contractors` interest in the construction of a new Air Base at Bholari

Hyderabad was published in different newspapers dated 16/07/15. In

response thereof, 41 contractors submitted their bids for pre-qualification

process, out of which 22 were shortlisted and were called for

presentations. Finally, 12 contracting firms were selected/cleared on the

basis of scoring recorded by the management. However, instead of

getting/opening the financial bids of the 12 firms, the executive further


137

shortlisted only 4 - 6 contractors in 13 works for financial bids costing Rs

10,003,907,089. It was further observed that a clear evaluation criteria was

not included in the bidding documents nor was the Award of Contracts

involving expenditure in billions posted on PPRA website on the given

format. The reasons of acceptance/rejection of bids in the form of a report

were also not shared with the bidders.



funds which indicated weak financial management and poor internal

controls.

The irregularity was pointed by audit in May, 2018. The

executive submitted irrelevant replies. Audit opined that the award of

works through the process of tendering was a mere formality as all the

prequalified parties/contractors were not provided opportunity to offer

financial bids, which rendered the entire process as being irregular and

non-competitive. The management also violated different pre/ post-bid

PPRA formalities and Financial Regulations in the said process as already

enumerated above.



progress on the serious violations was reported to audit till finalization of

this report.


competent authority along-with fixation of responsibility at multiple levels

in order to deter such serious violations in future.

DP-S-139/2018-19

1.15.2 Irregular, unjustified award of consultancy contract on

single offer - Rs 159.362 Million

138

According to Rule-6 (a) & (d) of Financial Regulations

Volume-I, 1986, “Every officer should exercise the same vigilance in

respect of expenditure incurred from government revenue as a person of

ordinary prudence would exercise in respect of the expenditure of his own

money”. “government revenues shall not be utilized for the benefit of a

particular person or a section of the community”.

According to Rule -2 (1) (c) & 29 of PPRA Rules – 2004

“competitive bidding” means a procedure leading to the award of a

contract whereby all the interested persons, firms, companies or

organizations may bid for the contract and includes both national

competitive bidding and international competitive bidding”. “Procuring

agencies shall formulate an appropriate evaluation criteria listing all the

relevant information against which a bid is to be evaluated.” Likewise,

according to PPRA Rule 35, procuring agencies shall announce the results

of bid evaluation in the form of a report giving justification for acceptance

or rejection of bids at least ten days prior to the award of procurement

contract.











According to Sindh Sales Tax Act No XII of 2011, issued

by Sindh Revenue Board (SRB), Government of Sindh, as also clarified


139

vide letter No. SRB/TP/51/2016/212146 dated 08th

March 2017, Sales Tax

would be charged @ 13% (2017) on contractors‟ services.

During audit of accounts of Project Bholari for the year

2016-17, it was observed that the Chief Project Director (CPD) Shahbaz,

Air Headquarters, Islamabad issued advertisement in different newspapers

dated 10.05.2015 and on PPRA website seeking pre-qualification of

leading firms regarding consultancy for the master planning of an Air

Base at Bholari Hyderabad. In response, 20 consultancy firms submitted

their pre-qualification documents, which were evaluated by the

management, out of which only 5 firms were shortlisted, being fit for the

said consultancy. The record further showed that the executive

recommended the name of M/s Kashif Aslam and Associates PVT (Ltd)

for hiring as project consultant based on single financial bid of Rs

100,386,000, which was later on revised to Rs 159,362,000. All the

technically shortlisted firms as a matter of fact were not given the

opportunity to submit financial bids except M/s Kashif Aslam&

Associates which tantamounted to giving undue favor to one party and it

negated the very purpose of advertisement too. The process of pre-

qualification was a mere formality as the management had already decided

to award consultancy contract to that firm. Further, Sales tax on hiring of

consultant‟s services amounting to Rs 20,717,000 was also not recovered.

The record also showed that the management did not comply with pre/

post bid evaluation criteria as quoted above.


The executive furnished an irrelevant reply.

The DAC vide meeting held in December 2018 directed


progress on the serious violations was reported to audit till finalization of

this report.

140


competent authority along-with fixation of responsibility at multiple-levels

in order to prevent such serious violations of rules in future.

DP-S-117/2018-19

1.15.3 Irregular, non-transparent award of contracts – Rs

688.591 Million

According to Rule 29 of PPRA Rules – 2004 “Procuring

agencies shall formulate an appropriate evaluation criteria listing all the

relevant information against which a bid is to be evaluated. Such

evaluation criteria shall form an integral part of the bidding documents.

Failure to provide for an unambiguous evaluation criteria in the bidding

documents shall amount to mis-procurement. Further, according to PPRA

Rule 35, procuring agencies shall announce the results of bid evaluation in

the form of a report giving justification for acceptance or rejection of bids

at least ten days prior to the award of procurement contract.

Likewise, according to PPRA‟s S.R.O.1170(1)/2009 dated










During audit of accounts of GE (Air) Masroor for the

financial year 2017-18, it was observed that 4 works contracts valuing Rs

688,590,874 were awarded by the executive to different contractors,

wherein following irregularities were noticed;


141

a) An appropriate evaluation criteria listing all the relevant

information against which a bid was to be evaluated was

not formulated,

b) The results of bid evaluation in the form of a report giving

justification for acceptance or rejection of bids at least ten

days prior to the award of procurement contract were not

announced,

c) The four Contract Awards bearing Nos. ENC PAF 13, 14,

31 and 52 each amounting to Rs 291,543,552, Rs.

70,161,856, Rs 220,742,926 and Rs 106,142,540

respectively, totaling to Rs 688,590,874, all these works

exceeded fifty million rupees but they were not posted on

PPRA‟s website on the given format.

The entire expenditure thus incurred stood as being

irregular and non-transparent.




controls.

The irregularities were pointed out by audit in October,

2018, but no reply was furnished by the executive.






fault.

DP-S-246/2018-19

142


Million

According to Rule 12 of PPRA Rules 2004, “Procurements

over one hundred thousand rupees and up to the limit of Rs 2.000 million

shall be advertised on the authority‟s website. Further, procurements over

Rs 2.000 million should be advertised on the authority‟s website as well as

in two national dailies, one in English and the other in Urdu”.

During audit of accounts of the following MES (Air)

formations for the period 2016-18, it was observed that contract works

valuing Rs 407,022,379 million were awarded to different contractors

without advertisement through PPRA‟s website and newspapers in

violation of PPRA Rules.

(Rs in million)

S No. DP No. Name of Unit / Formation Amount

1 DP-S-261/2018-19 GE (Air) Masroor 397.047

2 DP-S-05/2018-19 GE (Air) Faisal 9.975

Total 407.022




controls at the end of the executive.

The irregularity was pointed out by audit in 2016-2018.

The executive replied that PPRA rules were followed. The replies were

not found tenable as documentary evidence showing advertisement in

newspapers and on PPRA website were not produced in support of

management‟s contention.


that relevant documents be produced to audit for verification. No further

progress on the matter was reported to audit till finalization of this report.

143



1.15.5 Mis-procurement of store on repeat orders Rs 18.003

Million

Rule-2(J) of Public Procurement Rules-2004 defines

“repeat orders” as procurement of same commodity from same source

without competition and includes enhancement of contracts”. Further, as

per Rule-42 (c)(iv) “a procuring agency shall only engage in direct

contracting for repeat orders not exceeding fifteen per cent of the original

procurement”.

As per Rule 12(2) of Public Procurement Rules-2004, “All

procurement opportunities over two million rupees should be advertised

on the Authority‟s website as well as in other print media or newspapers

having wide circulation. The advertisement in the newspapers shall

principally appear in at least two national dailies, one in English and the

other in Urdu”.

During Audit of Northern Air Command Peshawar for the

year 2016-17, it was observed that contract for supply of 400,514 ltrs of

cooking oil was concluded with M/S Hanif Traders at a total cost of Rs

57,473,559/-. However, in actual 525,968 ltrs cooking oil was supplied

against the above contract, including additional quantity of 125,454 ltrs

(31.32%) cooking oil, which was beyond the permissible limit of 15%

provided under the procurement rules. Additional requirement of cooking

oil valuing Rs.18,002,649/- (125,454 Ltrs x Rs.143.50) was required to be

procured after proper competition, which was not done.


2017. The executive replied that requirement was a rough estimate which

may exceed or under draw as per contract. PAF Bases were required to

maintain 45 days war reserves of each ration item at all times. This war

reserve was maintained over and above the monthly running ration which

144

may vary from Base to Base. During the month of May and June frequent

deployments and exercise merited stocking up of rations items for

increased no of days to cater for the inflated deployment of man power at

NAC Bases. Hence, the firm was asked to deliver excess quantity. Reply

was not agreed as additional quantity was procured in violation of rules.


November, 2018

directed the management for regularization with the instructions that

appropriate clause regarding 15% permissible limit be included in contract

agreement in future. No further progress was reported to Audit till


Audit recommends regularization of the matter besides


DP-N-499/2017-18

145

Pakistan Navy

1.16 Irregular / unauthorized expenditure – Rs

2,006.494 Million

1.16.1 Splitting-up of sanctions - Rs 1,121.913 Million

According to Table-A of Para-25 and Para-389 of DSR

1998, the power of administrative sanction of DCNS (A) is up to Rs 30

million and the contractual powers of E-in-C and DW& CE are up to Rs

35 million and Rs 30 million respectively. Para-27 of DSR 1998 stipulates

that no project will be split up merely to bring it within the powers of an

approving authority.

During audit of following formations of MES (Navy) for

the year 2017-18, it was observed that contracts valuing Rs 1,121,913,089

were split up in order to avoid sanction of higher authority.

(Rs in million)

S No DP No. Name of Unit / Formation Amount

1 DP-S-224/2018-19 GE (N) Construction Manora, Karachi 1116.804

2 DP-S-119/2018-19 GE (N) Logistics Dockyard, Karachi 5.109

Total 1,121.913

Audit was of the opinion that splitting up of expenditure

was due to poor financial management within the entities.

The irregularity was pointed out by audit in September &

October, 2018. The executive in case of Sr. No 01 replied that the projects

had been processed separately and administrative approvals were issued

separately and in case of Sr. No 02 it was replied that the funds were

allotted by HQ Comlog for each job and that all the works were carried

out through separate sanctions accorded by HQ Comlog. Reply furnished

by the executive was not tenable as the nature of works and their location

was the same and the administrative sanctions were issued on the same

146

date, which was in transgression of powers vested with the above

authority.

The DAC vide meeting held in December 2018 directed that

relevant documents be provided to audit for examination. No further



competent authority.

1.16.2 Un-authorized advance payment for utility bills – Rs

344.909 Million

According to Para-408 to 417 of DSR, 1998, "there is no

provision of advance payment to contractor except secured advance".

Under Rule – 47(c) of Financial Regulations Volume-I 1986, “the most



During audit of accounts of following MES (Navy)

formations for the period 2017-18, it was observed that advance payment

amounting to Rs 344,909,616 was released on account of utility bills to K-

electric, SSGC and KW&SB in the month of June to avoid lapse of funds.

(Rs in million)

S. No DP No Name of Unit/ Formation Payment date Amount

01 DP -S- 210 GE (Navy) South Karachi 25th

June, 2018 193.066

02 DP -S- 203 GE (Navy) East Karachi 25th

June, 2018 111.963

03 DP-S- 154 GE (Navy) Fleet Karachi 27th

June, 2018 39.880

Total 344.909

The irregularity was pointed out by audit in July to

October, 2018. The executive stated that the advance payment would be

adjusted against bills of the upcoming months. Reply furnished by the

147

executive was not tenable as the advance payment was not covered under

the rules.


that relevant documents may be produced to audit for verification and

such practice may not be repeated in future. No further progress was

reported till finalization of this report.

Audit recommends implementation of DAC directives and

regularization of expenditure already incurred.

1.16.3 Unjustified advance payment to contractors – Rs

178.537 Million

According to Para 408 - 417 of DSR-1998, there is no

provision of advance payment to contractor except secured advance.

Further, according to Para 15 (C) (4) of DSR -1998, all payments to

contractors and employees should correctly represent the services

rendered (i.e., work done and stores supplied) in accordance with the

contract or other agreement under which those services have been

rendered.

During scrutiny of record pertaining to GE (Navy)

Construction Manora for the year 2017-18, it was observed that an amount

of Rs 178,537,120 was paid in advance to various contractors without

physical progress of works within 5-10 days of their commencement

which tantamounted to extending undue favor to them.


The executive replied that the payment was made to the contractors

against works done. Reply furnished by the executive was not tenable as

the works involving such hefty payments could not be executed in a

week's time and such assertion could not also be established during

currency of audit.

148


that an inquiry be conducted and responsibility fixed against the

individual(s) involved. No further progress on the matter was reported to


Audit recommends early implementation of DAC`s

directives.

DP-S-232/2018-19

1.16.4 Irregular procurement of fresh water beyond

authorization at exorbitant rates - Rs 90 Million

Para-5 of Appendix “K” of DSR 1998 puts limit of Rs 5

million per annum on agreements or memoranda for taking a supply of

electric energy, gas or water from an outside source for military buildings,

when the annual payment in the case of each station does not exceed Rs 5

million. Further, as per Rule-0104 (1)(a) of FR (Navy) 1993, “Every

officer should exercise the same vigilance in respect of expenditure

incurred from government revenue as a person of ordinary prudence

would exercise in respect of the expenditure of his own money”.

During scrutiny of record pertaining to GE (Navy) East,

Karachi for the year 2017-18, it was observed that an amount of Rs

90,000,000 was expended by the formation on supply of fresh water

through 18 contracts by dividing NORE-I station into eighteen sub-

stations. The review of record further showed that the procurement of

water was made @ Rs 2.37 per gallon from private contractors instead of

procuring it @ Rs 1 per gallon from KW & SB. This resulted in loss to the

state amounting to Rs 52,025,300 due to price difference between the two

sources of procurement.

149

Audit was of the opinion that the expenditure of Rs

90,000,000 on one station (NORE-I) was in violation of government rules

and it indicated weak financial management & internal controls.


The executive replied that due to short supply of water from KW&SB,

private contracts were concluded by CMES after proper tendering at

reasonable rates. Reply furnished by the executive was not tenable as one

station of NORE-I was irregularly divided into eighteen sub-stations and

water was procured at much higher rates, which was in violation of rules

quoted above.

The DAC vide meeting held in December, 2018 while

reiterating its earlier decision dated 1st& 2

nd January, 2018 directed that

the prescribed limit of Rs 5,000,000 for conclusion of fresh water

contracts for each station should not be exceeded by any unit / formation.

It also directed that SoP may be formulated within three months and

approval from respective Admin Authority be obtained for supply of fresh

water accordingly. No further progress in terms of regularization of

expenditure/ fixation of responsibility etc was reported to audit till



fixation of responsibility and regularization of expenditure already

incurred.

DP-S-201/2018-19

1.16.5 Un-authorized sanction of residential accommodation

under para-17 of DSR – Rs 85.076 Million

According to Para-17(a)(c) of DSR, 1998, “unexpected

circumstances may arise which make it imperative to short-circuit from

normal procedure. Such circumstances may arise from operational military

necessity or on urgent medical grounds when reference to the appropriate

150

CFA would entail dangerous delay. If such circumstances arise, any of the

authorities detailed in Table-A may order the commencement of a work by

functioning in order„ writing‟ to the engineer office concerned and

forwarding immediately and a copy of his order to superior engineer

authority with his reasons for giving the orders and the engineer officer‟s

estimates of the liability incurred. In all cases which may arise above the

earliest possible steps must be taken to regularize matters by normal action

contemplated by these Regulations”.

During scrutiny of record pertaining to AGE (Navy)

Mauripur Karachi for the year 2017-18, it was observed that a contract

valuing Rs 85,076,292 involving construction of 256 Men Barracks at

PNAD Mauripur was sanctioned by DCNS Admin, which apparently did

not involve operational military necessity or urgent medical requirement

as per above rule provisions. This resulted into unauthorized expenditure

amounting to Rs 85,076,292.

Audit was of the opinion that the authority avoided normal

procedures without sufficient justification which exhibited weak financial

management and internal controls.


2018. The executive replied that the work was sanctioned under Para – 17

of DSR 1998. The contention of the management was not convincing as

Para-17 could not be invoked for construction of routine residential

buildings.


that detailed justification/necessity of urgent/emergent works be provided

to audit along-with a copy of sanction and regularization status of works.

No further progress on the matter was reported to audit till finalization of

this report.

151


directives.

DP-S-128/2018-19

1.16.6 Non regularization of expenditure on construction

works - Rs. 72.701 Million

According to Para -17(a)(b) & (c) of Defence Services

Regulations for MES-1998, “notwithstanding anything laid down in these

Regulations un-expected circumstances may arise which make it

imperative to short circuit normal procedure. Such circumstances may

arise from operational military necessity or on urgent medical grounds

when reference to the appropriate CFA would entail dangerous delay. If

such circumstances arise, any of the authorities detailed in Table-„A‟ may

order the commencement of a work by furnishing an order in writing to

the engineer officer concerned and forwarding immediately a copy of his

orders to superior engineer authority with his reasons for giving the orders

and the engineer officer‟s estimates of the liability incurred. In all cases

the earliest possible steps must be taken to regularize matters by normal

action contemplated by the Regulations”.

During Audit of Garrison Engineer (Navy) Const.

Islamabad, it was observed that 03 contract agreements valuing Rs.

72,701,360/- were concluded during 2016-17 with different contractors for

construction works at Naval Complex Islamabad under Para-17 of

Defence Services Regulations, however, the regularization action was not

completed.


The executive replied that due to acute shortage of accommodation, it was

necessary to accommodate the troops and the same was required on

emergent basis by the users. Reply was not satisfactory because works

executed under Para-17 of DSR needed regularization.

152


November, 2018

directed that expenditure may be got regularized. No further progress was


Audit recommends regularization of the expenditure and its


DP-N-87/2018-19

1.16.7 Irregular conclusion of contract beyond financial

powers - Rs 48.457 Million

As per Para 389 of DSR 1998, as amended vide MoD`s

letter No.2/12/D.15/2001 dated 12-6-2006, the contractual power of AGEs

is up to Rs 500,000/.

During audit of Assistant Garrison Engineer (Navy)

Maintenance Manora for the year 2017-18, it was observed that an

agreement for providing drinking water through Reverse Osmosis (RO)

Plant amounting to Rs 48,457,000 was concluded by AGE beyond his

financial powers.

The irregularity was pointed out by audit in July, 2018. The

executive furnished an irrelevant reply. The AGE was not competent to

exercise powers of over Rs 500,000 in the instant case.


the executive to obtain ex-post facto sanction/approval of Government of

Pakistan and produce relevant record to audit for verification. No further



directives along-with fixing of responsibility against the person(s) at fault.

DP-S-111/2018-19

153

1.16.8 Award of contracts by splitting up - Rs. 20.188 Million

According to Government of Pakistan Ministry of

Defence Rawalpindi letter No. 2/12/D-15/2001 dated 12th

June, 2006, the

financial powers of GE for acceptance of contract is up to Rs. 2 million.

During Audit of Garrison Engineer (Navy) Const.

Islamabad, it was observed that eleven contracts valuing Rs. 20,188,965/-

for car parking sheds were concluded with M/s Manzoor Builders by the

GE on 3rd

June, 2016 just in one day by splitting up financial powers in

order to avoid obtaining sanction of higher authority.


The executive authorities stated that the works were required for different

departments. Therefore separate sanctions were issued and contracts were

concluded accordingly. Reply was not satisfactory because contracts were

concluded by the GE by splitting up financial powers, which required

regularization.


November, 2018

directed the management for regularization from competent authority. No


Audit recommends regularization of the expenditure

besides adoption of remedial measures to avoid such lapses in future.

