COMPfNDI.UM
Of ARTlCLfS ON
fINANC f & ACCOUNTS
BILLS RECOVERABLE:
CONCEPTS AND CHALLENGES
the outside month of
Introduction The write up on Bills recoverablehas been made by Shri Hira Ballabh, Sr DFM BSL. The article covers the items for which billing against outsiders is done, methodof billing,problems faced and also offers some solutions. Editor.
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CONCEPTS: As the term denotes, Bills Recoverable are the dues recoverable by Railways for services rendered and facilities provided to non-Railway persons or parties. Different type of services or facilities are provided by Railways to outsiders mainly when they are connected with Railway workings or are in surplus. The services provided range from maintenance, of private or assisted sidings, repair of non-Railway wagons, maintenance of FOB, Level Crossings etc. Similarly, land or buildings' not in use are let out to outsiders on commercial consideration for which recoveries are made periodically. Railway also deputes staff for carrying out Railway related work for outsiders, on which staff charges are raised. TYPEOF FACILITIES PROVIDED: The facilities provided statutory bodies can be categorised
to private parties or other Govt. departments, under following heads:
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1) Serviceslike maintenance of sidings owned by outsiders. ~ 2) Licensing of land or letting out buildings to private parties, govt. department, railway consumer co-operative society, staff union canteens etc. 3) Way leave facilities for pipe lines, cables etc. to outsiders and other govt. deptt. 4) Installation of personal weighing machines, showcases, display boards, advertisements, neon-signs on stations and other Railway premises. . 5) Electric energy supplied to outsiders and other govt. departments. 6) Licensing of stalls, commercial vending contracts, bookstall etc., in the station premises. 7) Rising of Commercial Staff Charges. Prior approval of competent authority would be required for gr~ting of the facility. Once the facility has been provided a formal agreement is signep with 48
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period. HOW THE
Bills recove head Dem (Abstract 'Z and the re Recoverabl Similarly, the amount withdrawn will have to RAISING Of late, th reduction' As per 1138 RegiSter of (1139-Al). should be r, issued to a realisation
REALISA~ provision sq The Para sa~ correctly mq not be an~ realised and the parties I . I should be bl render all p~ items. Thej the executivI METHOD
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When the a~ expenditur~
theoutside parties. Bills are raised by Railways against concerned parties in the month of April and the realisation of which should be ensured in one month's period. HOWTHE ACCOUNTAL IS MAINTAINED. Billsrecoverable 'is a Suspense balance one part of which is operated under the head Demands Recoverable. These recoverable form part of the 'Sundry Earnings' (Abstract'Z') of the Railways. These earnings are accrued once the bills are raised and the realisation of the amount clears the Suspense. Thus, the ' Demands Recoverable' is debited and 'Abstract Z' is credited once a bill is raised. Similarly, the 'Cash' is debited and 'Demands Recoverable' is credited once the amount billed is realised. Thus, in case the amount billed is to be withdrawn the provision for deduction to that extent from the sundry earnings willhave to be made from the traffic accounts simultaneously. RAISING OF BILLS: Of late, the realisations under bills recoverable are being watched closely as reduction in suspense and increase in earnings has required primary foc~s. Asper 1138- AI, bills for recovery will be raised through Form A 1138. Similarly, a RegiSter of Bills Recoverable should be maintained for entry of the bills raised (1139-A1). The bills should be prepared neatly and raised in time. This Register should be reviewed monthly with a view to see that the bills have been correctly issued to all parties in time and necessary action is being taken towards the realisation of outstanding bills. REALISATION OF BILLS RECOVERABLE - Para 1141 AI has very important provision so far as pinpointing of responsibilities for the recovery is concerned. The Para says that it will be the duty of Accounts Officer to see that the bills are correctly made out and promptly issued to the concerned parties. There should not be any ambiguity in the bill regarding date of payment, amount to be realised and mode of payment. Realisation of bill will have to be pursued with the parties by Accounts Office. Problem, if any, in reapsation of outstanding should be brought to the notice of executive. It is the responsibility of executive to render all possible help to Accounts office. Focus should be on old and high value items. The Accounts Office should also put up monthly position of outstanding to the executive head of the unit as well as FA&CAO. METHOD OF BILLING: When the amounts recoverable are of fixed nature i.e. a percentage on the actual expenditure or a fixed amount per annum or otherwise, bills are normally