DP-N-129/2017-18

1.16.9 Non-invoking of liquidity damages clause – Rs 19.361

Million

As per Para – 52(a) of PAFW-2249 forming part of

contract that, if the contractor fails to complete the works and clear the site

as stated in clause-53, such breach shall be liable to payment of

154

compensation amount equal to 1% of the sum or of the measured value of

the works order for every week, provided that total amount of

compensation so payable under this condition shall not exceed 10% of the

contract sum.


formations for the period 2017-18, it was observed that 02 of the works

contracts valuing Rs 193,617,738 were awarded to different contractors

who failed to complete their works within the specified time. No

extensions were found to have been allowed to the contractors by the

management. The liquidated damages amounting to Rs 19,361,738 were

required to be recovered from them, which was not recovered.

(Rs in million)

S. No DP No Name of Unit/Formation Amount

01 DP -S- 152 GE (Navy) Fleet 10.854

02 DP-S- 125 GE (Navy) Mauripur Karachi 8.507

Total 19.361


2018. The executive replied that the works had been completed by the

contractors within stipulated and extended dates and therefore no LD was

leviable in the said contracts. Reply furnished by the executive was not

tenable as the work at Sr. No 01 was still incomplete as could be observed

from a number of warnings and instructions issued by the management to

the contractor even beyond extended date in the said work. Further, the

executive in case of Sr. No 02 failed to provide any documentary evidence

wherefrom it could be established that the works had been completed in

time i.e. by 31.03.2017.


that the handing/taking over report of the Board and completion report

(part-A and B) of works be provided to audit for verification. No further

progress in the matter was reported to audit till finalization of this report.

155

Audit recommends expeditious implementation of DAC`s

directives/ recovery of LD charges from the contractors as per rules.

1.16.10 Un-authorized advance payment of electricity charges –

Rs 13.223 Million

In accordance with Rule 47 (e) of FR Vol-1 1986, most

careful supervision over expenditure shall be exercised and on no account

money shall be spent simply because it is available. Moreover sub rule 5

of Rule ibid stipulates that unexpended portion of any existing grant shall

lapse on 30th

June of each year.

During Audit of Garrison Engineer (Navy) Lahore Cantt, it

was observed that an amount of Rs 16,049,866/- was paid to LESCO for

the month of May 2017 on account of electricity bill whereas actual

electricity bill for the month of May 2017 was Rs 2,826,579/-. Remaining

amount of Rs 13,223,287 paid in advance was just to avoid the lapse of

funds in the month of June 2017, which was unauthorized, being not

covered under Rules.

The irregularity was pointed out by Audit in February

2018. The auditee replied that the amount objected paid to LESCO was

regularized by the LESCO bills received for the months of June, July,

August, September 2017 including fuel price adjustment. Reply was not

acceptable as there was no provision in rules to make advance payment

against future bills, just to avoid lapse of funds.


November, 2018

directed the management that relevant record regarding adjustment of bill

in subsequent months may be got verified from Audit. Further, in future

no such payments be made. No further progress and record was provided

to Audit for verification till finalization of this report.

156

Audit recommends that matter may be inquired for making

advance payment on account of electricity charges, besides, provision of

record of adjustment of advance payment and adoption of remedial


DP-N-36/2018-19

1.16.11 Un-authorized payment of Daily Messing Allowance –

Rs 12.129 Million

According to Rule-210 (b) of Pay and Allowance

Regulations 1976 (Navy), “Daily Messing Allowance will be admissible

to officers and men participating in the Exercises, maneuvers ordered by

NHQ/Administrative authorities viz Compak, Comkar, Comlog”.

During audit of accounts of PNS Ahsan Ormara for the

year 2016-17, it was observed that a sum of Rs 12,128,775 was paid to the

officers/officials on account of Daily Messing Allowance (DMA) on

normal duties, whereas the same was admissible only to the officers and

men participating in exercises and maneuvers. This resulted into

unauthorized payment amounting to Rs 12,128,775.

Audit was of the view that non-implementation of

government regulations caused irregular expenditure which indicated

weak financial management.


The executive replied that the objected DMA was paid to officers/ men

who participated in operation Talwars & Tuhafuz. The reply furnished by

the executive was not tenable as it was not substantiated by relevant



that admin sanction/order of operational/ exercise duty, schedule of

exercises along-with detail of participants, nominal roll of officers/

157

officials and CO`s certificate regarding payment of Daily Messing

Allowance may be provided to audit for examination. No further progress

on the matter was reported to audit till finalization of this report.


directives/ recovery of unjustified payment from the concerned.

DP-S-13/2018-19

1.17 Recoverables/ Overpayments – Rs 175.94 Million

1.17.1 Non-recovery of sales tax on services – Rs 59.748

Million

According to Balochistan Sales Tax on Services Act, 2015,

Schedule II, Part-B, services provided or rendered by persons engaged in

contractual execution of work or furnishing supplies are liable to pay 15%

Sales Tax on their rendered services.

A) During audit of following MES (Navy) formations for the

year 2017-18, it was observed that the Sales Tax on services @ 15%

amounting Rs 48,664,587 was not recovered from the contractors‟

payments.

(Rs in million)


1. GE (Navy) Construction-1, Ormara S-135 29.023

2. AGE (Navy) Maintenance, Ormara S-162 19.641

T o t a l 48.664

Non-recoveries were pointed out by audit in August &

September 2018. The executive at Sr. No 1 did not furnish reply, whereas

the executive at Sr. No. 2 submitted evasive reply.

158



recoverable tax.


December, 2018. The DAC was informed by executive that no Sales Tax

was leviable on civil works contracts. The contention of the management

was not tenable as the Sales Tax on services was a provincial subject and

the tax was therefore recoverable as per rules. The DAC, however, pended

the DP till formulation of policy/decision at MoD level, whereas the audit

suggested recovery of tax due as per rules/instructions of the provincial

government. Further progress in terms of recovery was not reported to


Audit recommends expeditious recovery of Sales Tax on

services.

B) According to Sindh Sales Tax Act No XII of 2011, issued

by Sindh Revenue Board (SRB), Government of Sindh circulated vide

Notification No. SRB/TP/51/2016/212146 dated: 08th

March 2017, Sales

Tax would be charged @ 13% to 14% (from 2015 to 2017) on contractors‟

services.

During audit of following MES (Navy) units and other

formations covering period 2015-17, it was observed that the Sales Tax on

services amounting Rs 11,084,099 was not recovered from the

contractors‟ payments.

(Rs in million)


1 GE (Navy) Construction, Dockyard S-223 4.845

2 PNS Karsaz S-68 3.934

3 PNS Qasim S-206 1.584

4 GE (Navy) Construction, Manora S-160 0.721

159

T o t a l 11.084


December, 2017 to June, 2018. No reply was furnished by the executive at

Sr. No1. The executive at Sr. No. 2 replied that the payment had been

released to the contractor after deduction of Sales Tax by Controller of

Naval Accounts. Sr. No 3 replied that Sales Tax on services was not

applicable on federal government entities. Sr No. 4 replied that additional

amount of GST as per SRB had not been catered for.

The contention of the management was not tenable as the

Sales Tax on services was a provincial subject and the tax was recoverable

on services in the province. Audit was of the view that due to non-

recovery of Sales Tax, public exchequer was deprived of hefty revenue on



informed by the executive at Sr. No. 1 that the FBR exempted levy of

Sales Tax over building maintenance/ construction. Sr. No 2 replied that

the payment against conservancy bills was released by CNA which was

responsible to deduct all applicable taxes at source. Sr. No 3 replied that

being a federal entity, it was not applicable to Pakistan Navy. Sr. No 4

replied that the tax was not catered for in the works. Replies furnished by

the executive were in disregard to government instructions, hence not

acceptable.

The DAC pended the DP till formulation of policy/decision

at MoD level, whereas the audit suggested recovery of tax due as per

rules/instructions of the provincial government. Further progress in terms

of recovery was not reported to audit till finalization of this report.

Audit recommends expeditious recovery of Sales Tax on

services.

160

1.17.2 Non-recovery of allied charges from consumers – Rs

37.039 Million

According to Para-442 of DSR, 1998, “the GE is



During audit of following MES (Navy) formations for the



(Rs. in million)


1 GE (Navy), Karsaz S-188 21.148

2 GE (Navy) Fleet, Karachi S-134 7.876

3 GE (Navy) Turbat S-72 4.870


T o t a l 37.039


indicated weak financial management at the end of the executive.


November, 2017 to September, 2018. The executive at Sr. No 1 replied

that the HQ Comkar had been approached for convening of Board of

Officers for assessment and recovery. The executive at Sr. Nos 2 and 4

replied that the electric bills had been forwarded for recovery. The

executive at Sr. Nos 3 replied that the electric charges against

contractors/commercial consumers had been recovered.




so far be got verified from audit and balance amount be recovered

161



Audit recommends expeditious recovery of amount and its

verification by audit.

1.17.3 Non-recovery of Sales Tax on goods– Rs 30.118 Million

As per Finance Bill 2010 "After amendments in the

Sales Tax Act, 1990, the applicable rate of sales tax on items in

Third Schedule has been increased to 17% with effect from 1st July

2010". Further, as per Rules 2(2) and (3) of the Sales Tax Special

Procedure (Withholding) Rules, 2007 under S.R.O. 660(1)/2007,

Islamabad, the 30th June, 2007, "A withholding agent shall deduct

an amount equal to one-fifth of the total Sales Tax shown in the

Sales Tax invoice issued by the supplier and make payment of the

balance amount to him" and "All withholding agents shall make

purchase of taxable goods from a person duly registered under Sales

Tax Act, 1990, provided that under unavoidable circumstances and

for reasons to be recorded in writing, if purchases are made from

unregistered persons, the withholding agent shall deduct Sales Tax at

19% of the value of the taxable supplies made to him from the payment

due to the supplier".

During audit of following MES (Navy) units for the period

2016-18, it was observed that Sales Tax on goods amounting to Rs

30,118,000 was not deducted from the contractors‟/suppliers‟ payments.

(Rs. in million)


1 GE (Navy) Logistics, Karachi S-172 25.722

2 GE (Navy) Construction, Manora, Karachi S-164 4.396

T o t a l 30.118

162


Tax, government exchequer was deprived of hefty amount of revenue on


Non-recoveries were pointed out by audit in December

2017 & September 2018. The executive at Sr. No. 1 replied that the

supplier was registered with FBR for payment of Sales Tax. The executive

at Sr. No 2 replied that 3.4% GST was deducted from the contractors.

Relevant record supporting full recovery was not produced to audit for

verification.


the executive at Sr. No1 that relevant documents showing recovery be

provided to audit for examination. In case of Sr. No. 2, the DAC directed

that the tax return of the contractor reflecting payment of remaining 80%

GST to FBR be provided to audit for verification. Record proving

recovery was however not produced to audit till finalization of this report.

Audit recommends early recovery of Sales Tax amount



24.506 Million





During audit of following MES (Navy) units for the period


was less deducted from various contractors‟ payments in violation of

above rule.

(Rs in million)


163

1 GE (Navy) Const. Manora, Karachi S-235 7.012

2 GE (Navy) Const. Manora, Karachi S-219 7.074

3 AGE (Navy), Maint. Manora, Karachi S-112 4.260

4 GE (Navy) East, Karachi S-204 1.973

5 GE (Navy) Logistics, Karachi S-20 2.418

6 GE (Navy) Dockyard, Karachi S-14 0.325

7 GE (Navy) Maint Karsaz, Karachi S-191 0.896

8 GE (Navy) Const-II, Ormara S-269 0.548

T o t a l 24.506

Non-recovery of government dues reflected weak financial

management which deprived government of potential revenue.


October 2018. The executive at Sr. Nos 2, 4, 5 & 7 replied that all the

contractors were filers. The executive at Sr. No 3 replied that Income Tax

on water through RO Plant was not applicable. The executive at Sr. No 1

also submitted evasive reply. The executive at Sr. No 8 replied that the

contractors were asked for provision of documentary evidence of being the

filers. The executive at Sr. No 6 did not furnish reply to DP. The replies

furnished were not found tenable as they were not substantiated by

relevant documentary evidence.


that proof regarding filer status of the contractors be provided to audit for

verification. In case of non –filer, the difference of Income Tax be

recovered from the contractors and record produced to audit for

verification. No further response on the matter was reported by executive

to audit till finalization of this report.

Audit recommends implementation of DACs‟ directives /

recovery of Income Tax as per rules on priority.

1.17.5 Less deduction of Income Tax against MES stores - Rs

12.408 Million

164





During audit of GE (N) Construction Manora, Karachi for

the financial year 2017-18, it was observed that an amount of Rs

768,350,000 was paid to the contractors against execution of 35 Nos of

contracts. The record showed that the Income Tax was deducted from the

contractors‟ bills after deduction of MES stores instead of making tax

deductions over gross amount of the bills, which resulted in less recovery

of Income Tax amounting to Rs 12,408,158.

Less recovery of Income Tax indicated weak financial



The executive‟s reply was irrelevant.


the management to reconcile the recoverable amount with audit, recover

the amount due and get it verified from audit. No further progress was


Audit recommends recovery of Income Tax as per rules.

DP-S-229/2018-19

1.17.6 Non-recovery of stamp duty from contractors – Rs

9.758 Million

As per Section 35 of Stamps Act 1899, no instrument




165





During scrutiny of record of following units, it was

observed that a sum of Rs 9,758,267 on account of Stamp Duty was not

recovered by the formations against different contract agreements

executed.

(Rs in million)

S.No Name of Unit/Formation DP No. Amount

1 GE (Navy) Eastern, Karachi S-66 3.816

2 GE (Navy) Turbat S-71 2.117

3 GE (Navy) Logistics, Dockyard, Karachi S-123 1.236

4 GE (Navy) Maint. Karsaz, Karachi S-265 1.150

5 GE (Navy) Const-II, Ormara S-272 0.988

6 Central Div. Stock, Karachi S-209 0.451

T o t a l 9.758

Non-recoveries were pointed out by audit during February

to September 2018. The executive at Sr. Nos 3, 4, 5 submitted evasive

replies. The executive at Sr. No 1 replied that the SRB had been

approached for recovery of stamp duty. The executive at Sr. No 2 replied

that the case had been taken up with appropriate authority for recovery of

stamp duty. The executive at Sr. No 6 replied that the Stamp duty

pertained to Government of Sindh and was not applicable on departments

working under Federal Government. The contention of the management

was not tenable as it was in disregard of rules quoted above.


DPs till formulation of policy/decision on recovery of stamp duty at MoD

166

level, whereas the audit suggested recovery of stamp duty in question on

priority. No progress in terms of recovery of stamp duty was reported to



expeditiously.

1.17.7 Non-deposit of government's share of rental income - Rs

1.408 Million

According to policy on use of A-I Land circulated

vide MoD`s letter dated 2nd April, 2008, for launch of essential

commercial activities required to serve the residents of the respective

garrison, survey will be conducted by a Board of Officers to determine

the actual area under usage. The rent shall be charged @ 6% per annum

of existing revenue rate of the said land. Government's share @ 25% of

the rent so charged will be deposited into government treasury.

Besides, the entire amount of rent charged for use of A-I land for

agricultural purposes will be deposited into government treasury.

During scrutiny of record relating to GE (N) Karsaz

for the financial year 2017-18, it was observed that M/s Aquagen

(Pvt) Ltd utilized “A-1” land for commercial purposes at Karsaz.

However, the government's share in the rent amounting to Rs 1,408,462

was not deposited into treasury in violation of A-1 Land Policy referred

above.

Audit was of the view that the delay in deposit of

government share reflected weak financial management on the part of the

executive.


2018. The management replied that the matter involving recovery of rent

167

was being looked after by PNS Karsaz and that the observation

would be shared with the concerned authorities.

The issue was discussed in DAC meeting held in

December, 2018. The DAC directed the executive to reconcile the

recoverable amount and get the recovery verified from audit. No record in

terms of recovery was however produced to audit for verification till


Audit recommends early deposit of government‟s share

into treasury as per policy.

DP-S-260/2018-19

1.17.8 Overpayment to contractor - Rs 0.955 Million

According to Para 15 (c) (4) of DSR – 1998, all payments

to contractors and employees correctly represent the services rendered

(i.e., work done and stores supplied) in accordance with the contract or

other agreement under which those services have been rendered.

According to Rule 0104 (a) of Financial Regulations (Navy) 1993 “Every

public officer should exercise the same vigilance in respect of expenditure

incurred from government revenue as a person of ordinary prudence

would exercise in respect of the expenditure of his own money”.

During scrutiny of record pertaining to GE (N) Logistics

for the year 2016-17, it was observed that an amount of Rs 16,077,000

was paid to the contractor through final bill against construction work for

establishment of air conditioning workshop at PN Dockyard, whereas the

total payable cost of the work as per agreement was Rs 15,121,559, which

resulted into overpayment of Rs 955,441 to the contractor.

168

Audit was of the opinion that the overpayment to the

contractor was due to weak financial management and internal controls at

the end of the executive.


The management replied that the contract was finalized within the

permissible limits and no overpayment was made to the contractor. The

contention of the management was not supported by relevant record/



December, 2018, wherein it was directed that relevant documents in

rebuttal of DP be provided to audit for verification. No response was

intimated to audit till finalization of this report.

Audit recommends expeditious recovery of amount

involved besides fixing of responsibility against the person(s) at fault.

DP-S-23/2018-19

1.18 Loss to State– Rs 273.957 Million

1.18.1 Non-recovery of electricity charges - Rs 261.075 Million.

According to Rule 0104 (a) of Financial Regulations

(Navy) 1993, “Every officer should exercise the same vigilance in respect

of expenditure incurred from government revenue as a person of ordinary


During audit of following MES (Navy) formations for the

year 2017-18, it was observed that an amount of Rs 261,075,000 was paid

by the formations to K-electric on account of electricity charges against

bulk supply of electricity without determining the free allowance of

electricity by the Board for the formations and without recovering the

amount from the consumers beyond free authorization.

169

(Rs in million)


1 GE (Navy) East, Karachi S-205 115.445

2 AGE (Navy) Mehran, Karachi S-234 81.971


Total 261.075

When the matter was pointed out by audit in September to

October 2018, the executive stated that the Board for the purpose of

authorization of units was under process. Reply furnished by the executive

was not tenable as the consumption beyond free authorization was to be

recovered.

The DPs were discussed in DAC meeting held in

December, 2018. The executive repeated their earlier stance. The DAC

directed that the Board findings/recommendations be provided to audit for

examination and irregular consumption of electricity be got regularized/

paid. No further response on the matter was reported by executive till



directives.

1.18.2 Wasteful expenditure on re-location/shifting of barriers

- Rs. 6.984 Million

Under Rule 47 (e) of FR Vol-I 1986, most careful

supervision over expenditure shall be exercise and on no account shall

money be spent simply because it is available.

During audit of Garrison Engineer (Navy) Const.

Islamabad, it was observed that an amount of Rs. 6,984,946/- was paid in

June 2016, to M/s Muhammad Ramzan Construction for

relocation/shifting/erection of spare jersey barriers against contract

agreement No. CEN-114/2016, despite the fact that these barriers were

170

erected/installed only a year ago, which resulted into wasteful expenditure.

Hence due to ill planning and mis-management government sustained a

loss of Rs 6,984,946/- due to shifting/relocation of barriers, which needed

regularization.

The irregularity was pointed out by Audit in June 2017, the

executive replied that due to user requirement security hazard jersey

Barriers were relocated/shifted. Reply was not justified as due to ill

planning and mis-management Government sustained a loss of Rs

6,984,946.


November, 2018

directed the management for provision of revised reply within 3 months.


Audit recommends regularization of the expenditure

involved besides adoption of remedial measures to avoid such lapses in

future.

DP-N-123/2017-18

1.18.3 Loss of revenue due to infructuous expenditure – Rs

5.898 Million

According to Para 210 (a) of DSR, 1998 “Infructuous

expenditure arises when government funds have been expended for which

government receives no useful return or in which there has been

unnecessary or avoidable extra expenditure. As per Rule-71 of Quarter&

Rent 1985 “It shall be the duty of the Unit Commander or Head of the

Department concerned to bring into the notice of the Station

Commander/Headquarters any military buildings that may be lying vacant

in order to admit of their being let, sold, dismantled or disposed off in any

other way under the appropriate regulations". Further, according to Para -

442 of DSR 1998 "The GE is responsible for making demands for

payment of all revenue and for taking steps for its prompt realization."