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preferred by Accounts department while directly sending copies of the same to concerned Executive departments for information and necessary action. However, where the. amount to be claimed has to be worked out on the basis of actuals, bills are prepared by the concerned Executive department and preferred through Accounts department. Similarly, when a new siding is opened or facility provide the first bill should be raised by executive through Accounts department The bills are prepared against the parties concerned in the Form A-1138 for dues payable by them. Rate per annum, period of the bill, nature and particulars of the bill and total outstanding including previous outstanding dues, if any, are mentioned in the bill. To ensure timely preparation and despatch of the bill to the parties concerned, Accounts office maintains bills Recoverable Registers (A 1139). Separate folios are set apart in respect of each party for individual facilities allowed or services rendered so as to enables a watch on raising of bills and resultant recoveries. All bills are entered in the Register and numbered in consecutive order. As and when dues are realised suitable remarks under appropriate column of the register are recorded. In cases where delay is noticed in settlement of the bills the same should be brought to the notice of higher authorities and should be pursued with the parties GOncernedat the appropriate level. ,
schools, with the welfare 0: No. 92/ amount 5 Regarding vide letter charged The land or worksh
In Para 1837-E of the Engineering Code, there is a provision for charging interest on the amount recoverable if the sum is not paid within one month from the date on which Railways make a written demand. The rate has been fixed at 12% per annum. A clause to this effect is incorporated in all agreements for the sidings and all the facilities. However, this is an enabling and not mandatory provision regarding interest on delay in payment. Therefore, objection from audit regarding non-imposition of interest charges, if any, is not considered acceptable.
Te uses like market val
COMMERCIAL,EXPLOITATION OF LAND:
Policy reg, letter No. the market land so pra of licensin Railways govemmen1 payment 0 1631-A1 thl office. For and outside
As per the new guidelines, for the purpose of commercial exploitation, surplus land can given on licensing basis. However, leasing of land would require prior approval of Railway Board. The instructions issued on the subject are circulated vide Board's letter No. 82/W2/LM/18/87 of 29/08/1995. License fee should be fixed on the basis of market value Le. arrived by Town Planning Department, Land Registration Offices, Govt. evaluator or as per the prevailing transaction of CPWD /PWD. Base year for determination of value is 1985 and 10% increase is added every subsequent years in the month of April. For the purpose of licensing the land has been classified into various categories like
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commercialplots, steel yard, shops and retail oil depot etc. Annual licence fee will befixed as a percentage on the value of the land.. The highest rate fixed is 20% whichis applicable for shops, retail oil depots etc. and 10% for steel yard, coal dumps, bulk oil installations etc., 7.5% for ordinary commercial plots with structureand 6% for without structure and so on. A standing Committee of HODs comprisingCE, CCM and FA&CAO has been nominated for fixing of rental value based .on the valuation of revenue and other authorities as described above. Minimum limit has been fixed at Rs. 1000/-. Fresh cases of licensing of plots connected with the Railway working would need the approval of GM. Agreements should be entered with the parties for these transactions and the termination or renewal of the agreement should be done at the end of financial year. The Surplus Railway Buildings can be let out to outsiders inCluding schools,welfare organizations, Mandirs, Masjids and Gurudwaras in accordance with the principles enumerated in Paras 1960-E and 1961-E. For schools and welfare organizations separate instructions have been issued vide Board's letter No. 92/LM (L)/21/4 dated 11/05/1992 according to which only a nominal amount should be charged on yearly basis as fixed by the Board. Regarding Mandir, Masjid and Gurudwara, latest instructions issued by board vide letter No. 2000/LML/22/1 of 31/05/2001 state that a nominal rent may be charged from these institutions with a provision of revision from time to time. The land so rented should be in the Railway colonies and not near stations, yard or workshops. Temporary licensing of land for a period not exceeding 3 months for the uses like carnivals, circus shows etc., can be granted at the rate of 20% of the market value of the land. This will require approval of GM. Open auction may be resorted for better value if more than one party is involved. The rate of licensing of Railway land to Govt. Departments should be 12% of the market value of land. Policy regarding provision of quarter for GRP staff as laid down vide Board's letter No. 92/LM (B) 21/41/Policy of 12/10/1993 stipulates that, a rate of 3% of the market value of land should be charged from the state govt. annually for the land so provide. This rate should be subject to revision every 10 years. This type of licensing should be for a period of 30. These quarters will be maintained by Railways and maintenance charges for the same will be raised against state government. Railway reserves the right to acquire the quarters at any time by payment of depreciated cost of building at the rate of 1/65 per year. As per Para 1631-A1 the recovery of rent from outsiders should be watched by the Accounts office. For this purpose a register of buildings rented to non-railway departments and outsiders should be maintained by accounts office in the Form A.1631.
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Regarding Rent/License fee for Way Leave facilities Railway Board had issued revised guidelines vide their letter No. 97/LM(L)24/3 of 10/07/1998. The rates of way leave facilities vary for various categories and are either in terms of a fixed amount or a percentage of the market value of land to be paid per annum. These rates shall be subject to revision every five years. INTEREST & MAINTENANCE CHARGES OF SIDINGS: Sidings are extension of railway facilities to premises of customers. Based on nature of association from Railways, sidings can be categorise as: 1. Assisted Sidings 2. Private Sidings ASSISTED SIDINGS
t I iJ o
PRIV Al
Whe: private ~ instruCtil These i 58 /Wl /~ 99/TC/I
charges
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account f Assisted Sidings are the sidings provided by Railways for transportation services to factory or industrial premises other than a colliery, or any mining area or Govt. Deptt.etc. General principles are laid down for the same in paras1822-E t01842-£. The construction of assisted sidings has now been discontinued (Board's L. No. 85/WI/SP / 43 Dt/ 01.12.86). The parties to whom such sidings are provided have to pay following two types of charges which are payable from the date of their opening. 1) Interest and Depreciation charges - The siding owners have to pay an Interest and Depreciation charges on the capital cost as per book value borne by Railway at the time of initial construction of the siding. This will be at the prevalent rate of dividend payable by Railways to general revenue i.e. 7% since 1993. 2) Maintenance charges - The portion of siding inside party's premises is to be maintained by the party concerned from its own resources. Railway shall maintain the portion of siding within Railway's premises for which maintenance charges are payable by the siding owner. The maintenance charges are payable at the rate of 4.5% of the cost of portion of siding borne by Railways which is they brought to the present day cost. The maintenance work inside the premises of sidings is their own responsibility. However, Railway may take the maintenance of siding beyond Railway limit if so desired by the siding owner. Railways shall carry out periodical inspection of the maintenance carried out by the party. 3) Inspection charges - As stated above where party is maintaining the siding, periodical inspections are carried out by Railways to ensure that
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1) Te 2) Re 3) Sta 00 4) De;
As peJ 22.04.92 tIthe respon maintain inspectioru LIBERALI As aJ fewdt
1) As a s (CTP~ throu~ siding
nodal I 2)
Civil ]
safety parameters are being followed properly. Inspection charges levied by the Railways shall be not less than Rs. 2,000/- per ETKM p.a. and maximum being Rs. 5000/- p.a. However, in terms of Board's latest instructions circulated vide No. 99/TC/FM/26/1 dated 29/09/2000, levy of inspection charges has been withdrawn w.e.f. 29/09/2000.
PRIVATESIDINGS Where the cost is fully born by the outside party such sidings are termed as private sidings. In terms of Board letter No.58/WI/SA/13 of 13/04/1982 uniform instruction have been issued for levy of maintenance charges from private sidings. These instructions have further been modified vide Board's letter No. 58/W1/SP/45 of 0l/12/1986,No. 85/W1/SP/45 of 20/04/1987 and No. 99/TC/FM/26/1 of 29/09/2002. As per the above instructions, maintenance charges are to be levied for private siding on per kilometre basis, which will account for the following factors: 1) Tools & Plant Charges.
- Rs. 200/-
- 3% per year of cost of new fittings. 3) Staff cost Le. Pay & Allowances - On the basis of Pay scales of Maintenance Staff. Of Vth Pay Commission.