171

During audit of accounts of GE (N) Eastern Karachi for

the year 2017-18, it was observed that 12 MOQs were constructed at

Sajawal in the past but the same were lying unutilized / un-allotted

since their construction. Thus the expenditure on construction was found

as being infructuous. Further, due to non-allotment of MOQs, the

government also sustained additional estimated loss to the tune of Rs

5,898,240 on account of non-recovery of HRA because of the MOQs`

non-allotment.

Audit was of the view that due to weak financial

management within the organization and its ill-planning the financial

loss was caused to the state.

The irregularity was pointed out by audit in July, 2018.

The executive replied that the concerned authorities had been

approached for providing occupation/vacation status of the 12 MOQs at

Sajawal along-with recovery details against HRA and utilities.


informed that the MOQs were not allotted to the officers. The past

expenditure on MOQs was thus wasteful. The DAC directed that fresh

reply be provided to audit for examination. No further response on the

matter was however reported to audit till finalization of this report.

Audit recommends early implementation of DAC directives


DP-S-179/2018-19


1.19.1 Irregular conclusion of contracts - Rs 764.487 Million

According to PPRA‟s S.R.O.1170(1)/2009 dated July 9,

2009, all procuring agencies whether within or outside Pakistan shall post

172

Contract Awards over fifty million rupees on PPRA‟s website on the

proformas as set out in Annexure-I and Annexure-II to these regulations,

provided that where any information related to the award of a contract is

of proprietary nature or where the procuring agency is convinced that such

disclosure of information shall be against the public interest, it can

withhold only such information from uploading on PPRA‟s website

subject to the prior approval of the Public Procurement Regulatory

Authority. [F.No. 2/1/2008/PPRA-RA.III].

According to Table- A of Para-25 and Para-389 of DSR

1998, as amended vide MoD`s letter No.2/12/D-15/2001 dated 12-06-

2006, the contractual power of E-in-C is up to Rs 35 million and the full

power is subject to concurrence of Military Finance. According to Para 51

of DSR – 1998, after the 15th

April, no new capital/major work will be

commenced and no allotment will be made thereto unless on ground of

urgent military necessity or for urgent medical reasons. Further, according

to Para 369 of DSR-1998, original contract together with drawing,

specifications and comparative statement of tenders will be submitted to

Controller of Accounts for scrutiny.

During audit of GE Navy Construction Manora for the year

2017-18, it was observed that 9 contracts each exceeding Rs 50 million

totaling to Rs 764,487,196 were concluded by the E-in-C without posting

Contract Awards on PPRA website and without getting concurrence of

Military Finance. It was also observed that the contracts were concluded in

June after 15th

April and payment of 1st RAR amounting to Rs

264,150,000 was made in the same month without physical progress of the

works in question and without scrutiny and vetting by the Controller of

Naval Accounts, Karachi as required under the rules. The entire

expenditure thus incurred stood as irregular.


173


without adoption of PPRA and other rules could lead to misuse of

government funds which indicated weak financial management.


The executive‟s reply was found irrelevant.


the executive to provide relevant documents to audit for examination. No

further progress was reported to audit till finalization of this report.



(DP-S-239/2018-19)

1.19.2 Irregular, non-transparent award of contracts – Rs

321.962 Million

According to PPRA Rule 35, procuring agencies shall

announce the results of bid evaluation in the form of a report giving

justification for acceptance or rejection of bids at least ten days prior to the

award of procurement contract. Further, according to PPRA‟s

S.R.O.1170(1)/2009 dated July 9, 2009, all procuring agencies whether

within or outside Pakistan shall post Contract Awards over fifty million

rupees on PPRA‟s website. on the proformas as set out in Annexure-I and

Annexure-II to these regulations, provided that where any information

related to the award of a contract is of proprietary nature or where the

procuring agency is convinced that such disclosure of information shall be

against the public interest, it can withhold only such information from

uploading on PPRA‟s website subject to the prior approval of the Public

Procurement Regulatory Authority. [F.No. 2/1/2008/PPRA-RA.III]


formations for the financial year 2017-18, it was observed that works

contracts amounting to Rs 321,962,671 were awarded to different



174

contractors without meeting the requirement of above rules, which

rendered the entire expenditure as being irregular and non-transparent.

(Rs in million)

S. No DP No. Name of Unit / Formation Amount

1 DP-S-170/2018-19 AGE (N) Maintenance, Ormara 175.676

2. DP-S-130/2018-19 GE (N) Construction-I, Ormara 146.286

Total 321.962



funds which indicated weak financial management at the end of the

executive.

The irregularity was pointed out by audit in August

&September 2018. The executive in case of Sr. No 01 replied that the

higher authority had been approached for provision of the required

documents and in case of Sr. No.2 no reply was furnished to audit.

The DAC vide meeting held in December, 2018 shifted the

DPs to E-in-C Branch for immediate reply. No further progress was


Audit recommends for expeditious compliance of DAC


fault.

1.19.3 Irregular procurement of stores – Rs 12.127 Million

According to Rule 12(1-2) of PPRA Rules-2004,

“Procurements over one hundred thousand rupees and up to the limit of Rs





175

During audit of accounts of the following MES (Navy)

formations for the year 2017-18, it was observed that contracts involving

different works valuing Rs 12,127,110 were awarded to different

contractors without advertisement through PPRA‟s website and

newspapers in violation of PPRA Rules.

(Rs in million)

S.No DP No. Name of Unit / Formation Amount

1 DP-S-115/2018-19 AGE (N) Maintenance, Manora 8.227

2 DP-S-147/2018-19 GE (N) Turbat 3.900

Total 12.127




controls.

The irregularity was pointed out by audit in July to August

2018. The executive replied that the contracts of works were awarded to

firms after meeting all codal formalities. The replies were not found

tenable as documentary evidence showing advertisement in newspapers

and on PPRA‟s website was not produced in support of management‟s

contention.


that relevant documents in support of reply be produced to audit for

examination. In case of failure, the DAC directed the conduct of inquiry

on the matter. No further progress on the matter was reported to audit till




1.20 Non-production of record – Rs 15.00 Million

176

1.20.1 Non-production of auditable record – Rs 15.00 Million

Under Section – 14(3) of Auditor General‟s Ordinance

2001, any person or authority hindering the auditorial functions of the

Auditor General regarding inspection of accounts shall be subject to

disciplinary action under relevant Efficiency and Disciplinary Rules,

applicable to such person.

During audit of accounts pertaining to PNS Karsaz, it was

observed that an amount of Rs 15,000,000 was allocated to the NBCD

School PNS Karsaz during the financial year 2016-17 out of Disbursement

of Training Charges Fund under code head 1/877/54 by Naval HQ

Islamabad for revitalization of Damage Repair Training Simulator

(DRTS).The auditable record like break-up of the above expenditure,

sanctions, PPRA advertisements, related vouchers, tax recovery details,

and items‟ procured details against the said allocation was requested

through written requisitions and verbal requests. However, the formation

did not produce record to the audit team till the close of audit, which was a

serious violation on the part of the auditee organization and entailed strict

action against the concerned as per above rule provisions.

Audit was of the opinion that non-production of auditable

documents to audit team constituted serious lapse and indicated weak

internal controls and financial management.

The irregularity was pointed out by audit in June, 2018.

The management furnished an irrelevant reply.


that relevant documents/adjustment account be provided to audit for

examination. No record was produced to audit till finalization of this

report.

177

Audit recommends early production of complete auditable

record as enumerated above along-with fixation of responsibility against

the person(s) at fault.

DP-S-163/2018-19

178

Military Accountant General

1.21 Un-authorized / Irregular Expenditure - Rs

11,337.123 Million

1.21.1 Un-authorized remittance of public money into

commercial bank – Rs 7,593.00 Million

Para 1 (vii) of Govt. of Pakistan, Ministry of Defence letter

No. 7/6/2004-05/D-21 (Budget) dated 30th

November, 2004 states that all

expenditure against defence budget shall be pre-audited.

Rule 48 (a) of Financial Regulations Volume-I 1986

categorically specifies that within the limits of budget provision,

Controllers are authorized to draw cheques on the State Bank of Pakistan

and the National Bank of Pakistan at places where the cash business of

Govt. is conducted by that bank or on a Govt. Treasury or Sub Treasury at

any other place in Pakistan. Rule 36 (d) of Financial Regulations ibid lays

down that all units and formations should open a current account with the

State Bank of Pakistan or National Bank of Pakistan where such bank

exists, otherwise in a local treasury.

During audit of CMA (RC) Rawalpindi, it was observed

that an amount of Rs.7,592,598,000 was released to Military Intelligence

Directorate (M.I Dte) GHQ Rawalpindi. Scrutiny of available contingent

bills amounting to Rs 882,500,000 showed that these contingent bills

marked as “Secret” were passed and the amount was released by the CMA

(RC) without pre-audit. Cheques were issued in favour of Askari Bank,

GHQ Rawalpindi to deposit the amount in Account No. 28-01-165-0163-

1, on the advice of Military Intelligence Directorate, merely on the basis of

certificate provided by that Directorate that “Funds for cost of war will be

utilized for Secret Intelligence Operation”. There was no provision in the

rules referred above to transfer Public Funds in a private bank account of

any unit. Hence release of amount on this account by the CMA needed

regularization from Government of Pakistan, besides provision of details

179

of expenditure against released amount and profit earned if any, against

retention of public money in a commercial bank account.


2017. The executive replied that this office had called the justification

from M.I. Dte GHQ Rawalpindi vide this office letter No.

S/STA/Misc/Corr of March, 2017 but no reply has been received.

The Draft Para was reported to Ministry of Defence on 5th

December, 2017. Ministry of Defence was requested vide DGADS letter

dated 28th

June and 1st October, 2018 for convening of DAC meeting.

DAC meetings were scheduled on 6th

, 22nd

and 29th

November, 2018 but

postponed by the Ministry and could not be held till finalization of this

report.

Audit recommends immediate transfer of Public Funds into

National Bank besides deposit of amount of profit (if any) into

Government Treasury and regularization of bank account in other than

National Bank. Details of expenditure against released amount be

provided to CMA for accounting and adoption of remedial measures by

MAG for strengthening of pre-audit in such cases, to avoid such lapses in

future.

DP-N-163/2017-18

1.21.2 Unauthorized expenditure out of Al-Mizan fund – Rs.

3,744.123 Million

As per Para-1(v) of Ministry of Defence letter No.

7/6/2004-05/D-21 (Budget) dated 30th

November, 2004, the releases from

Special Transfer Account (STA) shall be used for procurement of stores

and for replenishment of stock.

During audit of the accounts of following two CMAs, it

was observed that the payments were released by CMA to different Army

units out of Al-Mizan Fund (drawn on STA) on account of purchase of

sports items, construction work, repair / maintenance work, pay and

180

allowance of security guards and expenditure of Yuam-e-Shuhada which

were not covered as per above cited Government orders.

(Rs. in million)

S

#

DP No. Nature of Expenditure Amount

1 DP-N-151/2017-18 CMA (RC) Procurement of sports items.

(Sports Dte. GHQ)

7.00

2 DP-N-164/2017-18 CMA (RC) Construction of House.

(AGs Branch Welfare &

Rehabilitation Dte.)

500.00

3 DP-N-253/2017-18

CMA (RC)

Expenditure of Yuam-e-Shuhada

211.937

4 DP-N-258/2017-18

CMA (RC)

Pay and Allowances of Security

Guards. (HQ‟r 10 Corp)

180.660

5 DP-N-261/2017-18

CMA (PC)

Const /Repair & Maintenance

Work.

(GE‟s)

2,844.526

Total 3,744.123

Audit is of the opinion that CMA should have pointed out

that expenditure other than the specified purpose was a violation of

Government policy. Release of funds indicates failure of pre-audit check.


accounts authority replied that matter has been referred to concerned

Army authorities and reply is awaited.

The Draft Paras were reported to Ministry of Defence

during February to May, 2017. Ministry of Defence was requested vide

DGADS letter dated 28th

June and 1st October, 2018 for convening of

DAC meeting. DAC meetings were scheduled on 6th

, 22nd

and 29th

November, 2018 but postponed by the Ministry and could not be held till


Audit recommends regularization of the whole expenditure,

besides, adoption of remedial measures by MAG to strengthen pre-audit

system to avoid such lapses in future.

181


1.22.1 Double payment on account of repair and maintenance

- Rs 39.00 Million

According to Rule 6 (d) of Financial Regulation Volume-I,

1986 that Govt. revenues shall not be utilized for the benefit of a particular

person or a section of the community.

According to Rule 47 (e) of Financial Regulations Volume-

I, 1986, “most careful supervision over expenditure shall be exercised and

on no account shall money be spent simply because it is available”.

During Audit of accounts of CMA (PC) Peshawar, the

following irregularities were observed;

(i) An amount of Rs 24,000,000 was paid vide DV No. 148 of

10/2015 against a bill preferred by 14 Engineers Battalion Camp Area

Miran Shah to M/s Farukh & Sons Peshawar on account of repair and

maintenance of 24 check posts at North Wazirastan Agency (NWA) @

Rs.1.000 million per post. Whereas Rs 24,000,000 for the same posts was

again paid to another contractor M/s RWK Enterprises Peshawar vide DV

No. 121 of 12/2015, which resulted into double payment of Rs 24,000,000

against one and the same work.

(ii) An amount of Rs 15,000,000 was paid vide DV No.004 of

05/2016 of HQ 21 Div Arty Operational Area Malakand Division to M/S

Royal Business System on account of repair and maintenance of 15x

check posts / surveillance tower at Malakand Division @ Rs. 1,000,000

per post /surveillance tower, whereas Rs 15,000,000 for the same work

had also been paid to the same contractor vide DV No.27 of 06/2016

which resulted into double payment of Rs 15,000,000 for the same work.

The irregularities were pointed out by Audit in 2016-2017.

The accounts authorities replied that the objections had been forwarded to

unit/formation concerned and replies are awaited.

182

The Draft Paras were reported to Ministry of Defence

during 2017-18. Ministry of Defence was requested vide DGADS letter

dated 28th

June and 1st October, 2018 for convening of DAC meeting.

DAC meetings were scheduled on 6th

, 22nd

and 29th

November, 2018 but

postponed by the Ministry and could not be held till finalization of this

report.


besides, holding of inquiry for fixing responsibility on person(s) at fault


DP-N-175 & 373/2017-18

183

Inter Services Organizations

1.23 Un-authorized / Irregular Expenditure- Rs 5.463

Million

1.23.1 Un-justified payment to contractor on provisional

CRVs – Rs 5.463 Million

According to Rule- 105 of Financial Regulation (Army &

Air Force) Vol-1 1986, unless specially authorized by the Government no

cash advances should be made to contractors.

Rule-51 of Financial Regulation Vol-II 1986 stipulates that

it is not permissible to draw any money to prevent the lapse of amounts

provided in estimates.

While examining the accounts of AFIMH Rawalpindi, it

was observed that unjustified payment amounting to Rs 5,463,000 was

made to the contractor M/s ALM Enterprises for procurement of patient

lift (Qty-03) on provisional CRVs, whereas lifts were not delivered by the

contractor despite lapse of 09 months (April 2017 to January 2018) as

neither inspection nor physical installation of lifts took place till close of

audit on 31.01.2018.


The executive replied that the size of the lifts in AFIMH building was not

of international standards. It came into notice once the lifts were received

in Karachi Port. So the lifts ordered by M/s ALM Enterprises were to be

sent back to China for modification by the manufacturers. Lifts would

soon be installed as soon as they reach and inspection report would be

submitted accordingly. Reply advanced by the executive was itself

admittance of irregularities as no lifts were delivered/installed/inspected.


November, 2018 was

apprised that cheque for equivalent amount has been obtained from the

firm and will be deposited into Government treasury in case lifts are not

184

delivered by 31st January 2019. DAC directed that shipping documents

and latest deadline given to the firm be provided to Audit. No further


Audit recommends delivery and installation of the lifts,

besides, holding of inquiry for releasing payment without receipt of store


DP-N-21/2018-19

1.24 Recoverable / Overpayments- Rs 6.680 Million

1.24.1 Non-deposit of interest earned on public receipts - Rs

6.680 Million

As per Rule-2 of Financial Regulations, 1986 (Vol-II) “all

transactions to which any officer of Government in his official capacity is

a party, shall, without any reservation, be brought to account and all

moneys received by or tendered to Government officer which are due to,

or are required to be deposited with Government shall, without undue

delay, be paid, in full, into a Government treasury”.

While examining the accounts of Armed Forces Post

Graduate Medical Institute (AFPGMI) Rawalpindi, it was observed that a

private PLS Account No.0084602010003180 in the name of commandant

AFPGMI was being maintained at MCB Bank Chaklala Rawalpindi, for

the purpose of collection of training charges from the civilian doctors

against the courses being arranged in the Institute. Accordingly a sum of

Rs 6,679,519 received from the civilian doctors was kept in non-public

fund account, which needed to be deposited into Government Treasury

along with interest earned on these deposits.


The executive replied that amount received from civilian doctors as tuition

fee is distributed among various heads, as per GHQ instructions and

Government share is regularly deposited on TRs. Funds available in bank

account is a private fund belonging to the Institute and is not a public

185

money. Reply advanced was not acceptable, as money received on behalf

of Government was required to be deposited into Government treasury.


November, 2018 was

apprised that training charges are being collected and kept in private

account on the authority of GHQ ltr No. 79/489/R/DMS-1(IS), dated 17-9-

2008. DAC directed that GHQ ltr No. 79/489/R/DMS-1(IS), dated 17-9-

2008 alongwith relevant record of its approval from Competent Authority

be provided for audit scrutiny. However, no further progress was reported

till finalization of this report.

Audit recommends recovery of the whole amount along

with interest accrued and its deposit into Government Treasury, besides,


DP-N-118 & 128/2017-18

186

CHAPTER-2

Ministry of Defence Production

2.1 Introduction

Ministry of Defence Production deals with procurement,

indigenous production and manufacture of defence equipment and stores.

This Ministry negotiates agreements and Memorandums of Understanding

(MoUs) for foreign assistance or collaboration, loans for purchase of

military stores, technical knowledge and transfer of technology. It also

deals with export of defence products, marketing, and promotion of

activities relating to export of defence products and procurement and

research & development related matters of the defence sector. Under

Armed Forces Development Plan this Ministry has undertaken mega

projects like JF-17, Al-Khalid Tank, F-22P Frigate and AWACS Air

Refueling System as well as F-16 Block 52, Radar System etc.

2.2 Brief comments on the status of compliance with PAC's

directives.

The status of compliance of Public Accounts Committee

(PAC) directives for the Audit Reports from 1985-86 to 2017-18 discussed

during its various meetings held from July, 1992 to December, 2018 is

given below:-

Year Total

Paras

No. of Paras

Discussed

Compliance

Made

Compliance

awaited / Non

Complied

Percentage

of

Compliance

1 2 3 4 5 6

1985-86 15 01 0 01 0%

1986-87 12 0 0 0 0%

1987-88 17 13 01 12 7.69%

1988-89 14 05 0 05 0%

1989-90 14 02 0 02 0%

1990-91 10 02 01 01 50%

1991-92 15 04 0 04 0%

1992-93 15 03 0 03 0%

1993-94 26 04 0 04 0%

187

1994-95 22 0 0 0 0%

1995-96 28 12 03 09 25%

1996-97 91 63 02 61 23.80%

1997-98 55 05 0 05 0%

1998-99 0 0 0 0 0%

1999-00 86 33 03 30 9%

2000-01 140 48 34 14 70.83%

2001-02 44 27 10 17 37%

2002-03 0 0 0 0 0%

2003-04 01 01 01 0 100%

2004-05 08 08 04 04 50%

2005-06 27 06 05 01 83%

2006-07 07 06 02 04 33%

2007-08 08 08 08 0 100%

2008-09 16 03 03 03 100%

2009-10 13 01 0 01 0.00%

2010-11 Report not yet discussed



2013-14 7* 4 0 3 0.00%

2013-14 Not yet discussed by sub PAC up to 50 million



2016-17 2 2 1 1 50.00%


Total 693 261 78 185 29.73%

Ministry of Defence Production fully complied with only

78 PAC directives out of 261 which indicates that compliance of PAC

directives was very slow and the Principal Accounting Officer should take

necessary steps to expedite compliance of PAC‟s directives.

* Above 50 million paras discussed by PAC

188

Audit Paras

2.3 Unauthorized / Irregular payments – Rs 3,134.771

Million and US $ 0.117 Million

2.3.1 Irregular advance payment against provisional

CRVs/Inspection Notes – Rs 2,274.0 Million

According to paras 3-b (2 & 3) of Chapter XIII (Payments)

of Purchase Procedure and Instruction (2002 DGDP), if the stores are to

be inspected at firm‟s premises and dispatched by the firm by rail/road

,50%-80% of the value of accepted stores as stipulated in the contact be

paid by CMA (DP) on production of (a) Inspection Note and Invoice, (b)

an original copy of the Railway Receipt/Road Carrier Receipt under which

stores were dispatched to the consignee duly verified and endorsed by the

inspector. The remaining 50%-20% of the value of accepted stores, as the

case may be, will be claimed and paid on receipt of stores by the

consignees duly supported by the CRV.

Further, as per rule-51 of Financial Regulations Vol-II” no

money shall be drawn unless it is required for immediate disbursement. It

is not permissible to draw any money to prevent the lapse of amounts

provided in estimates”.

As per para 15 of contract clause “80% payment of the

value of consignment will be paid to supplier on receipt of bills dully

supported by CRV /Inspection note. The balance 20% will be paid to

supplier on submission of bill duly supported by the consignee‟s CRV.”

It was observed from the record held with Central

Ordnance Depot, Rawalpindi that 35 contracts valuing Rs 2,274,001,815

were concluded by DGP (A) for supply of different stores with delivery

period as noted against each & terms of payment of contract mentioned

above. It was revealed from verification of receipt of stores passed by

Inspection Agencies Form (in lieu of LP-386) that advance/provisional

CRV & Inspection Notes were prepared/ issued without actual receipt of

189

stores. Executive authorities were asked to provide DSR (Daily Record of

Stores) showing description of stores i.e. weight, bundles/bales, vehicle

number etc.), delivery challans, packing material list and issue of stores

vouchers to indenting units but the same were not provided till completion

of audit.


2017. The executive replied that firm had not yet delivered the contracted

stores. They also added that provisional advance CRVs & Inspection note

were issued on instruction of LS Branch CLS Secretariat vide letter dated

25 May 2015 to avoid lapse of funds. BG/CDRs of equal amount were

obtained. Quantity against advance CRVs had been recorded on the

accounts cards as dues (receivables). On the receipt of stores the same

would be issued to concerned units. Reply was not acceptable as the action

taken was not covered under the rules and resulted into blockade of public

money. Moreover, in reply dated 22-08-2017, the executive stated that the

store against only few contracts was delivered while supplies were still

waited.


November, 2018

directed to shift the Draft Para to DGP (A) / MoDP. No further progress

was reported to Audit till finalization of this report.

Audit recommends the following:

1. Matter needs to be investigated at appropriate level and

responsibility fixed for payment against advance CRVs and

Inspection Notes before actual delivery of stores against

contracts concluded by DGP (Army).

2. Provision of up-to-date position of actual receipt of stores

against each contract, inspection of said stores by ITD,

Chaklala and its further issuance to quarter concerned units.

3. Detail of imposition & recovery of LD charges with

reference to actual date of delivery of stores.

190

4. Recovery of PR and deposit in government treasury.

5. Regularization of the lapse for blockade of money.

6. Adoption of remedial measures to forestall recurrence of


DP-N-429/17-18

2.3.2 Purchase of imported vehicles beyond the quantity

approved by the Prime Minister – Rs 684.881 Million.

According to Government of Pakistan Cabinet Secretariat

Division letter No. 6-1(4)/07-MII dated 06-10-2007, imported vehicles

could only be purchased after prior approval of Prime Minister. Approval

of the Prime Minister for purchase of qty 508 Trucks (5 Ton 4x4) was

conveyed to GHQ vide Ministry of Defence letter No. 1/2015-16-D-21

(Budget) dated 8-03-2016.

During audit of Director General Procurement (Army)

Rawalpindi, it was observed that two contracts were concluded for

purchase of 647 imported Trucks (5 Ton 4x4) against the approved qty of

508 trucks. Thus, an unauthorized expenditure of Rs 684,881,465/- being

the cost of 139 additional trucks was incurred against the approval of

Prime Minister which needed regularization.


2016. The executive replied that being a procurement agency this

Directorate was bound to purchase the vehicles as per indenter‟s

requirement to meet the existing deficiencies. Additional 139 x vehicles

were purchased by DGP (Army) to make up the deficiency of Truck 5 Ton

4 x 4 out of balance amount left after purchase of vehicles at most

economical rates. The reply furnished by the executive was not justified as

139 additional vehicles were procured beyond the approval of the Prime

Minister.


April, 2018 was

apprised that ex-post facto sanction for purchase of additional vehicles

191

was under process. DAC directed to get the expenditure regularized. No


Audit recommends for holding an inquiry and fixing

responsibility for procurement of vehicles beyond approved quantity,

besides, regularization of the expenditure involved and adoption of

remedial measures to avoid such lapses in future.

DP-N-177/2017-18

2.3.3 Award of contract on fake bank guarantees - Rs 120.68

Million.

Clause 26 (a) of Contract No. 21-0663-4-0 dated 08-12-215

and 23 (a) of Contract No. 21-0611-4-0 dated 08-11-2013 states: “to

ensure timely and correct supply of stores, the firm will furnish an

unconditional Bank Guarantee from Schedule Bank of Pakistan on a

Judicial stamp paper”

A) Director General Procurement (ARMY) Rawalpindi

concluded four contracts bearing No. 21-0663-4-0, 21-0663-4-1, 21-0663-

4-2 and 21-0663-4-3 with M/s Rahat Marketing, Lahore for supply of

sugar during financial year 2015-16. M/s Rahat Marketing furnished four

Bank Guarantees from “Allied Bank Limited Main Branch Gulberg

Lahore” valuing Rs 99,269,870/- and the same were forwarded to

Controller Military Accounts, Defence Production, Rawalpindi after

confirmation by DGP (Army). At a later stage, on a reference from DGP

(A), the Allied Bank Limited in their letter No. ABL/BSG 2016 dated 28-

04-2016 categorically denied existence of “Main Branch Gulberg Lahore”

from whom these bank Guarantees had been provided by the above named

firm. It shows flaws in DGP (A)‟s verification process because of which

these Bank Guarantees were certified as genuine.

B) Similarly, another Contract No. 21-0611-4-0 dated 08-11-

2013 was concluded with M/s Supply Pro, Islamabad for Provision of

Sugar valuing Rs. 495,467,000/-. The Bank vide letter No. BIPL/

192

AIT/LHR/01 dated 03-02-2016, showed its inability to confirm genuiness

of the Guarantee No. PG000002857001/2697 dated 15-01-2015 of Rs.

21,500,000/- furnished by the firm. Thus the said Bank Guarantee

remained unconfirmed.

The irregularities were pointed out by Audit in December

2016. The executive replied that appropriate disciplinary action in the light

of prevailing rules would be initiated at the closure of the contract and

firms had already been informed accordingly.


April, 2018 was

apprised that one year embargo has been imposed on the firms besides

revision / improvement of procedure for processing of Bank Guarantees.

After detailed discussion it was agreed that implementation of revised

procedure will be got cross-checked from Audit in DGP (A)/ CMA (DP).


Audit recommends that BG verification procedure may be

got approved from the Ministry of Defence besides holding inquiry for

fixing responsibility if any lapse was made in acceptance of fake bank

guarantees. Moreover, appropriate action may be taken against firms

which provided them the said BGs.

DP-N-195/2017-18

2.3.4 Release of payment before delivery of store and non-

recovery of interest Rs 29.678 Million

Para 3(b)(1) to Defence Purchase Procedure and

Instructions (Revised 2002) stipulates that, “If the stores are delivered to

the inspecting agency for inspection and subsequently dispatched to the

consignee(s), 60%-80% value of the accepted stores as stipulated in the

contract, will be paid by CMA (DP) on production of Inspection

Note/Certificate issued by the inspecting agency after inspection and

acceptance of stores. The remaining 40%-20% will be paid duly supported

by CRV after receipt of stores by the Consignees”.

193

As per record held by Directorate General Procurement

(Army) Rawalpindi, a Contract Agreement No.14-757-00/Askari dated

28-04-2016 valuing Rs 26,977,822 was concluded with M/s Askari

Enterprises for procurement of spare parts for tank Al-Khalid. During

scrutiny of contract, it was observed that full payment was released to the

contractor in June, 2016 on the basis of Inspection Note and CRV dated

27-05-2016, showing that complete store was delivered by the contractor

and taken on charge. However, as per Askari Enterprises letter

No.AE/01/Spares dated 03-04-2017 and delivery challan dated 27-03-

2017, the store was actually delivered by the contractor on 27th

March,

2017. Thus, unauthorized payment was made on provisional CRVs and

against the established practice.

The irregularity was pointed out by Audit in April 2018.

The management replied that they are responsible for release of payment

to firm on receipt of Inspection Notes from inspection authorities and

CRVs from consignees and both documents are held in record. Reply was

not tenable as full payment was authorized for release to contractor in June

2016 but store was delivered by the contractor in March 2017.

The para was reported to Ministry of Defence Production

on 29th

October, 2018. The DAC was convened by the PAO on 4th

January

2019. However, minutes of the meeting could not be finalized till meeting

of external QCC.

Audit recommends investigation of matter through an

inquiry alongwith fixing of responsibility against the responsible for

issuance of provisional CRVs / Inspection note besides regularization

from Government of Pakistan.

DP-N-205/2018-19

2.3.5 Release of final payment without execution of work -

Rs. 22.612 Million.

194

According to Para-52 of Defence Services Regulations for

MES 1998, “No funds will be spent un-economically merely to prevent

them from lapsing.”

While examining the accounts of Garrison Engineer (DP)

ARF Kamra, it was observed from Contract Agreement bearing No.

CEDP-2017-57 that Admin approval was granted by Chairman PAC

Board Kamra vide letter No. ARF/1564/762/ Wks/PACB/1008/5/work

dated 25.05.2017 for Rs 23,770,000 for re-routing / improvement of U/S

sewerage pipe lines with UPVC pipelines and rehabilitation of Sewerage

Treatment Plant in domestic area ARF PAC Kamra. As per acceptance

letter, dates of commencement and completion of work were 29-05-2017

and 28-01-2018 respectively. However, final payment of Rs 22,612,423

was made to the contractor on 19.06.2017 vide CBI No. 209 i.e. just after

21 days from acceptance of tender without completion of work. Audit was

of the view that subject work was neither commenced nor completed on

19.06.2017 and payment was made just to avoid lapse of funds in violation

of Govt. rules, which needed regularization.

The irregularity was pointed out by audit in July 2017. The

executive authorities admitted that payment was made to the contractor to

avoid lapse of funds. The irregularity admitted by the executive needed

regularization.


April, 2018 pended the

draft para till verification of documents regarding completion reports of

work.

Audit recommends holding of an inquiry for making

advance payment without execution / completion of work and fixing of

responsibility besides implementation of the DAC directives and its


DP-N-243/2017-18

2.3.6 Non-provision of performance security - US $ 0.117 (M)

195

As per clause 8 of Contract Agreement No. 74/5001/IT-

Gen/6TD-1 & 6TD-2/2016/ CP-1/FE/Proc/UDE-18,4-59-K/KE-16 dated

17 Jun 2016, the supplier shall furnish a bank guarantee within 30 days of

signing of the contact.

While examining the accounts of Heavy Rebuild Factory

(T) HIT Taxila, it was observed that CA No. 74/5001/IT-Gen/6TD-1 &

6TD-2/2016/CP-1/ FE/Proc/UDE-18,4-59-K/KE-16 dated 17 Jun 2016

valuing US$. 2,344,802.49 was concluded with M/S UKRSPECEXPORT,

Islamabad for procurement of spares for Tank T-80UD and Tank Al-

Khalid. However, contractor failed to furnish 5% Performance Bank

Guarantee of US$. 117,240 (2,344,802.49 x 5%) which was against the

above cited provision.


Executive stated that reply would follow in due course of time. Audit was

of the view that non-provision of 5% Performance Bank Guarantee was a

clear violation of contract clauses.


October, 2018 was

apprised that due to low credit rating of Ukrainian banks, Pakistani banks

did not accept counter bank guarantees of Ukrainian banks. Due to non-

provision of PBG, terms of payment had been amended and early

shipment of stores was expected. DAC pended the draft para and directed

HIT management to submit the progress on monthly basis. No further

progress was reported till finalization of this report.

Audit recommends that the matter needs to be investigated

with respect to any favour extended to the firm. If required, Ministry of

Defence Production should formulate a policy in consultation with SBP to

safeguard interest of State.

DP-N-213/2017-18

2.3.7 Un-authorized expenditure on provision of kitchen

facility with single men barrack – Rs 2.920 Million

196

Para 115 of Defence Service Accommodation Scales, 2000

provides detail of a typical barrack and accommodation authorized therein.

Further, according to para 121 of Defence Services Accommodation

Scales, 2000 the number of Cook Houses and Dining Halls provided

should be the minimum compatible with the authorization of the unit and

should be constructed in as few blocks as practicable.

While examining the accounts of Garrison Engineer (DP)

Construction / Services Taxila, it was observed that contract agreement

No. TXL-2017-17 was concluded with M/S Shiba Associates at a cost of

Rs. 2,928,335/- for construction of kitchen for single men staff at HIT

Taxila Cantt, whereas no provision exists in Defence Services

Accommodation Scales - 2000 for construction of kitchen facility for

single men barrack. This resulted into unauthorized expenditure on

provision of kitchen facility with single men barrack of Rs. 2,920,541/-.


The executive replied that kitchen was constructed in phase -1 keeping in

view that the funds were available with the authority. As and when the

funds get available the other portions of cook house, i.e. stores, washing

area and dining hall will also be constructed to complete the requirements.

Reply was not tenable due to the fact that provision of kitchen facility for

single men barrack was not authorized under accommodation scales.


on 1st September 2018, The DAC was convened by the PAO on 4

th

January 2019. However, minutes of the meeting could not be finalized till

meeting of external QCC.

Audit recommends holding of an inquiry for fixing

responsibility on the person(s) at fault besides regularization and

verification of actual utilization of the building by Audit.

DP-N-157/2018-19

197


2.4.1 Overpayment to contractor due to non-deduction of

amount of taxes – Rs 332.050 Million

Under para-3 (a) of Sales Tax Special Procedure

(withholding) Rules-2007, in case the sales tax amount is not indicated on

the invoices, the recipient shall deduct sales tax at the applicable rate of

the value of taxable services from the payments due to the Services

provider. Moreover, as per purchase proposal of contract agreement No.

02/5126/IT-3073/2014-15/18/CP/Gun (F)/Proc, dated 7th

November 2014,

17% GST was included in the quoted rates. As per purchase proposal, the

contract was made on FOR basis. Moreover, according to note (d) under

schedule of stores of the said contract, the unit price “is inclusive of all

taxes”. Vide clause 22 (a) of the contract, only “custom clearance” was

HIT responsibility. Inland charges were also payable by the firm. On a

reference made by HIT, the FBR clarified vide letter No.

3(10)ST/L&P/2007(Pt) dated 20-12-2018 that the tax payable at import

stage should be deposited.

While examining the accounts of Gun Factory HIT Taxila,

it was observed that the above contract agreement valuing Rs 850,320,000

(including 17% GST), was awarded to M/s Trojans Islamabad for

procurement of 125 mm Tank Guns Barrels blanks quantity 120. The firm

claimed payment through HIT contingent bills which clearly disclosed that

the claims included 17% GST. Full payment i.e. Rs 850,320,000 was

released to the firm without deduction of GST inspite of the fact that bill

of entry attached with the bill showed that it had been got cleared by

Embarkation HQ Karachi without payment of GST (RS 166,237,000) by

the firm. Similarly, neither 15% custom charges (Rs 127,548,000) were

198

paid nor 4.5% income tax (Rs 38,260,000) deducted at source by the

CMA.

The irregularity was pointed out by audit in October 2016.

The executive replied that procurement of Barrel Blanks of 110 Tk Al-

Khalid-I Program (Qty-120) was contracted after approval of Chairman

HIT on 10th

July 2014. CP Branch BMP Directorate HIT was approached

for deduction of 17% Sales Tax from the firm. The reply furnished by the

management was not satisfactory because the purchase proposal was

inclusive of 17% GST. Therefore, payment without GST invoice was un-

authorized and needed recovery. Moreover, FOB process involving port

clearance as defence store in FOR contract was irregular, as it led to

clearance of imported stores without payment of any import charges or

deduction of income tax at the time of payment.


September, 2017

directed HIT management to conduct a court of inquiry and submit the

findings/recommendations within 3 months. The para was again discussed

by DAC in its meeting held on 09th

October, 2018. DAC directed HIT

management to submit detail of progress to MoDP within two months.

However, no further progress in regard to findings of the inquiry was


Audit recommends recovery of the amount from the firm

besides finalization of the inquiry, fixing responsibility and initiation of

disciplinary proceedings. Moreover, Audit recommends adoption of

process of port clearance though Embarkation HQ without payment of

duties in this case as well as in similar cases should be investigated.

DP-N-550/2016-17

2.4.2 Overpayment to contractors due to non-recovery of

price reduction – Rs 44.467 Million

As per para-7 (a) of Chapter-XVII (Inspection and

Discrepancies) of Purchase Procedure (Revised) 2002, Inspector, being a

199

specialist, will be responsible for inspection of all kind of defence stores

indented for purchase and assist the indenter ensuring that the terms of

contract as to the standard specifications and drawings are strictly

complied with, in letter and spirit. Where there be an event of sub-standard

stores being supplied involving Price Reduction (PR), then both the

inspector and the Services HQ will inform the Purchaser (Procurement

Agency) for doing so. Further, as para-7 (f) unless a different intention

appears from the terms of the contract, the Controller Military Accounts

(DP), shall deduct the amount of Price Reduction (PR) as notified on

inspection note of respective Services HQ and make the remaining

payment against the bill.

During Audit of COD Rawalpindi, it was observed that

CRVs were issued for payment from CMA (DP) Rawalpindi to the firms

and payment was made accordingly. As per inspection notes, inspection

authority imposed price reductions on total contracted store, which was

not recovered from the firms concerned. Thus, an amount of Rs

44,467,222/- was overpaid to the contractors, which needed immediate

recovery besides justification for acceptance of substandard stores.

The irregularity was pointed out by Audit in December,

2017. The executive stated that as per contract clause-4, being a

consignee, COD was only responsible for receipt of contracted stores.

Funds against contract were placed at the disposal of DGP (A) by the

indenter and recovery of price reduction was sole responsibility of DGP

(A) / CMA (DP) instead of consignee department.


December, 2018

directed to shift the Para to DGP (A). No DAC was held in MODP inspite

of reminders from Audit.

Audit recommends holding of inquiry to fix responsibility

and early recovery of the price reductions amount and its deposit into

government treasury, besides, initiation of remedial measures to avoid


200

DP-N-107/2018-19

2.4.3 Overpayment to contractor due to non-deduction of

income tax - Rs. 32.177 Million

According to Government of Pakistan Regional Tax Office

Rawalpindi letter No.MAC-III/2016-17/31 dated 03-08-2016, Income Tax

@ 4.5% is required to be deducted while making payment to contractor.

According to para 18 (Sl No. 9 & 10) of Special Conditions

of the contract, type of contract was FOR (Indigenous) and country of

origin was indigenous (Pakistan).