2) Replacement of small fittings
4) Departmental Charges.
- 12% now reduced to 5% w.e.f. 9/2000 on the total of above 3 items.
As per Board's. instructions issued vide their letter no. 90/CE-1/SP /38 of 22.04.92the maintenance of private siding beyond the Railway limits is primarily the responsibility of sidings owners. The siding owners should be encouraged to maintain the siding on their own and Rly. should only carry periodical inspections. LIBERALIZATION OF SIDING RULES: As a move towards customer care, Railway Board.have conveyed following few decisions vide their letter No. 99/TC (FM/26/1) dated 29/09/2000. 1) As a single window service to the customer Chief Traffic Planning Manager, (CTPM) has been nominated as a nodal officer for all siding matters throughout the construction stage and signing of agreement. As soon as the siding is handed over for commissioning, CCM (FM) will take over as the nodal officer. 2) Civil Engineering Inspection charges have been withdrawn.
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3) The OHE maintenance cost for existing as well as new sidings will be born by Railways not the sidings. 4) The capital cost and overhead charges for new sidings are rationalised. 5) Staff charges, other than Commercial staff will be borne by Railways. These instructions also make a provision for review of siding agreement, which were issued in 1985. 6) Cost of examination in case of sidings other than POL and C&W cost is to be borne by Railways. The rate of maintenance charges per Km. per year shall be subject to revision every five years. In the intervening period these will be increase @10% per year.
2)
MAINTENANCE CHARGES OF ROBs/FOBs AND LEVEL CROSSINGS: No specific orders from Board are available regarding fixation of rates of maintenance charges of ROBs and FOBs. As per standard form of agreement a rate of 3% per annum of the entire cost of the bridge has to be levied with a provision of revision as and when considered necessary. In term of Para 1851-E, level crossing maintenance charges are levied on the basis of actual pay and allowances of establishment required for maintenance of the level crossing. COST OF COMMERCIAL STAFF DEPUTED TO SIDINGS: These charges are levied on actual basis for staff deployed to sidings i.e. pay and allowances actually paid to the staff multiplied by number of staff. In addition to actual pay and allowances Railway also charges incidental charges, leave salary contribution to SRPF and gratuity at a prescribed percentage. All staff charges, except Commercial staff deputed at siding dealing with POL and other hazardous commodities, should be borne by Railways CHALLENGES: As stated above, all the charges leviable on other private parties/Govt. Deptt. are raised by Railways on concerned parties annually and Commercial staff charges are raised quarterly. All bills must be raised in time and realisation of the bills should be ensured within the financial year. However, owing to certain problems the recoveries lag behind. The type of problems faced can be categorised under following heads. 1) NON-AVAILABILITY OF PROPER RECORDS I AND NONEXECUTIONIREVISION OF AGREEMENTS: In cases of plots allotted to private/other Govt. parties it has been noticed that plans, maps, area of the plots and all other documents required are not properly maintained in Railway Offices. In the absence of the records, it becomes difficult to put strong defence to solve the dispute as and when they arise. Similarly, agreements are not executed in a number of cases and in some other cases though the agreements are executed but the clauses therein are in the old. format having no provision for revision arising out of change in policy.
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2) REVISION OF POLICIESIFRESH INSTRUCTIONS WITH RETROSPECTIVE EFFECT: Fresh arrear bills are raised if policy changes take place with retrospective effect. In most of the cases realization of these bills give rise to disputes. For example, Board's letter on license fee issued vide letter No. 82/W2/LM/18/87 of 29/08/1995 resulted in raising of revised bills w.e.f. 1985. These instructions could actually be implemented in 1999 only. Thus, the plot rent holders were compelled to pay difference in plot rent for 13/14 years at one stroke at a later date, which obviously .