As per record held with Directorate General Procurement

(Army) Rawalpindi, a Contract Agreement No. 21-657-7-1 dated 31-5-

2016 valuing Rs 715,050,000/- was concluded with M/S ARUS

International, Faisalabad for procurement of 3,150 Metric Ton Dall Mash.

However, it was observed that income tax amounting to Rs 32,177,250/-

(Rs 715,050,000 X @ 4.5%) was not deducted from the payment made to

contractor, which needed recovery.


The executive replied that recovery of income tax from firm is the

responsibility of CMA (DP) Rawalpindi which makes payment after

deduction of all kinds of taxes and other recoveries. However, Directorate

General Procurement (Army) had already approached CMA (DP), Rwp to

provide recovery detail of Income Tax. Reply of Directorate General

(Procurement Army) Rawalpindi was found unsatisfactory because as

confirmed from CMA (DP) record Income Tax was not deducted.

The para was reported to MoDP on 29th

October, 2018.

The DAC was convened by the PAO on 4th

January 2019. However,

minutes of the meeting could not be finalized till meeting of external

QCC.

201

Audit recommends investigation into the matter to fix

responsibility on the person(s) at fault besides immediate recovery of the

amount involved and its verification by Audit.

DP-N-206/2018-19

2.4.4 Non recovery of risk & expense amount Rs 7.284

Million

According to para I of Chapter XI of Purchase Procedure

and Instructions (PP & I) 2002, specified delivery period is the essence of

the contract. All the deliveries must be completed by the specified date.

Upon failure of supplier to deliver the store within the stipulated time

frame the purchaser shall be entitled: -

a) To cancel the contract.

b) To purchase elsewhere stores not delivered at the risk and

expense of the supplier

c) To impose/recover liquidated damages @2% per month up

to a maximum 10% against the unsupplied store.

While examining the accounts of Directorate Procurement

(Navy) Rawalpindi, it was observed that a contract No.525021 /R511/

330278 dated 22-05-06 was concluded with M/S Sara Corporation

Karachi, for procurement of clothing items, at a cost of Rs. 19,582,000

with delivery period up to 31-10-2006. However, the contractor failed to

supply the store, and later on contract was cancelled on firm‟s Risk &

Expense in October 2012. Thereafter, another contract No. 525021 /R511/

330278/A dated: 28-12-15 was concluded with M/S Excel Tex Industries,

Karachi at a cost of Rs 14,041,544.40 at Risk & Expense of the defaulting

contractor. However, recovery of Risk & Expense amount of Rs 7,283,678

from defaulting firm was still outstanding.


The executive replied that contract was cancelled on firm‟s Risk &

202

Expense in October 2012. CMA (DP) was requested to recover the amount

from other bills of the firm and bank guarantee amounting to Rs. 979,100/-

was extended and adjusted against risk and purchase amount. Reply was

not acceptable because no recovery of risk and expense amount was made

and no action was taken against the firm. Furthermore, as per verification

by audit, bank guarantee expired on 31/05/2010 and not encashed /

forfeited well in time.


October, 2018 pended

the draft para with the directions to blacklist the firm besides a “Court of

Inquiry”. No further progress was reported to Audit till finalization of this

report.


besides, blacklisting of the firm and early finalization of court of inquiry

and fixing responsibility.

DP-N-376/2017-18

2.5 Loss to State – Rs 85.532 Million, US $ 0.617

Million and EURO 0.096 Million

2.5.1 Non-acceptance of lowest bid - Rs 72.602 Million.

According to Rule 38 of the Public Procurement Rule 2004,

“the bidder with the lowest evaluated bid, if not in conflict with any other

law, rules, regulations or policy of the Federal Government, shall be

awarded the procurement contract, within the original or extended period

of bid validity”.

While examining the accounts of HRF (T) Taxila, it was

observed that tender inquiry No. 70/5001/IT-3019/6TD-2/2013/CP-

1/FE/Proc dated 4/9/2013, regarding procurement of spares for rebuild of

12 x 6TD-2 engine (85 items) was published in the newspaper and on

PPRA website. Technical & Commercial Quotations were received from

three firms, which were technically accepted. M/S Business Associate

submitted lowest bid of US $ 103,924.87 whereas M/S USE quoted US $

203

837,278.00 for all 85 items required. Consequently, M/S Business

Associate being the lowest evaluated bidder requested vide letter dated:

19-12-2013 that it would furnish 05% Bank Guarantee within 30 days of

the signing of contract & OEM Certificate up to 5th

January 2014 due to

holidays. However, his request was not acceded to and bid of M/S

Business Associate was subsequently rejected and the contract was

awarded to 2nd

bidder (M/S USE Islamabad) with a difference in bid value

of Rs 72,601,960 (US $ 837,278 - US $ 103,924.87 = US $ 733,353 x Rs.

99) on the grounds that M/S Business Associate had not provided earnest

money and OEM certificate in time. Furthermore, no evidence regarding

deposit of earnest money by M/S USE (being un-registered with HIT) was

found in the record. Due to non-acceptance of lowest bid the state had to

bear additional cost of Rs 72,601,960, which could have been avoided by

considering the request made by M/s Business Associates (1st lowest) or

re-bidding due to huge difference in bid value of 1st & 2

nd lowest bidders.


The executive replied that reply would follow in due course of time. Audit

suggested that matter be investigated at appropriate level beside recovery /

regularization action.


October, 2018 directed

HIT Board to hold a “Court of Inquiry” and submit the

findings/recommendations duly approved by Chairman, HIT to MoDP

within one month. No further progress was reported to Audit till

finalization of the report.

Audit recommends implementation of the

recommendations of the DAC besides regularization of the extra

expenditure.

DP-N-276/2017-18

2.5.2 Non-receipt of stores from defaulting contractor US $

0.361 Million.

204

As per clause No. 17 of Contract Agreement No.

225/5001/IT-Gen/2009/CP-1/Proc dated 27 Jun 2009, “If the Supplier fails

to deliver the stores within the period prescribed, then on the expiry of 21

days (grace period) the Purchaser shall be entitled at his option to cancel

the contract without any notice and /or purchase from elsewhere stores not

delivered, at risk and expense of the supplier. The Supplier shall also be

liable for any loss which the Purchaser may sustain on this account but

shall not be entitled to any gain on repurchase”.

While examining the accounts of Heavy Rebuild Factory

(T) HIT Taxila, it was observed that CA No. 225/5001/IT-Gen/2009/CP-

1/Proc dated 27 Jun 2009 valuing US$ 1,768616.82 plus 6% freight

charges was concluded with M/S “PROGRESS” Ukraine for procurement

of 221 different spares. The supplier refused to supply 34 outstanding

items valuing US$ 360,902.84/- due to increase in cost of material &

components vide its letter No. USE/Pk/568 dated 24 Mar 2017. However,

neither the contact was cancelled nor risk & expense purchases were

made.


The executive replied that 34 items of stores were still outstanding. Firm‟s

representative had suggested during meeting held on 10th

April 2017 to

short close the contract after recovering 30 % pre-payment against balance

34 x items from other contracts of HIT Taxila. Firm‟s suggestion was not

accepted by user project. Therefore, the firm was advised to adhere to the

contractual obligations and provide balance stores on priority against

subject contract vide last reminder issued to firm dated 30 May 2017.

Reply was not accepted as neither 34 outstanding items were provided by

the supplier nor procured from elsewhere at the risk and expense of

supplier.


October, 2018 was

apprised that Letter of Credit and Delivery Period have been extended up

to May 2019 & March 2019 respectively with imposition of 5% LD

charges and 5% Performance Bank Guarantee will be deducted from the

205

forthcoming supply. DAC directed HIT for provision of revised reply to

audit and verification by audit. No further progress was intimated till


Audit recommends expeditious supply of the outstanding

items and recovery of the LD imposed by the management.

DP-N-242/2017-18

2.5.3 Blockade of public money due to non-fulfillment of

contractual obligation by the firm - EURO 96,940.61

According to serial-5 of Notes of Schedule of Store of

contract No. PACB/751/310308082/JF-17/0398-A/P-2, dated 28-06-2008

(AMF) Installation and Commissioning at AMF would be free of charge

by the OEM or its representative along with operational acceptance after

commissioning.

While examining the accounts of PAC Board Kamra, it was

observed that CA No. PACB/751/310308082 /JF-17/0398-A/P-2 dated 28-

06-2008 (AMF) was concluded with M/S Shaheen Aero Traders

Islamabad for the provision of one Spectrum Analyzer at a total cost of

Euro 96,940.61. The supplier delivered the contracted store on 28-10-

2013. However, installation and commissioning at AMF was not done by

the firm. Resultantly the equipment remained un-operational for last four

years.

The irregularity was pointed out by audit in July 2017, the

executive replied that the equipment was delivered by the firm without

provision of accessory/option FSU-B4, which was subsequently delivered

in Aug 2015 but could not be installed due to provision of wrong

accessory. The replacement of the accessory is under process and expected

in the near future. Upon the receipt of correct accessory the outstanding

installation / commissioning will be completed by the supplier. Further in-

lieu of outstanding commissioning of delivered store, 10% FOB payment

Euro 8,588.72 was withheld by AMF. The reply of the executive was not

206

tenable because timely and free installation and commissioning was the

responsibility of the firm.


October, 2018 pended

the para and directed PAC Board, Kamra to blacklist the firm and submit

the progress of the case to MoDP. No further progress was intimated till


Audit recommends implementation of the DAC

recommendations and initiation of corrective measures to avoid such

lapses in future.

DP-N-401/2017-18

2.5.4 Non-recovery of cost of rejected stores from firm US $

0.099 million

According to clause 7 ( C ) of C.A No. 165/5001/IT-Gen/

6TD-I/2013/CP-1/FE/Proc/USE-18-4-114-K/KE-13 dated 26 Jun 2013,

the supplier shall replace/repair the defective/damaged stores free of cost

at consignee‟s end within three months, starting from the date of

defect/reject report signed. Further under clause 7 (a) para-2 of Annex E

of the said Contract Agreement, “in case of failure to replace the defective

stores as stipulated in the contract the supplier under takes to refund the

relevant cost in the currency / currencies in which received plus freight

charges”.

During audit of HRF (T) for the financial year 2016-17, it

was observed that a contract agreement No. 165/5001/IT-Gen/ 6TD-

I/2013/CP-1/FE/Proc/USE-18-4-114-K/KE-13 dated 26 Jun 2013 valuing

US$, 2,401,113.28 was concluded with M/S UKRSPECEXPORT

Islamabad for procurement of different spares. During scrutiny of contract,

it was observed that 28 spare parts out of 390 valuing US$. 99,832.11/-

were found rejected as evident from HRF (T) letter no. 1711/T-

80UD/165/Receipt/-S dated 3 Feb 2017 and HIT BMP Dte (CP Br) letter

no. 165/5001/IT-Gen/6TD-I/2013/CP-1/ /Proc dated 22 Mar 2017.

207

However, the rejected items were neither replaced by the supplier nor cost

was recovered. This resulted into non-recovery of cost of rejected stores of

US$ 99,832.11.


The executive stated that firm had already been asked for replacement of

rejected items.

The para was discussed by DAC in its meeting held on 09th

October, 2018. DAC was apprised that the firm is agreed for the

replacement of store and 2 out of 28 items have been replaced and

remaining store will be replaced by the end of 2018. DAC pended the draft

para till completion of the contract/replacement of the rejected stores. No

further progress was intimated till finalization of the report.

Audit recommends early replacement or recovery of the

cost of rejected stores from the firms besides adoption of remedial


DP-N-300/2017-18

2.5.5 Non-replacement of rejected store / non-cancellation of

contract on firm’s risk & expense - Rs 9.234 (M) & US $

0.0766 (M)

According to para 2 of Annexure-C to Clause No. 10 (2) of

Contract No. 27/2015-16/5041/IT-3004/CP/HRF(M)/Proc dated 31-03-

2016 "In case of failure to replace the defective store free of cost within

two months, firm will refund the relevant cost on FOR Taxila in the

currency / currencies in which received and the purchaser shall have right

to purchase the vehicle declared defective at their risk and expense."

Further, according to Clause No. 18.2 of Contract No.

69/2015-16/5041/IT-3010/CP/HRF(M)/Proc dated 19-05-2016

"Replacement against rejected / defective stores will be provided by the

supplier free of cost within two months of detecting the discrepancies /

issue of inspection report."

208

While examining the accounts of Marketing &

Procurement (M&P) Directorate HIT Taxila, it was observed that 1,056

units of "Wheel Solid" for rebuild of APCM 113 delivered by the firm

concerned i.e., M/s Paradigm Technologies International Islamabad

against the aforementioned contracts were checked, inspected by the user

and rejected as evident from C.P Branch letter No. 69/14-15/5041/IT-

3051/CP/HRF (M)/Proc dated 04-08-2017. The firm failed to replace the

defective / rejected stores valuing Rs. 9,233,600 & USD 76,664 within the

prescribed period as mentioned in the above cited contract clause. The

amount of objected stores needed to be recovered / refunded to

Government.


The executive stated that firm would be approached for replacement of

rejected stores. Reply was not acceptable as it did not justify the delay in

replacement of the rejected stores as per contract clause.


on 15th

August, 2018, The DAC was convened by the PAO on 4th

January


of external QCC.

Audit recommends early replacement of rejected stores and


DP-N-40/2018-19

2.5.6 Non-replacement of rejected store. US $ 0.080 Million

As per Para 2 Annexure-B, DPL-15 of Purchase Procedure

(Revised 2002) the supplier undertakes that “in case of failure of supplier

to replace the defective stores free of cost within three months of reporting

by the consignees, we will refund the relevant cost and the purchaser shall

have the right to purchase the stores declared defective at his risk and

expense from elsewhere”.

209

While examining the accounts of Revolving Fund PAC

Board Kamra, it was observed that an amount of US $ 80,072.23 was paid

to contractors against the supply of store which was found defective by the

inspecting authority. However, replacement of same was not made despite

passage of considerable time.


2017. The executives replied that contracts were concluded with various

firms/suppliers. All stores except the rejected one was delivered. Suppliers

were being regularly approached to get the contracts materialized. Reply

was not agreed as process regarding replacement of rejected store needed

to be completed immediately which was not done. Therefore, payments

already received need to be recovered in the light of supplier‟s warranty.


on 11th

July 2018. The DAC was convened by the PAO on 4th

January


of external QCC.

Audit recommends early supply of rejected stores and


DP-N-548/2017-18

2.5.7 Non-recovery of tools/tool holders issued to contractor

as advance samples - Rs. 3.696 Million.

According to Rule 1 (b) of FR Vol-II, 1986 “the

Government servant shall also be held personally responsible for any loss

sustained by Government through fraud or negligence on his part.

While examining the accounts of APC Factory HIT Taxila,

it was observed that contract No. 213/10/5061/IT-Gen/CP/P-881/Proc

dated 20-06-2010 was concluded with M/s. Gantner Pakistan Lahore for

procurement of tools and tool holders for HBM TC-40 CNC machine.

Against this contract, 21 sample tools/tool holders worth U.S $ 35,209

were issued to the said contractor on demand as evident from BMP Dte

210

letter No. 213/10/5061/IT-Gen/CP/APC/Proc dated 19-07-2013. The said

samples have however, not been returned by the firm concerned even after

lapse of a considerable period. The omission resulted into a loss of Rs.

3,696,945/- (US $ 35,209x@Rs. 105/each).


The executive authorities stated that unserviceable samples were issued to

firm, which was being approached to return the same. The executive‟s

reply was not convincing because the firm vide letter dated 27-07-13

refused to return the samples on the plea that these were consumed.


on 31st July, 2018. The DAC was convened by the PAO on 4

th January


of external QCC.

Audit recommends recovery of cost of the sample and its


DP-N-32/2018-19

211

Annexure-I

MefDAC Paras (DGADS North) 2017-18 and 2018-19

Pakistan Army

(Rs. In million)

S

No.

DP

No.

Year Unit /

Formation

Subject Amount

1. 99 2017-18 MF Bolan Un-authorized purchase of

tractors and issuance to

military farm bolan, Okara

over & above authorization

1.118

2. 100 2017-18 MF Bolan Un-authorized payment to

contractor

7.476

3. 101 2017-18 CMH Sialkot Un-authorized conclusion of

contract

20.732

4. 102 2017-18 CMH Sialkot Loss to state due to less

recovery of income tax

6.147

5. 103 2017-18 CMH Okara Less deduction of income tax 1.262

6. 104 2017-18 CMH Okara Fixation of pay on last pay

drawn instead of initial pay

scale on re- employment

1.167

7. 105 2017-18 CMH Okara Advance payment made to

contractor

8.920

8. 119 2017-18 ACE (A) 10

Corps

Rawalpindi

Un-authorized conclusion of

contract

59.816

9. 120 2017-18 GE (Const-II)

Rawalpindi

Un-authorized construction

work

303.878

10. 124 2017-18 GE (A)-II

Gujranwala

Un-authorized advance

payment

51.950

11. 127 2017-18 Station HQr

Tarbela

Non surrender of budget 1.760

12. 131 2017-18 MF Okara Irregular payment to

contractor

391.040

13. 132 2017-18 701 Regt

W/Shop Okara

Premature overhauling of

vehicles

2.150

14. 133 2017-18 GE (A)Svs

Mangla

Un-authorized release of

advance payment

101.491

212

15. 141 2017-18 MF

Gujranwala

Payment to contractor without

actual execution of work

14.357

16. 142 2017-18 MCE Risalpur Non-recovery of government

charges from cadets

2.441

17. 146 2017-18 GE(A) Kohat Overpayment to contractor 5.817

18. 147 2017-18 CMH Multan Irregular purchase made

violating policy

21.029

19. 154 2017-18 MF Jhelum Non-recovery of dues on

account of dairy produce

(credit, cash and coupons)

21.230

20. 155 2017-18 GE Const-II

Rawalpindi

Irregular expenditure on

operational and emergency

works

2425.000

21. 182 2017-18 GE (Svs)

Sialkot

Un-authorized payment to

contractor

3.150

22. 183 2017-18 GE (A)-II

Gujranwala

Non-production of sales tax

invoice

4.032

23. 184 2017-18 GE (A) Jhelum Overpayment to contractor

due to taking excess area of an

item of work

2.197

24. 185 2017-18 GE JSHQ

Chaklala


contracts in piece meal

24.154

25. 187 2017-18 DRO Sahiwal Violation of PPRA rules 220.989

26. 200 2017-18 GE (A) Jhelum Un-authorized expenditure on

construction works

267.908

27. 201 2017-18 GE (A-1)

Rawalpindi

Un-authorized expenditure by

splitting

20.384

28. 212 2017-18 GE(Army)

Abbottabad

Irregular conclusion of

contract in piecemeal

70.915

29. 214 2017-18 District

Remount

Office Sahiwal

Excess consumption of

ration item

8.215

30. 221 2017-18 GE

(Army)PMA

Kakul

Un-authorized expenditure on

construction works due to

non-observance of PPRA rules

1114.028

31. 222 2017-18 GE (Army)

Abbottabad

Un-authorized payment due to

excessive area in SM barrack

1.530

32. 224 2017-18 GE (Army)-I

Rawalpindi


contract due to non-

advertising on PPRA website

175.811

33. 225 2017-18 GE (Army)-I

Rawalpindi

Un-authorized expenditure by

splitting the requirement

11.879

213

34. 226 2017-18 GE (Army)

Abbottabad

Non-recovery of electric /

water / sui gas charges from

FC kpk recruits

1.340

35. 227 2017-18 GE (Army)

Tarbela

Un-authorized award of

contract

8.418

36. 228 2017-18 GE (Army)

Tarbela

Un-justified advance payment

made to contractor

241.026

37. 247 2017-18 GE (Army)Svs

Peshawar

Less recovery of income tax 1.782

38. 259 2017-18 MF

Gujranwala

Overpayment to contractor 1.376

39. 271 2017-18 GE (Army)

Jhelum

Non-recovery of CGI sheets

and iron from contractor

1.994

40. 272 2017-18 41 Baloch

Regt Sialkot

Expenditure incurred by

splitting up financial powers

2.000

41. 273 2017-18 CMH Okara Non deposit of electricity

charges

2.797

42. 274 2017-18 GE (Army)

Abbottabad

Un-authorized execution of

work beyond the authorized

scale

22.061

43. 279 2017-18 District

Remount

Office

Sahiwal

Mis-procurement due to

violation of PPRA rules

318.666

44. 280 2017-18 Military Dairy

Factory Renala

Un-authorized local purchase

of fresh milk

1723.173

45. 281 2017-18 GE (Army)

Svc Mangla

Loss to state due to less

recovery of electricity charges

from consumers

111.837

46. 282 2017-18 Remount

Depot

Sargodha


contracts

2.272

47. 288 2017-18 GE (Army)

Tarbela


contracts in piecemeal

206.035

48. 290 2017-18 GE (Army)-I

Rawalpindi

Loss to state due to excess

expenditure

1.356

49. 294 2017-18 CMH Mardan Mis-procurement of store due

to non-observance of PPRA

rules

5.807

50. 295 2017-18 CAD Havelian Non deposit of cost of brass

scrap from POF Wah

54.441

214


Factory Renala

Blockage of public money due

to purchase and retention of

furnace oil without necessity

24.800


Factory Renala

Un-authorized issuance of

cheques to the incharge of

MCCs

1003.463

53. 299 2017-18 GE (Army)-I

Gujranwala

Overpayment to contractor

due to an item of work not

provided for in the drawing

1.406

54. 301 2017-18 19 CGT Co.

Rawalpindi

Undue favor to

owners/contractors

due to hiring of old model

vehicles

4.524

55. 304 2017-18 GE (Army)

Svc Mangla

Un-authorized expenditure out

of united nations re -

imbursement account

11.108

56. 309 2017-18 GE (Army)

Jhelum


due to taking excess area of an

item of work

1.256

57. 312 2017-18 GE (Army)-II

Gujranwala

Loss to state due to an un-

authorized item of work

3.030

58. 313 2017-18 MF

Gujranwala

Un-authorized purchase of

buffaloes beyond financial

powers and unjustified

issuance of fresh milk

11.895

59. 314 2017-18 MF Jhelum Conclusion of contracts

beyond financial power

63.453

60. 315 2017-18 PMA Kakul Un-authorized expenditure on

procurement by non-

advertising on PPRA website

115.544

61. 325 2017-18 DASB Kasur Non-provision of auditable

documents

62. 326 2017-18 POL Depot

Kharian

Non provision of lab reports to

audit regarding pol

327.192

63. 330 2017-18 GE (Army)

Svs Peshawar


payment to PESCO for MES

feeder

8.111

64. 333 2017-18 Station HQr

Multan

Non-Production of auditable

record

--

65. 334 2017-18 GE (Army)

Rawalpindi


215

66. 337 2017-18 501 C/W EME

Rawalpindi

Un-authorized expenditure

due to holding of excess

establishment

16.167

67. 338 2017-18 ACE (A) 11

Corps

Peshawar

Un-authorized expenditure in

piece meal

16.412

68. 342 2017-18 GE (A) Svs

Peshawar

Un-authorized payment for

new construction

1.716

69. 348 2017-18 PWS Bhimber Un-authorized expenditure on

abnormal repair

9.025

70. 350 2017-18 GE (A)-I

Kharian

Irregular purchase of store 13.314

71. 352 2017-18 GE (Svs)

Lahore

Irregular payment on account

of un - authorized work

6.838

72. 353 2017-18 GE(A) Svs

Mangla

Un-authorized payment

to IESCO on account of

further tax.

7.734

73. 356 2017-18 CMH

Gujranwala

Un-authorized enhancement of

contract

15.909

74. 358 2017-18 206 Svs Sector

Peshawar

Un-authorized expenditure 6.047

75. 359 2017-18 PMA Kakul Un-authorized payment of

messing allowance

5.276

76. 366 2017-18 MSD

Sargodha

Non-replacement of rejected

store by the firm

3.800

77. 371 2017-18 HQr 11 Corps

Peshawar

Un-authorized payment of pay

and allowances to the officers

posted in DHA

28.653

78. 372 2017-18 ACE(Army)

10 Corps

Rawalpindi


on abnormal repairs

63.970

79. 380 2017-18 GE (A) Kohat Un-authorized advance

payment to contractor

75.411

80. 382 2017-18 GE (A)

Sargodha

Advance payment made to

contractor

4.768

81. 383 2017-18 GE (A) Jhelum Un-authorized expenditure on

provision of first class soft

wood

2.142

82. 386 2017-18 GE (A) Svs

Peshawar

Non recovery on account of

excess consumption of

electricity charges

6.541

216

83. 387 2017-18 GE (A) Svs

Rawalpindi



without supporting

documents

40.009

84. 389 2017-18 POL Depot

Kharian Cantt

Un-authorized issuance of

unfit MS-87

4.453

85. 393 2017-18 Remount

Depot Mona


contract

301.788

86. 394 2017-18 HQ AAD

Command

Rawalpindi

Un-justified expenditure

without supporting documents

10.000

87. 395 2017-18 ACE (A) 10

Corps

Rawalpindi


contracts

46.790

88. 396 2017-18 Ordnance

Depot

Nowshera

Non pursuance of long

outstanding fraudulent

withdrawal of public money

0.600

89. 397 2017-18 GE CMH

Gujranwala

Loss due to non-conclusion of

contract with lowest bidder

1.136


Factory

Renala

Non recovery of risk &

expense amount from

defaulting contractor

4.200

91. 404 2017-18 GE Const-II

Rawalpindi

Non finalization of contracts

within stipulated time

289.440

92. 405 2017-18 GE (A)Svs

Lahore Cantt

Loss to state due to allotment

of accommodation free of cost

1.396

93. 406 2017-18 GE (A)Svs

Lahore Cantt

Un-authorized usage of

bunglows/ MOQ,s as guest

rooms without re-

appropriation

6.963

94. 407 2017-18 GE (A)Svs

Lahore Cantt


of married accommodation

other than defence paid

1.279

95. 408 2017-18 Remount

Depot

Sargodha



15.909

96. 409 2017-18 Headquarter

11 Corps

Peshawar


pol due to holding of vehicles

in excess of authorization

12.269

97. 410 2017-18 CMH

Gujranwala

Loss due to holding of surplus

staff

27.971

217

98. 411 2017-18 GE (A)

Sargodha

Un-authorized payment of

adjustment charges to SNGPL

in addition to monthly bill

9.784

99. 415 2017-18 GE (A)

Tarbela

Extra expenditure due to

provision of expensive

specification in SM barrack

4.657

100. 416 2017-18 GE (A)

Abbottabad

Non-accountal of store

arranged by the contractor

2.594

101. 417 2017-18 District

Remount

Office

Sahiwal

Advance payment to

contractor & non-production

of auditable documents

176.669

102. 419 2017-18 (ACE) A 11

Corps

Peshawar,

Non-deposit of bank guarantee

by the contractors

55.261

103. 420 2017-18 GE (A)Svs

Peshawar,

Un-authorized release of final

payments to contractors before

completion of works

16.472

104. 424 2017-18 GE (A)

Abbottabad

Non-recovery of electric

charges from army unit

4.118

105. 425 2017-18 GE (A) Multan Overpayment to contractor 4.317

106. 428 2017-18 MF Sargodha, Casualties of animals caused

due to negligence of farm

authorities

6.200

107. 430 2017-18 Remount

Depot

Sargodha,


due to excess quantity of an

item of work

2.420

108. 431 2017-18 GE (A-I)

Okara

Un –due benefit to contractors 1.225

109. 433 2017-18 HQ 30 Corps

Gujranwala,

Non observance of public

procurement rules

10.000

110. 434 2017-18 HQ AAD

Command

Rawalpindi,

Irregular payment made

through cash instead of

cheques

1.300


Factory Okara


of machines in violation of pp.

rules

1.440

112. 437 2017-18 MF

Gujranwala

Loss to state due to casualties

of animals caused due to

negligence of farm authorities

1.400

113. 440 2017-18 GE (A-I)

Gujranwala


of store

27.538

218

114. 441 2017-18 GE(A) II

Okara


115. 442 2017-18 HQ 30 Corps

Gujranwala


of accommodation free of cost

2.208

116. 443 2017-18 HQ 30 Corps

Gujranwala

Non deposit of rent into govt.

treasury

56.799

117. 445 2017-18 MF Okara Un-authorized conclusion of

contract for supply of loose

white bhoosa

22.900

118. 447 2017-18 HQ 12 Div

Murree

Non recovery of house rent

allowance

0.903

119. 452 2017-18 GE(A) Jhelum Non recovery of outstanding

electricity charges

4.591

120. 454 2017-18 702 PWS

Bhimber

Infructuous expenditure on

replacement of meters

5.501

121. 456 2017-18 Punjab

Regimental

Centre

Mardan

Loss to state due to non-

deposit of rent of commercial

projects

5.156

122. 466 2017-18 MF Sargodha Wasteful expenditure on dry

animals during the period July

2015 to June, 2016

8.719

123. 472 2017-18 POL depot

Kharian

Un-authorized charge off pol

leaked from packed stock

2.950

124. 474 2017-18 HQ AAD

Command

Rawalpindi

Un-authorized payment of kit

items

1.472

125. 475 2017-18 CMT & SD

Golra

Rawalpindi,

Mis-procurement due to non-

observance of public

procurement rules

7.271

126. 478 2017-18 Additional

Garrison

Engineer (A)

Risalpur

Less recovery of income tax

from non-filers

1.738

127. 479 2017-18 Garrison

Engineer

(Army)

Peshawar

Non-accounting of store


4.966

128. 484 2017-18 702 PWS

Bhimber



1.141

219

129. 485 2017-18 GE (A)-I

Kharian

Un-due benefit to contractor

due to change of specifications

1.789

130. 487 2017-18 HQ Signal

Training

Centre &

Records

Kohat


131. 488 2017-18 HQ 12 Div

Murree


HMT charges

2.757

132. 489 2017-18 Garrison

Engineer

(Const-I)

Rawalpindi



42.903

133. 494 2017-18 11 Corps

Peshawar


deposit of government share

against commercial projects

11.805

134. 495 2017-18 Remount

Depot Mona


contract

16.081

135. 496 2017-18 Ordnance

Depot

Nowshera

Mis-procurement of store due

to non-advertisement in

newspapers

7.671

136. 497 2017-18 Military Farm

Khyber Okara


contract on lump sum basis

3.000

137. 501 2017-18 Garrison

Engineer

(Const-I)

Rawalpindi

Overpayment to contractor for

applying contractor‟s

percentage on market rate of

items

5.590

138. 503 2017-18 Garrison

Engineer

Tarbela


due to conclusion of contracts

at higher percentages

2.317

139. 504 2017-18 Garrison

Engineer (A)

Hospital

Rawalpindi

Non recovery of outstanding

amount

22.865

140. 512 2017-18 701 Pak

Works Section

Muzzafarabad

Un-authorized splitting of

necessity

35.202

141. 513 2017-18 Para Training

School (PTS)

Peshawar

Un-authorized sanction of

expenditure beyond financial

power,

42.800

142. 515 2017-18 Headquarter

11 Corps

Peshawar


observance of revenue rates

issued by FBR

14.905

220

143. 516 2017-18 Remount

Depot

Sargodha


works contracts without

adopting MES schedule of

rates

28.238

144. 521 2017-18 Garrison

Engineer

(Army)

Construction

Kakul

Less recovery of income tax

from non-filers

34.680

145. 523 2017-18 Garrison

Engineer (A)

Construction–

II Rawalpindi


construction of soldier flats by

splitting up of work

71.487

146. 524 2017-18 GE (Army)-II

Lahore

Non finalization of contract

agreement

6.772

147. 525 2017-18 Garrison

Engineer

(Army)

Tarbela


account of low power factor

penalty

2.000

148. 526 2017-18 477 Army

Survey Group

Engineers

Rawalpindi

Un-justified issuance of CRV

in advance and release of

100% payment for entire

quantity,

54.818

149. 527 2017-18 MH

Rawalpindi

Loss to state due to purchase

of medicines at higher rates,

11.877


Gujranwala

Irregular purchase of 236 ton

commercially prepared

concentrated cattle feed (cat-a)

beyond financial powers

7.788

151. 543 2017-18 GE (Const-I)

Rawalpindi


contracts in violation of public

procurement rules

4.679

152. 545 2017-18 Garrison

Engineer (A)

Construction

Kakul

Non accounting of stores

arranged by the contractor,

84.844

153. 549 2017-18 Garrison

Engineer (A)

Multan


154. 550 2017-18 702 PWS

Bhimber

Non-recovery from

contractors

1.858

221


Farm Renala

Non retention of remaining

amount deducted from

contractor

9.069


Bolan Okara

Un-justified payment to

WAPDA against well meter

4.738


Sialkot


contract for supply of 195 ton

commercially prepared

concentrated cattle feed (CAT-

B)

5.948


Lahore

Un-authorized payment out of

normal budget

8.894

159. 562 2017-18 Director

Remount

Officer

(D.R.O)

Sahiwal

Award of contracts in

violation of public

procurement rules

6.170


Gujranwala

Loss to state due to purchase

of un-authorized dry ration

items

12.399

161. 569 2017-18 GE (Cont-I)

Rawalpindi


contract

199.323

162. 571 2017-18 Garrison

Engineer

(Const-I)

Rawalpindi


provision of elevators

58.800

163. 572 2017-18 Garrison

Engineer (A)

Const-I

Rawalpindi


contract

314.534

164. 581 2017-18 RSD ASC

Peshawar

Procurement of stores in

violation of public

procurement rules

32.689

165. 589 2017-18 Garrison

Engineer (A)-

I, Kharian


an item of work not provided

in drawing

1.747

166. 590 2017-18 Garrison

Engineer (A)

Services

Peshawar

Unauthorized award of

contract

13.027

167. 591 2017-18 Garrison

Engineer (A)

Construction

Kakul


due to execution of special

work

20.375

222

168. 592 2017-18 GE (Army)

Peshawar

irregular expenditure out of

Al-Mizan fund

34.300

169. 9 2018-19 GE (A)

Mangla


addition/alteration of

government buildings

11.999

170. 11 2018-19 HQ 30 Corps

Gujranwala


officers posted at special

works department

6.380


Factory Okara

Violation of public

procurement rules due to

conclusion of contracts by

negotiation

174.680

172. 20 2018-19 Garrison

Engineer

(Army)-II

Lahore


contract

11.457


Kharian

UN-authorized advance


1.424

174. 26 2018-19 BSD (ASC)

Multan


recovery of government dues

1.188

175. 27 2018-19 80 EME

Battalion

Gujranwala

Violation of public

procurement rules

1.482

176. 28 2018-19 Garrison

Engineer (A-

II) Okara


177. 30 2018-19 HQ 4 Corps

Lahore

Non recovery of pay and

allowances from officers

serving in DHA

26.520

178. 33 2018-19 09 Engineers

Battalion

Lahore

Non-provision of auditable

documents

179. 34 2018-19 Garrison

Engineer

(Army)-II

Lahore

Non submission of copies of

CAs to N.A.B

351.423

180. 46 2018-19 Garrison

Engineer

(Army)-I

Lahore


181. 47 2018-19 Garrison

Engineer

(Army)

Un-authorized execution of

work in piecemeal

3.685

223

Lahore


Factory Okara

Un-authorized payment in

cash to the incharge of MCCs

1230.052

183. 52 2018-19 R.S.D ASC

Sialkot


recovery of cost of risk

purchase

62.063

184. 54 2018-19 Military

College of

Signals

Rawalpindi

Non recovery of training

charges from foreign trainees

$ 0.1062

185. 58 2018-19 MH

Rawalpindi


of electro medical equipment

90.467

186. 59 2018-19 MH

Rawalpindi

Un-authorized deposited of

CNE service charges into unit

account,

15.199

187. 61 2018-19 302 Spare

Depot EME

Rawalpindi

Unjustified local purchase of

store,

8.887

188. 62 2018-19 Garrison

Engineer (A)

Construction

Kakul

Overpayment due to incorrect

application of rate,

1.798

189. 63 2018-19 Garrison

Engineer (A)

Construction

Kakul

Overpayment to the contractor 1.239


Bolan Okara


installation of milking line

system at MF Lahore

12.500

191. 73 2018-19 COD

Rawalpindi

Non-recovery of liquidated

damages charges from the

contractor / firm

43.964

192. 86 2018-19 ACE (A) 10

corps

Rawalpindi


contracts

59.983

193. 106 2018-19 Garrison

Engineer

(Army)

Tarbela


provision of weather shield

paint in SM barracks

4.245

224

194. 111 2018-19 SSD Okara Un-authorized payment to

HMT contractor in violation

of Public Procurement Rules

2004

4.117

195. 112 2018-19 Garrison

Engineer

Okara

Violation of Public

Procurement Rules

225.611

196. 113 2018-19 Garrison

Engineer

(Army)-I,

Sialkot


due to provision of glazed tiles

in BQ in violation of drawing

2.110

197. 119 2018-19 Supply &

Transport

Branch Log

area Peshawar


contracts beyond the contract

carrying capacity of

contractors

757.574

198. 120 2018-19 Garrison

Engineer

(Army)

Construction–

II Rawalpindi


execution of works out of al-

Mizan funds

5.490

199. 123 2018-19 Garrison

Engineer

(Services)

Bahawalpur

Un-authorized retention of

MOQs without re-

appropriation and non-

recovery of market rent from

defence housing authority

2.660

200. 127 2018-19 HQ 4 Corps

Def Coy

Lower Topa


deduction/deposit of income

tax

1.132

201. 133 2018-19 ACE (A) 10

Corps

Chaklala


abnormal repair

94.661

202. 138 2018-19 Garrison

Engineer(A)

Nowshera


quantity of scrap iron taken on

charge

2.370

203. 140 2018-19 Additional

Garrison

Engineer

Bannu

Unjustified payment to

contractor without provision

of original invoices

3.545

204. 147 2018-19 Garrison

Engineer

(Army) Maint-

II Rawalpindi

Un-authorized commencement

of major works and allotment

of funds

35.727

205. 152 2018-19 Garrison

Engineer(Svc)

Sialkot


contractor for provision of

sub-standard cable electric

5.186

225

206. 153 2018-19 701 Pak

Works Section

Muzaffarabad

Undue favour to contractor

due to non-imposition of

liquidated damages

11.658

207. 154 2018-19 Garrison

Engineer (A)

Maint-II

Rawalpindi

Irregular utilization of

allotment

17.638

208. 158 2018-19 Garrison

Engineer

(Army)

Construction

Kakul


over and above the admin

sanction

187.696

209. 159 2018-19 502 Central

Workshop

Rawalpindi


of store beyond financial

powers

8.268

210. 162 2018-19 Garrison

Engineer(Arm

y)-I Sialkot


recording of redundant item

2.260


Multan


payment made to contractor

2.290

212. 166 2018-19 Garrison

Engineer

(Army)-II,

Bahawalpur


execution of work on private

drawing

30.573

213. 167 2018-19 GE (A) A-II

Sialkot

Splitting up of project and

issue of irregular

administrative sanction.

110.523

214. 170 2018-19 Garrison

Engineer (A)

Murree

Irregular award of bazar

supply contracts without

advertising on PPRA‟s

website

15.613

215. 172 2018-19 Garrison

Engineer

(Army) GHQ

Rawalpindi


due to provision of tiles in

office block

1.847

216. 173 2018-19 Garrison

Engineer

(Army) Maint-

II Rawalpindi


contracts without

advertisement

29.358

217. 174 2018-19 701 PWS

Muzzafarabad


payment of electric bills

37.844

226

218. 185 2018-19 CMES (Army)

Rawalpindi


provision of security lights,

2.011

219. 187 2018-19 Garrison

Engineer

(Army)

Services

Mangla


contract without

advertisement,

12.771

220. 188 2018-19 Garrison

Engineer (A)

Murree



73.921

221. 192 2018-19 701 Pak

Works Section

Muzaffarabad

Un-authorized construction of

guest rooms under the

sanction of store block –

5.943

222. 193 2018-19 Garrison

Engineer

(Army) Maint-

II Rawalpindi

Non-disposal of demolished

building/ stores through open

tenders,

106.400

223. 197 2018-19 Junior Leaders

Academy

Shinkiari

Non recovery of training

charges from foreign trainees

$0.0751

Total

Rs

16337.83

& US

$0.1813

Pakistan Air Force

(Rs. In million)

S

No.