created disputes. In a number of cases, concerned parties had vacated the
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plots but still they had to pay difference bills. Similarly, the parties who have been paying their dues on the basis of rates calculated earlier were unable to pay heavy billing as a result to the revised instructions on rounding off of the sidings length less than 112Km to IhKm. Many parties go to court and obtain stay orders in case of disputes as a result outstanding is lying in Railway books. It has also been noticed that as a result of the changes some parties have stopped making payment of there due even at older rate also. 3) LACK OF CLARITY REGARDING THE INSTRUCTIONS: ETKM factor for levy of maintenance charges often create confusion as it has often been misinterpreted by both the parties in their favour. 4) REMITIANCE BY PARTIES REMAINING UNCONNECTED: - In a n~ber of cases of plot /building rent, vendor license etc., it is noticed that the parties pay their bills at stations and the same are remitted to Railway earnings through station balance sheet. But under Bills Recoverable record the same is not accounted for and outstanding dues continue to appear for years together. In number of cases, bills outstanding figure available with executive department and Accounts Department show a major variation, as the necessary recon~iliations are not carried out. It is therefore necessary that the records are connected and reconciled periodically. 5). DISPUTE IN COMMERCIAL STAFF CHARGES: - The common dispute is that the sanctioned strength of staff is less than actual numbers of staff deployed. The grading of staff deputed and amount actually billed for does not tally as the grades of men on roll and grades of sanctioned strength are different. Sometimes, revision in rates of NDA, OT, NHA and revision of pay as a result of pay commissions etc., are not communicated to siding owners. Overtime paid to staff working on the sidings is also disputed. In most of the cases fault lies with railways as excess billing is done and no efforts are made to charge the sidings on rational basis. Accounts office should sort out this problems through 55
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tripartite meetings between commercial, personnel and Accounts while taking the party's point of view into account. 6). MULTIPLICATION OF AGENCIES INVOLVED IN REALISATION OF DUES: There is no fixed channel or Agency for realisation of each type of dues. For Commercial staff charges bills,.there are 4 departments involved in issue and realisation of bills. For raising of bills in some cases, Accounts Department is the Agency but for realisation of the same Engineering Department is the nodal agency e.g. for the dues of plot rent, building rent charges for ROB, FOB, Water charges etc., Engineering department is looking after realisation of dues. However, these problem can be sorted out if Accounts office plays a role of nodal coordinating agency. HOW TO APPROACH THE ISSUE: Proper and timely communication with the parties at appropriate level is of paramount importance as far as the realisation of outstanding dues is concerned. It should be ensured that there is no inaccuracy or arithmetical error in the preparation of bills. Bills must be raised in time and follow-up action should be initiated. Parties should be convinced with the documentary support that the bills are legitimately due. Wherever there is major disputes, meetings may be convened after taking prior appointment, at appropriate level. For the disputes of long standing nature, meetings may be arranged at Sr. Official's level. It should be ensured that proper groundwork is done before going for the meeting. All the Railway officials should be polite in their conduct with the customers since some of the customers like siding owners constitute important source of freight earnings. Our main objective is freight and not the other sundry charges. Thus, the issue may be approached on these lines only. There are instances when because o.f the disputes related to maintenance and other charges, the customers has shifted to road transport. Therefore, such eventualities must be avoided at all cost. One thing to be kept in mind is that the payments to Railways, being a government department, are not of sensitive nature from the perspective of the party therefore recover are relatively easier. Similarly, the viewpoints of parties must be appreciated and their other concerns should be communicated to the executive head of the Railway unit concerned. In an interesting finding, a review of disputed items on BSLdivision, as conducted on 15/12/2002, showed that in almost all the cases, the fault lied with Railways. The problems were related to unusual delay in raising of the bills, wrong calculation of charges, improper interpretation of the rules and staff charges being raised disproportionately etc. For example, sidings of IOC at Gaigaon and Shirud 56
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stations bill ame 2000 011
Similar! erroneol well. J parties ( which v. released Therefor ensured
stations of BSL Division were opened in July 1994 whereas the first maintenance bill amounting to Rs. 1.8 crores could be raised as late as in the month of May ~OOO only. Moreover, there was no siding agreement entered with the party. Similarly, in the case of FCI/MMR an excess bill of Rs. 49.9 lacs was raised erroneously which resulted in dispute and non-payment of remaining charges as well. However, these disputes were sorted out to the satisfaction of both the parties once the matter was taken up with a proper direction. The payments, which were disputed and were outstanding since inception of these sidings were released by IOC and CFI in one go without much effort being made by Railways. Therefore, despite few problems proper recoveries of Railway dues can be ensured if little more discipline is brought in the working.
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