DP

No.

Year Unit/

Formation

Subject Amount

224. 88 2017-18 PAF Hospital

Islamabad

Un-necessary purchase of

electro medical equipment‟s

27.501

225. 93 2017-18 PAF Base

Lower Topa


pay and allowances

3.850

226. 134 2017-18 PAF Base

Sakesar

Un-authorized deposit of

huge receipt

14.108

227. 145 2017-18 AGE(Air)

Sakesar

Conclusion of contract by

violating Public Procurement

Rules

51.402

227

228. 278 2017-18 PAF Base

Kohat


SMA/DMA

2.129

229. 364 2017-18 PAF Hospital

Rafiqui

Non recovery of expenses

made against treatment of

MES employees and their

families

2.040

230. 467 2017-18 AGE (Air)

Sakesar

Execution of contracts


6.875

231. 470 2017-18 PAF Hospital

Rafiqui


contracts

1.718

232. 477 2017-18 Additional

Garrison

Engineer (Air)

Risalpur



64.181

233. 505 2017-18 Garrison

Engineer (Air)

Nur khan


account of low power factor

penalty

4.108

234. 506 2017-18 Garrison

Engineer (Air)

Base Nur khan

Non accounting of store

arranged by contactor

16.503

235. 507 2017-18 GE (Air) Nur

khan


on account of electricity

charges out of public fund

against a private housing

society

127.641

236. 537 2017-18 Assistant

Garrison

Engineer (AGE)

Air Lower Topa


on provision of additional

coat of painting

1.358

237. 551 2017-18 Additional

Garrison

Engineer (AGE)

Air Lower Topa


on provision of work not

provided in sanction,

3.005

238. 552 2017-18 Garrison

Engineer (Air)

Machine, Pool

Organization

MPO Chaklala


disposal of inactive store

1.278

239. 554 2017-18 Garrison

Engineer (Air)

Maintenance

Islamabad

Unauthorized expenditure on

replacement of damaged

window panes in followers

quarters

2.907

228

240. 574 2017-18 PAF Base

Mushaf

Irregular deposit of huge

receipts into non-public fund

account

531.240

241. 578 2017-18 Garrison

Engineer (Air)

AHQ Peshawar

Loss to state due to payment

of low power factor (LPF),

1.235

242. 2 2018-19 AGE (Air)

Lower Topa


243. 6 2018-19 AGE

(Air)Lower

Topa


244. 48 2018-19 PAF Base

Lahore


recovery of tower fee

1.056

245. 124 2018-19 Garrison

Engineer (Air)

Islamabad

Non accountal of stores

arranged by the contractors

6.679

246. 126 2018-19 Assistant

Garrison

Engineer (Air)

Lower Topa

Non accountal of stores


1.458

247. 160 2018-19 Assistant

Garrison

Engineer (Air)

Kalabagh

Non-accounting of stores


8.149

248. 164 2018-19 PAF Base

Rafiqui

Un-authorized excess

achievement of flying

hours/sorties than authorized

limit

160.836

249. 182 2018-19 PAF Base

Murid


due to holding of surplus

staff

54.360

250. 183 2018-19 DW&CE (Air)

Chaklala

Unauthorized sanction of

expenditure out of original

works-

9.666

Total= 1109.143

Pakistan Navy (Rs. In million)

S

No.

DP

No.

Year Unit /

Formation

Subject Amount

251. 89 2017-18 PNS Zafar

Islamabad

Un-justified payment of DMA 33.620

229

252. 90 2017-18 PNS Hafeez

Islamabad

Un-justified payment of DMA 4.902

253. 277 2017-18 GE (Navy)-

Const

Islamabad

Mis-procurement due to award of

bazar supply contracts without

advertisement in newspapers and

on PPRA website

41.409

254. 588 2017-18 PNS Hafeez

Hospital

Islamabad

Un-authorized distribution of

CNE share without deduction of

cost of x-ray films and laboratory

kits

6.494

Total 86.425

ML&C Deptt

(Rs. In million)

S.No

.

DP

#

Year Unit /

Formation

Subject Amount

255. 106 2017-18 CB Multan Loss to cantt fund due to less

assessment for house tax

(Askari-II)

11.600

256. 107 2017-18 CB Kharian Non-fulfillment of contractual

obligation

6.923

257. 108 2017-18 CB Kharian Non-realization of pension

share from other boards

1.094

258. 109 2017-18 CB Sialkot Loss to cantt fund due to non-

recovery of property tax

1.912

259. 110 2017-18 CB Sialkot Non-realization of pension

share from other boards

8.245

260. 111 2017-18 CB Sialkot Loss to cantt fund due to mis-

management

3.670

261. 112 2017-18 CB Sialkot Non-recovery of BTS tower /

antenna fee from world call

telecom Ltd

6.722

262. 114 2017-18 CB Walton Unauthorized payment to

Jung News Paper

1.500

263. 116 2017-18 CB Walton Loss to cantt fund due to non-

recovery of T.I.P Tax

2.088

264. 135 2017-18 CB

Rawalpindi

Non-recovery of composition

fee and development charges

1.384

230

265. 136 2017-18 CB

Rawalpindi

Loss to cantonment fund due

to non-assessment of

commercial building

2.071

266. 137 2017-18 CB Okara Loss to government due to

non-deduction of sales tax

from contractors

3.175

267. 139 2017-18 CB Havelian Loss to State due to non-

recovery of Property Tax

2.353

268. 140 2017-18 CB Okara Embezzlement Of

Cantonment Funds And Un

Necessary Delay To Decide

The Discipline Case

1.033

269. 143 2017-18 CB Multan Non recovery of Cantt Board

dues amounting to

16.736

270. 148 2017-18 CB Wah Overpayment due to wrong

application of rates

3.145

271. 161 2017-18 CB Walton Unauthorized approval of

Housing Scheme in

haphazard way and non-

recovery of TIP Tax,

Conversion charges &

composition Fee

30.610

272. 196 2017-18 CB

Abbottabad


construction works due to

non-observance of public

procurement rules

31.900

273. 197 2017-18 CB

Abbottabad

Unauthorized procurement of

Staff Car

1.916

274. 198 2017-18 CB

Rawalpindi

Non recovery of Cantt Fund

dues

14.425

275. 203 2017-18 CB

Abbottabad

Non recovery of Tower Fee 3.401

276. 205 2017-18 CB

Rawalpindi

Outstanding dues on account

of Bulk Water Supply

34.954

277. 215 2017-18 CB

Abbottabad


278. 216 2017-18 CB

Abbottabad

Non recovery of composition

Fee and Development

Charges

6.478

279. 217 2017-18 CB

Rawalpindi

Non recovery of composition

fee

8.089

231

280. 229 2017-18 CB

Rawalpindi

Loss to Cantt Fund due to less

assessment of property tax

3.714

281. 231 2017-18 CB

Rawalpindi

Non recovery of cantt fund

dues from occupants of

various building

12.133

282. 236 2017-18 CB

Abbottabad

Non recovery of premium /

development charges from

change of purpose

72.476

283. 237 2017-18 CB Multan Non depositing of Half Pay

of CEO

2.270

284. 239 2017-18 CB

Rawalpindi

Unauthorized construction by

the owner of the building

7.465

285. 245 2017-18 CB Attock Unauthorized encroachment

of “C” Class Land

7.820

286. 249 2017-18 CB

Abbottabad

Unauthorized execution of

contracts of maintenance &

repair

21.750

287. 267 2017-18 CB

Abbottabad


construction of sport

complex

19.703

288. 268 2017-18 CB

Rawalpindi

Non recovery of withholding

tax

3.740

289. 269 2017-18 CB

Rawalpindi

Non recovery of Cantt Fund

dues

4.598

290. 283 2017-18 CB Taxila Undue financial favour to

cattle mandi contractor due to

less receipt of security deposit

6.200

291. 284 2017-18 CB DI Khan Non deduction of withholding

tax on auction

2.500

292. 285 2017-18 CB

Rawalpindi

Loss to Cantt Fund due

favoritism/less recovery of

commercialization fee

2.414

293. 302 2017-18 CB

Rawalpindi

Non recovery of premium 17.032

294. 320 2017-18 CB

Abbottabad

Non recovery of installments

of Pole Signs Premium from

defaulting contractors

2.825

295. 335 2017-18 CB Multan Loss to Cantt Fund due to less

Assessment of House Tax

7.360

296. 344 2017-18 CB Kohat Unauthorized change of

purpose due to use of

residential property as

commercial

5.842

297. 345 2017-18 CB DI Khan Non recovery of house tax 1.163

232

298. 354 2017-18 CB Mardan Loss to cantt fund due to

encroachment of land

1.800

299. 355 2017-18 CB Walton Loss to state due to

unauthorized encroachment of

government land

6.240

300. 369 2017-18 CB Risalpur Loss to Cantt Fund due to

illegal allotment of Cantt Flat

0.801

301. 403 2017-18 CB Peshawar Non recovery of income tax

from owners of shops

4.720

302. 412 2017-18 CB Peshawar Loss to Cantonment Fund due

to Non recovery of rent from

owners of shops

13.173

303. 413 2017-18 CB Multan Non assessment of property

tax

2.100

304. 414 2017-18 CB Multan Nonreflecting of the Cantt

Fund in Annual Accounts

305. 460 2017-18 CB Peshawar Loss to Cantonment Fund due

to non-recovery of House Tax

4.910

306. 462 2017-18 CB Sargodha Loss to Cantt Fund due to

non-imposition of

composition fee

13.980

307. 471 2017-18 CB Sargodha Loss to Cantt Fund due to

non-recovery of composition

Fee and Cantt Board dues

5.203




commercial

6.879




commercial

7.109

310. 510 2017-18 CB D.I Khan Non observance of Public

Procurement Rules

4.592

311. 518 2017-18 CB Kamra Non recovery of premium on

allotment of commercial

building hall

3.100

312. 519 2017-18 CB Lahore Less recovery of composition

fee

3.414

233

313. 530 2017-18 CB Lahore Non recovery of surcharge

from purchaser on Late

payment

6.359

314. 531 2017-18 CB Wah Non recovery of

premium/development

charges and composition fee

for unauthorized cant fund

22.904

315. 532 2017-18 CB Lahore Non realization of pension

share from other Cantt Boards

6.811

316. 541 2017-18 CB Murree Non-recovery of property tax.

House Tax and Rent from the

owners of properties

3.655

317. 542 2017-18 CB Multan Loss due to non-recovery of

property tax of Bomanjee

commercial plaza

5.650

318. 559 2017-18 CB Walton Non imposition of

composition fee

8.008

319. 560 2017-18 CB

Rawalpindi

Less recovery of account of

income tax

12.277

320. 561 2017-18 CB Chaklala Loss to Cantt Fund due non-

recovery of outstanding

hoardings charges

4.231

321. 564 2017-18 CB Multan Non recovery of hoarding

charges

34.700

322. 577 2017-18 CB

Gujranwala

Unauthorized reduction of

land in GLR worth

31.796

323. 595 2017-18 CB Wah Non recovery of pension

share from various Cantt

Boards

12.942

324. 596 2017-18 CB Chaklala Non recovery of composition

fee

2.629

325. 3 2018-19 CB Wah Loss to Cantonment fund due

to non-recovery of House Tax

3.413

326. 8 2018-19 CB Peshawar Loss to Cantt Fund due to

non-imposition of

composition fees

5.545

327. 10 2018-19 CB Lahore Unauthorized purchase of

vehicles

151.720

328. 14 2018-19 CB Lahore Unauthorized local purchase

of Suzuki Pick Up

1.050

329. 19 2018-19 CB Nowshera Non recovery of composition

fee against unauthorized

construction

5.034

234

330. 22 2018-19 CB

Bahawalpur

Unauthorized payment to

contractor

2.377

331. 31 2018-19 CB Lahore Loss to Cantt Fund due to

non-finalization of rent

agreement

23.102

332. 37 2018-19 CB Nowshera Loss to Cantt Fund due to

non-recovery of Tower /

Antenna fee from cellular

companies

1.502

333. 38 2018-19 CB Nowshera Non recovery of rent from

SNGPL-

13.078

334. 42 2018-19 CB Chaklala Non recovery of BTS Tower

fee

2.500

335. 43 2018-19 CB Mardan Non recovery of Balance

Premium on auction of shops

9.380

336. 55 2018-19 CB Nowshera Non recover of income tax on

account of auction

2.395

337. 56 2018-19 CB Nowshera Non recovery of outstanding

amount of loan from other

officers

2.778

338. 72 2018-19 CB Nowshera Loss of revenue due to non-

reaction of shops

26.075

339. 74 2018-19 CB Jhelum Non recovery of outstanding

amount of hoarding charges

1.383

340. 80 2018-19 CB Chaklala Encroachment of Govt / Cantt

Land

2.155

341. 81 2018-19 CB Nowshera Non recovery of auction dues

from contractors

7.831

342. 83 2018-19 CB

Abbottabad

Unauthorized encroachment

over Cantt Board Land

4.301

343. 89 2018-19 CB Sargodha Loss due to less deduction of

Income Tax

1.891

344. 91 2018-19 CB Nowshera Non recovery of balance

amount of conservancy

charges from Army

authorities

2.780

345. 92 2018-19 CB Chaklala Non recovery of rent from the

tenets of Cant Market / Old

dispensary shops

1.090

346. 94 2018-19 CB Chaklala Non recovery of balance

amount of contract for

collection rights slaughtering

fee

1.000

235

347. 96 2018-19 CB Mardan Non deposit the rent realized

by TMA from shops

constructed on encroached

land

37.000

348. 97 2018-19 CB Mardan Non deposit deduction of

withholding Tax on auction of

shops (ground floor

6.984

349. 99 2018-19 CB Dera

Ismail Khan

Loss to Cantt Fund due to

non-recovery of conservancy

charges

4.572

350. 101 2018-19 CB Chaklala Unauthorized payment

without supporting documents

22.693

351. 102 2018-19 CB Chaklala Non recovery of income tax

on auction of collection rights

of slaughter house

3.000

352. 114 2018-19 CB

Gujranwala

Loss due to non-finalization

of assessment of commercial

buildings for property tax

6.000

353. 117 2018-19 CB D.I Khan Non deduction / remittance of

withholding tax on auction of

Adda collection contract

0.860

354. 125 2018-19 CB Nowshera Non recovery of premium and

development charges due to

unauthorized use of

residential property for

commercial purposes

962.205

355. 139 2018-19 CB

Abbottabad

Undue favour due to less

imposition of composition

charges

6.119

356. 141 2018-19 CB Risalpur Loss to cantt fund due to non-

recovery of cantt fund dues

2.453

357. 165 2018-19 CB

Bahawalpur

Violation of public

procurement rules Rs. 4.80

million and non-deposit of

sales tax

0.697

358. 168 2018-19 CB Mardan Loss to cantt fund due to

encroachment of class „c‟

land

3.600

359. 181 2018-19 CB

Rawalpindi

Loss to cantt fund due to non-

imposition of composition fee

1.103

360. 190 2018-19 CB

Rawalpindi

Loss to cantt fund due to non-

imposition of composition

2.586

236

fees,

361. 191 2018-19 CB Chaklala Non recovery of income tax

on auction of collection rights

of slaughter house,

1.520

362. 198 2018-19 CB Risalpur Loss to cantt fund due to un-

authorized commercial use of

residential property

25.657

363. 199 2018-19 CB Risalpur Non recovery of premium and

development charges due to

unauthorized use of

residential property for

commercial purposes

15.520

364. 200 2018-19 CB

Bahawalpur


uplift of a public park by cantt

board without transfer of its

land by TMA

5.970

Total 1582.068

MAG (Rs. In million)

S.No

.

DP

#

Year Unit /

Formation

Subject Amount

365. 150 2017-18 CMA (RC)

Rawalpindi

Irregular sanctioning of

expenditure

33.120

366. 152 2017-18 CMA (RC)

Rawalpindi

Mis-procurement due to

non-observance of PPRA

rules

16.454

367. 160 2017-18 CMA (RC)

Rawalpindi


368. 165 2017-18 CMA (RC)

Rawalpindi


acceptance of lowest bid

2.125

369. 166 2017-18 CMA (RC)

Rawalpindi


contractor at exorbitant rates

5.831

370. 167 2017-18 CMA (RC)

Rawalpindi


contractor at exorbitant rates

1.125

237

371. 168 2017-18 CMA (RC)

Rawalpindi

Invalid sanctioning of

expenditure

14.847

372. 169 2017-18 CMA (RC)

Rawalpindi

Irregular expenditure beyond

financial powers

5.000

373. 170 2017-18 CMA (RC)

Rawalpindi


on procurement of electro

medical equipment for up

gradation purpose out of al-

Mizan fund

3.481

374. 171 2017-18 CMA (RC)

Rawalpindi

Un authorized expenditure

on repair/maintenance works

due to non-observance of

PPRA rules

100.000

375. 172 2017-18 CMA (RC)

Rawalpindi

Un authorized payment to

contractor due to acceptance

of higher rates

10.056

376. 173 2017-18 CMA (PC)

Peshawar

Over payment to contractor

on account of repair and

maintenance of bridges

2.000

377. 174 2017-18 CMA (PC)

Peshawar


repair & maintenance of

civil work & provision of

MES store

1.021

378. 176 2017-18 CMA (PC)

Peshawar


on account of repair and

maintenance of kacha track

(2xkm) at north Waziristan

agency

10.000

379. 178 2017-18 CMA (RC)

Rawalpindi

Irregular procurement of

store

5.105

380. 179 2017-18 CMA (PC)

Peshawar

Over payment on account of

repair and maintenance of 10

x bridges and 8 x fences

walls at south Waziristan

agency

14.716

381. 189 2017-18 CMA (MC)

Multan

Un-authorized expenditure 40.561

382. 190 2017-18 CMA (RC)

Rawalpindi


contractor

35.462

383. 191 2017-18 CMA (RC)

Rawalpindi

Non recovery of income tax 10.000

384. 192 2017-18 CMA (RC)

Rawalpindi


fund

24.353

238

385. 193 2017-18 CMA (RC)

Rawalpindi

Undue favour to contractor 1.132

386. 194 2017-18 CMA (RC)

Rawalpindi

Over payment to contractor 1.216

387. 209 2017-18 CMA (RC)

Peshawar

Non deduction of income tax

on repair / maintenance

20.000

388. 210 2017-18 CMA (PC)

Peshawar


acceptance of the lowest bid

for repair and maintenance

of check posts

89.750

389. 211 2017-18 CMA (RC)

Rawalpindi


DA and cost of air tickets

out of Al-Mizan fund

US $

0.1452

390. 220 2017-18 CMA (PC)

Peshawar

Non deduction of income tax

on supply of goods

1.171

391. 250 2017-18 CMA (RC)

Rawalpindi


on procurement of gift

2.000

392. 251 2017-18 CMA (RC)

Rawalpindi


on procurement of cover

outer in piecemeal

66.989

393. 252 2017-18 CMA (RC)

Rawalpindi


procurement of stores


124.586

394. 254 2017-18 CMA (RC)

Rawalpindi


on Pak day parade civil

works due to non-

observance PPRA rules

29.350

395. 255 2017-18 CMA (RC)

Rawalpindi

Mis-procurement beyond

financial powers

42.892

396. 256 2017-18 CMA (RC)

Rawalpindi

Mis-procurement of civil

works material

39.331

397. 257 2017-18 CMA (RC)

Rawalpindi


on procurement of electro

medical equipment out of al-

Mizan fund

185.854

398. 260 2017-18 CMA (PC)

Peshawar

Non deduction of income tax 3.000

399. 262 2017-18 CMA (RC)

Rawalpindi


out of Al-Mizan fund

10.141

400. 263 2017-18 CMA (RC)

Rawalpindi


procurement out of Al-

Mizan fund

8.770

401. 264 2017-18 CMA (RC) Unauthorized expenditure in 19.000

239

Rawalpindi piecemeal

402. 265 2017-18 CMA (RC)

Rawalpindi

Non-Observance of PPRA

Rules

41.700

403. 266 2017-18 CMA (RC)

Rawalpindi

Un-authorized local

purchase of stores

21.536

404. 286 2017-18 CMA (PC)

Peshawar



PPRA rules

20.000

405. 287 2017-18 CMA (PC)

Peshawar



PPRA rules

2.000

406. 308 2017-18 CMA (PC)

Peshawar

Doubtful payment on

account of development of

swimming pool at Punjab

regiment Centre Mardan

13.000

Total= 1087.692

US $

0.1452

ISO’s

(Rs. In million)

S

No.

DP

No.

Year Unit /

Formation

Subject Amount

407. 130 2017-18 Army Cardiac

Centre Lahore

Less deduction of income

tax

2.810

408. 362 2017-18 AFPGMI

Rawalpindi



PPRA rules

3.000

409. 374 2017-18 JSHQ

Chaklala

Non deduction of HRA 1.641

410. 533 2017-18 AFIT

Rawalpindi

Un-authorized procurement

of electro medical

equipment

27.165

411. 583 2017-18 AFIT

Rawalpindi

Excess procurement of

medical store

19.785

412. 7 2018-19 AFIT

Rawalpindi

Non-recovery of income tax

from CNE share paid to

various individuals

2.119

413. 143 2018-19 AFIC/ NIHD

Rawalpindi

Un-authorized local

purchase of motorized

6.000

240

electric beds in violation of

PPRA rules

414. 145 2018-19 AFIC

Rawalpindi

Unauthorized retention of

diesel

3.741

415. 161 2018-19 AFIC/ NIHD

Rawalpindi


of human resource (staff)/

non-production of hiring/

expenditure record

204.031

416. 169 2018-19 AFIMH,

Rawalpindi


conclusion of contract with

successful bidder

3.761

417. 186 2018-19 AFIC

Rawalpindi

Un-authorized receipt of

CNE patients share

5.487

418. 202 2018-19 AFIC / NIHD

Rawalpindi

Non-recovery of

outstanding medical

treatment charges from

panel departments

13.020

Total= 292.56

MODP (Rs. In million)

S

No.

DP

No.

Year Unit /

Formation

Subject Amount

419. 87 2017-18 DP(Air)

Chaklala

Non conclusion of contract

at risk and expense of

defaulting firm

10.242

420. 96 2017-18 DGP (Army)

Rawalpindi

Non deposit of un-spent

balance into government

treasury

$ 0.2073

421. 218 2017-18 HRF (T) HIT

Taxila

Non-recovery of cost of

rejected stores from firm

$0.0915

422. 219 2017-18 GE JSHQ

Chaklala


without prior approval of

competent authority

8.171

423. 238 2017-18 GE (DP) ARF

Kamra


recovery of rent on account

of shops / cabins

5.136

424. 241 2017-18 HRF (T) HIT

Taxila

Non observance of PPRA

rules

6.275

241

425. 292 2017-18 HRF (T) HIT

Taxila


rejected stores from supplier

$0.314

426. 318 2017-18 PAC Board

Kamra

Loss to state exchequer due

to ill-planning

$0.0651

427. 319 2017-18 GE (DP) MRF

Kamra

Non recovery of outstanding

rent & allied charges

5.405

428. 327 2017-18 HRF (T)

Taxila


contract

2.670

429. 328 2017-18 GE (DP) ARF

Kamra


due

to splitting of work

13.256

430. 360 2017-18 GE (DP) ARF

Kamra

Less deduction of income

tax

2.917

431. 361 2017-18 MRF Kamra Un-authorized 100%

advance payment to firms

on provisional CRVs

39.731

432. 368 2017-18 GE Maint

(DP) Taxila

Non recovery of rent &

allied charges from private

consumers

4.166

433. 375 2017-18 GE (DP)

Maint. Taxila

Un-authorized / doubtful

expenditure on account of

renovation of workers

married accommodation

7.218

434. 377 2017-18 Gun Factory

Taxila


receipt of store, PBG &

non-imposition of LD

charges

5.303

435. 400 2017-18 PAC Board

Kamra

Non imposition of LD Euro

0.7668

&

$0.0054

436. 426 2017-18 GE DP Maint

Taxila

Undue favour to contractor 1.639

437. 438 2017-18 GE DP Maint

Taxila


contractor

1.700

438. 455 2017-18 GE Maint

(DP)

Taxila


for construction of

badminton court

4.037

439. 457 2017-18 MRF Kamra Un-authorized payment to

surplus officers & staff

101.790

440. 458 2017-18 ASRF Kamra Mis procurement of store 8.076

242

441. 465 2017-18 MRF Kamra Loss to state due to non-

replacement of rejected

store

EURO

0.0034

AND

US $

0.0071

442. 469 2017-18 HRF (HIT)

Taxila

Non-provision of 20%

advance payment bank

guarantee

US$

0.4689

443. 481 2017-18 Garrison

Engineer (DP)

Taxila


contracts in piece meal to

avoid sanction of higher

authority

52.482

444. 482 2017-18 Garrison

Engineer (DP)

Maintenance

Taxila



without execution of work

22.700

445. 483 2017-18 HRF (T)

Taxila


deposit of earnest money

18.247

446. 490 2017-18 Heavy

Rebuild

Factory (HIT)

Taxila

Non-provision of 5%

revised performance bank

guarantee

US $

0.0884

447. 491 2017-18 Mirage

Rebuild

Factory

(MRF), Kamra

Un-authorized inclusion of

contract clause regarding

advance payment

33.935

448. 492 2017-18 Directorate

Procurement

(Navy)

Rawalpindi

Mis-procurement of store 38.769

449. 534 2017-18 HRF (T)

Taxila

Excess holding of staff

beyond authorization

47.105

450. 535 2017-18 Directorate

Procurement

(Navy)

Rawalpindi

Non-Replacement of

rejected store-

US $

0.015

451. 538 2017-18 PAC Hospital

Kamra

Mis-procurement of store 1.927

452. 539 2017-18 Directorate

Procurement

(DP) Navy

Rawalpindi

Loss to state due to

procurement of store at

higher rates-

6.450

453. 546 2017-18 HRF (T)

Taxila

Un-authorized / substantial

increase in quantity before

award of contracts

3.753

243

454. 547 2017-18 HRFT (P-711)

Taxila

Blockade of public money

due to purchase of stores

without emergent

requirement

2.061

455. 563 2017-18 Directorate

Procurement

(DP) Navy

Rawalpindi


purchase of water boozers at

higher rates

11.500

456. 575 2017-18 PAC Board

Kamra


supplier

3.385

457. 582 2017-18 PAC Board

Kamra


finalization of export related

commercial projects

248.728

458. 586 2017-18 DP(Air)

Rawalpindi


rate running contracts

740.908

459. 587 2017-18 HRF (T) HIT

Taxila


rejected store from supplier

-

$0.0472

460. 4 2018-19 Directorate

Procurement

(Navy)

Rawalpindi

Non-delivery of store after

lapse of six years and non-

cancellation of contract at

risk and expense

$0.637

461. 5 2018-19 Garrison

Engineer (DP)

Maintenance

Taxila

Avoidable extra expenditure

due to provision of richer

specification

1.060

462. 39 2018-19 Marketing &

Procurement

(M&P)

Directorate

HIT Taxila

Blockage of public money

due to non-installation /

commissioning of painting

& baking booth

39.174

463. 77 2018-19 Marketing &

Procurement

(M&P)

Directorate

Taxila


contract without availability

of funds

10.970

464. 78 2018-19 Marketing &

Procurement

(M&P)

Directorate

Loss due to non-supply of

contracted stores

1.056

465. 88 2018-19 Garrison

Engineer (DP)

Maintenance

Taxila


due to excess provision of

premix –

2.444

244

466. 98 2018-19 Garrison

Engineer

Maint (DP)

Rawalpindi


contracts in piecemeal,

8.076

467. 104 2018-19 Garrison

Engineer (DP)

const/Svcs

Taxila

Avoidable extra expenditure

due to provision of false

ceiling through deviation

order

10.256

468. 105 2018-19 Garrison

Engineer

Maintenance

(DP) Chaklala

Unjustified advance

payments to contractors

through RARs without

execution of work

67.302

469. 108 2018-19 DP (Air)

Rawalpindi

Non-production of record

requisitioned by audit

--

470. 175 2018-19 Directorate

General

Procurement

(A),

Rawalpindi


cancellation of contracts at

risk and expense of the

contractor

37.058

471. 176 2018-19 Directorate

General

Procurement

(Army)

Rawalpindi


of stores

156.980 &

JPY-

166.117

472. 180 2018-19 Garrison

Engineer

Maintenance

(DP) Chaklala

Unjustified advance


through RAR without

provision of cooling system,

3.861

473. 194 2018-19 Directorate

General

Procurement

(Army)

Rawalpindi

Non-deposit of it/tender

processing fee into Govt

treasury

0.836

474. 196 2018-19 Directorate

General

Procurement

(Army)

Rawalpindi


advance CRVs before

receipt of stores

20.520

475. 203 2018-19 DGMP

Rawalpindi

Non production of auditable

documents

476. 204 2018-19 Directorate

General

Procurement


due to inclusion of income

tax in quoted price

1.841

245

(Army)

Rawalpindi

Total= Rs

1821.317

US$ 1.947

Euro

0.7702

JPY

166.177

Annexure-II

MefDAC Paras (DGADS South) 2018-19

Pakistan Army

(Rs in million)

S

#

DP No. Year Unit/Formation Subject Amount

1 S-25 2018-19 Military Dairy

Farm, Quetta

Unauthorized

conclusion of

contracts beyond

financial power

40.630

2 S-46 2018-19 GE( Army)

Hyderabad

Non-recovery of sales

tax on services

31.572

3 S-62 2018-19 AGE (Army) RY

Khan

Irregular sanction of

abnormal repair works

10.760

4 S-78 2018-19 AGE (Army)

Chorr Cantt

Unjustified excess

payment to the

contractor

1.275

5 S-87 2018-19 GE (Army)-I

Quetta

Non-recovery of allied

charges from private

consumers

0.509

6 S-91 2018-19 AGE (Army)

Badin

Non-recovery of Sales

tax on services

10.996

7 S-96 2018-19 GE (Army)-I

Quetta

Irregular

administrative

115.810

246

sanction and

conclusion of

contracts beyond

sanctioning power

8 S-175 2018-19 GE (Army)-I,

Malir

Undue favoritism

resulting in regular

award of works

95.493

9 S-185 2018-19 GE (Army)

Kashmore



4.554

10 S-190 2018-19 GE (Army)

Kashmore

Irregular expenditure

on account of

unauthorized award of

contracts

104.666

11 S-195 2018-19 GE (Army)

Karachi

Irregular

commencement of

work after 15th April

68.330

12 S-208 2018-19 CMH Malir Non-recovery of sales

tax on services from

specialists on private

practice

2.897

13 S-211 2018-19 GE (Army)

Hyderabad

Non-recovery of sales

tax on services

60.796

14 S-212 2018-19 GE (Army)

Hyderabad

Non-recovery of GST

from contractors/

suppliers

1.397

15 S-214 2018-19 GE (Army)

Hyderabad

Unjustified excess

payment to the

contractors

70.494

16 S-221 2018-19 School of Army

Air Defence,

Malir Cantt


expenditure in

installments

11.000

17 S-228 2018-19 GE (Army)

Kashmore

Non-recovery of Sales

tax on services

4.690

18 S-230 2018-19 SI&T Quetta Irregular sanction of

expenditure in

installments

2.000

19 S-236 2018-19 GE (Army)

Hyderabad

Unjustified advance

payment to the

contractors

30.303

20 S-271 2018-19 AGE (Army)

Khuzdar Cantt

Execution of contract

without Performance

guarantee

1.260

21 S-282 2018-19 GE (Army)

Kashmore

Irregular

administrative

21.195

247

sanction and

conclusion of

contracts

22 S-283 2018-19 GE (Army)

Kashmore

Execution of contract

without Performance

guarantee

4.642

Total 695.269

Pakistan Air Force

(Rs in million)

S

#

DP No. Year Formation Subject Amount

1 S-24 2018-19 GE (Air)

Masroor

Unauthorized

expenditure on

purchase of furniture

3.140

2 S-29 2018-19 GE(Air)

Shahbaz,

Jacobabad

Unjustified payment to

SSGC

3.253

3 S-98 2018-19 GE(Air) Korangi

Creek

Non-recovery of allied

charges from private

consumers

1.707

4 S-113 2018-19 Project Bholari Non-recovery of Sales

Tax on services

1,091.589

5 S-133 2018-19 GE (Air)

Korangi Creek

Irregular purchase of

non-scheduled furniture

11.493

6 S-137 2018-19 GE (Air)

Korangi Creek

Loss of revenue on

account of non-

recovery of sales tax on

services

54.996

7 S-176 2018-19 PAF Base Faisal Irregular, unaccounted

for expenditure

2.754

8 S-180 2018-19 GE (Air)

Korangi Creek

Irregular execution of


47.278

9 S-182 2018-19 PAF Base Faisal Unjustified expenditure

on non-functional APC

vehicles

2.101

10 S-189 2018-19 PAF Base Faisal Unauthorized excess

procurement of store in

transgression of scale

3.611

11 S-216 2018-19 GE (Air)

Samungli



4.164

12 S-245 2018-19 GE (Air)

Masroor



3.730

248

13 S-250 2018-19 GE (Air)

Masroor

Loss of revenue on

account of non-

recovery of Sales tax

on services

232.672

14 S-251 2018-19 GE (Air)

Masroor


by split up of sanctions

108.123

15 S-254 2018-19 GE (Air)

Masroor

Irregular administrative

sanction and

conclusion of contracts

409.036

16 S-257 2018-19 GE (Air)

Masroor

Unjustified invoking of

emergency clause

under Para-17 DSR

1998

85.083

17 S-259 2018-19 GE (Air)

Masroor


without prior

administrative and

technical sanction

28.530

18 S-286 2018-19 GE Air (Faisal) Non-recovery of

electrical charges from

petrol pumps

142.768

19 S-289 2018-19 GE Air (Faisal)7 Loss to state on

account of

unauthorized use of Air

Conditioners

135.363

20 S-292 2018-19 GE Air (Faisal) Non-recovery of water

charges from Falcon

Mall

2.400

21 S-295 2018-19 GE Air (Faisal) Overpayment to

contractor

0.801

22 S-296 2018-19 PAF Base

(Faisal)

Non-recovery of

training and medical

charges from

international trainees

3.634

23 S-297 2018-19 GE Air (Faisal) Irregular expenditure

without admin approval

5.289

24 S-298 2018-19 PAF Base

(Faisal)

Non-deposit of allied

charges into

Government treasury

1.285

Total 2384.800

ML&C

(Rs in million)

S DP No Year Unit/Formation Subject Amount

249

# (Rs.)

1 S-51 2018-19 CB Faisal Non-recovery of

composition fees from

M/s Millennium

Classic Mega Mall

20.575

2 S-65 2018-19 CB Faisal Loss of revenue on

account of non-

recovery of sales tax

on services

6.240

3 S-67 2018-19 MEO Karachi Non-deduction of

Income Tax on

disposal of surplus

Defence land by

auction

4.503

4 S-88 2018-19 MEO Karachi Unjustified

expenditure on

account of hiring of

land by MEO Karachi

4.412

5 S-108 2018-19 MEO Karachi Improper / unjustified

allotment of plots at

throw-away price to

civilian officers

1,100.000

6 S-120 2018-19 Karachi Cantt

Board


non-recovery of GST

from contractors/

suppliers

3.004

7 S-129 2018-19 CB Korangi

Creek

Non-recovery of rent

from different parties

1.307

8 S-178 2018-19 CB Korangi

Creek

Loss of revenue on

account of non-

recovery of Sales Tax

on Services

11.020

9 S-248 2018-19 Cantonment

Board Clifton

Non-recovery of

outstanding dues on

account of road-

cutting charges

1.685


Board Clifton

Award of contracts

without open tendering

in violation of PPRA

Rules

3.075


Board Clifton

Award of contract



Rules

3.681

250


Board Malir

Award of contract to

advertising firm



Rules

3.322

Total 1162.824

PAK NAVY

(Rs in million)

S.

No

DP No Year Unit/Formation Subject Amount

1 S-28 2018-19 CDS (Navy),

Karachi

Blockage of

Government

money due to non-

disposal of surplus

stores

4.774

2 S-58

2018-19 GE (Navy) Const-I,

Ormara

Irregular

expenditure

involving splitting

of contracts

51.998

3 S-82 2018-19 GE (Navy) Eastern,

Karachi

Non-recovery of

sales tax on

services

141.734

4 S-86 2018-19 GE (Navy) Turbat Loss to

government due to

less deduction of

Income tax from

contractors

14.932

5 S-102 2018-19 AGE (Navy) Maint.

Manora, Karachi

Less recovery of

Income Tax from

contractor

2.100

6 S-107 2018-19 AGE (Navy) Maint.

Manora Karachi

Non-recovery of

Sales tax on

services

2.000

7 S-121 2018-19 GE (Navy)

Logistics Dockyard,

Karachi

Non-recovery of

Sales tax on

services

45.915

8 S-122 2018-19 GE (Navy)

Logistics Dockyard,

Karachi

Execution of work

without prior

approval

8.416

9 S-136 2018-19 AGE (Navy) PNAD

Maripur Karachi

Irregular sanction

of abnormal

repairs

8.139

251

10 S-146 2018-19 AGE (Navy) Maint.

Ormara

Irregular invoking

of emergency

clause under Para-

17 of DSR-1998

10.313

11 S-153 2018-19 AGE (Navy)

Mauripur, Karachi

Non-recovery of

Sales tax on

services

0.962

12 S-155 2018-19 GE (Navy) Fleet,

Karachi

Irregular &

unauthorized

expenditure in

excess of allotment

9.872

13 S-158 2018-19 GE (Navy) Fleet,

Karachi

Loss of revenue on

account of non-

recovery of Sales

Tax on Services

36.000

14 S-159 2018-19 AGE (Navy) Maint.

Ormara, Karachi

Conclusion of

contracts through

negotiation in

violation of PPRA

Rules

38.365

15 S-168 2018-19 PNS Karsaz Non-deposit of

hoarding charges

into Government

Treasury

79.944

16 S-193 2018-19 GE (Navy) Karsaz Irregular

expenditure

involving splitting

of contracts

41.578

17 S-202 2018-19 GE(Navy) East Irregular

expenditure in

violation of PPRA

Rules

246.929

18 S-213 2018-19 PNS Qasim Unjustified

expenditure on

hiring of private

transport

0.977

19 S-220 2018-19 GE (Navy) Cons,

Dockyard

Irregular purchase

of non-scheduled

furniture

1.156

20 S-238 2018-19 AGE (Navy) Maint.

Ormara, Karachi

Irregular

administrative

sanction beyond

financial powers

37.154

21 S-242 2018-19 AGE (Navy)

Mehran, Karachi

Non-recovery of

Sales Tax on

2.235

252

services

22 S-263 2018-19 GE (Navy) Karsaz,

Karachi

Award of contracts

without obtaining

security deposit

12.260

23 S-294 2018-19 AGE (Navy)

Mehran

Irregular sanction

of abnormal repair

works

4.554

24 S-83 2018-19 GE(Navy) Eastern Irregular

conclusion of

contracts without

authority- Rs.

29.700 m

39.700

Total 842.007

AUDIT REPORT ON THE ACCOUNTS OF DEFENCE SERVICES … 2018-19.pdfGeneral of Pakistan are responsible...

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