How implementation of CMC's award-winning commercial taxation solution, iComitrax, benefited both taxpayers and the authorities in Madhya Pradesh.

The Madhya Pradesh commercial taxes (MPCT) department is among the largest in the country, with 96 offices in 60 locations and a team of 5,000 employees. It collects around Rs 35 billion annually and is one of the biggest single revenue sources for the state government.

Handling such large and complex operations manually has meant inefficiencies in workflow and inconvenience to taxpayers. MPCT was looking for an IT solution that would be cost-effective and improve its effectiveness.

Working proactively, the department had identified the main areas which needed improvement:

Tracking returns filing compliance: Many of MP's 350,000 registered dealers delayed filing their tax returns; sometimes, they would skip filing returns altogether. Manually, the staff could effectively track only a handful; the bulk often got away. Closer monitoring could significantly boost revenue collections.

Monitoring defaulters: It was difficult to track assessments of the amount due from identified defaulters. Often, these cases were settled without any substantive recoveries for the government.

Accuracy of returns data: Each commercial transaction has its origins in another deal. A reconciliation of a dealer's declaration can establish the correctness of each dealer's returns. But manually, this task is simply impossible.

Estimation of actual collections: Scrolls containing thousands of tax payment challans (delivery notes) were sent to MPCT offices by banks. These needed to be reconciled with the tax returns before revenues were booked. Banks take a long time preparing, sorting and forwarding these scrolls. Add to that the time taken in reconciliation. So, even though 30 per cent of MPCT's staff was always locked in reconciliation, the real collections figures were never known on time.

Rescheduling rigmarole: Due dates for filing returns (and tax payment) could be rescheduled by an officer, and there was no need to notify a senior officer or generate a report. In the absence of a foolproof tracking mechanism, some of the important cases would get repeatedly rescheduled, and slowly drop out-of-sight as well as out-of-mind. This practice could also be prone to misuse by vested interests.

Percolation of policy changes: MPCT offices work under directions of the headquarters at Indore, but the tax working and related calculations are undertaken independently at each office. When a directive or clarification was issued, it took some time before it reached every one concerned. Till these directives were received, some offices worked under different guidelines or interpretations, causing hardship to the taxpayers.

Accessibility: Whether it is for a query or to check the status of an application, tax offices are fairly inaccessible to the taxpayer. Merely picking up a form could well become an arduous task, owing to the employees being overloaded as well as the absence of any means to keep track of information and provide it to the dealers. This led to delays, and bred middlemen and touts.

IT to the rescue
In the year 2000, the department assigned the task of developing a value-added tax (VAT) based system to CMC. MAP_IT was named technical consultant. By mid-2001, the software was almost ready, but the central government deferred the introduction of VAT, and the project ran into a bottleneck. MPCT was unable to use the software and asked CMC to make it compatible with the existing sales tax laws. Keen to see its effort put to use, CMC agreed to handle the additional development without any extra cost. In 2002, the software was completed, tested and was ready for deployment. The stage was set for procurement of equipment and creation of a statewide infrastructure.

Innovation in implementation: To minimise teething troubles, CMC and MAP_IT (consultants appointed by the government to this project) decided to pilot the project at a few locations. Users were provided the training, encouraged to work with the system, and their responses were carefully observed. This formed the basis for drawing up the training content and plans for the bulk of the users. The user interface was suitably modified, and the complete roll-out was based on the learnings from this stage. This change management exercise meant a smoother passage; the roll-out was completed by mid 2003.

Scope
CMC was MPCT's prime partner in an ambitious project where a state government department set out to achieve total automation. Our role included:

	System architecture, application software development and user training
	Supply and installation of hardware and system software
	Supply and installation of networking equipment
	Routing consultant, including coordination with all other vendors/outside entities involved
	Project management

Application software details:

	Developed using state-of-the-art technology, on a J2EE platform
	Developed on Oracle Jdeveloper 3.2.2 and deployed on Oracle 9iAS with Oracle 9i RDBMS
	Browser-based three-tier application

Main modules of the application software:

Dealer information system (DIS)	Registration, amendments, issue of forms, etc
Returns processing system (RPS)	Filing of returns under various Acts, tracking defaulters, issuing advance tax notices
Dealers assessment system (DAS)	Tax assessment under various Acts
Law and judicial system (LJS)	Handles appeals, revisions and tracks court cases
Industrial exemptions system (IES)	Exemption / deferment cases of new industries. Tracks eligibility and exemption limits
Arrears recovery system (ARS)	Tracks tax dues and their recovery
Enforcement and raids system (ERS)	Collects and processes information from departmental sources, other departments and other sources, to select cases for raids; keeps track of post-raid records, reconciliation from check-posts, etc
Personnel information system (PIS)	Handles service and administrative matters of the employees of the department (like postings, transfers, promotions, leaves, loans)
Pension and payroll system (Pen & Pay)	Generates payroll, pay-slips and prepares pension papers of all employees
Management information system	Analyses data and generates a variety of reports

System architecture and application deployment

We developed a one-of-its-kind application using the latest state-of-the-art technology. A web-based system in which the application and the database for the entire state is centrally located at Indore, in a cluster of Alpha ES 40 servers, with redundancy and high availability, using BSNL high-speed leased lines

Hindi is an acceptable working language for end-users. The application includes an intranet-based mailing system for MPCT.

Results
After having used the system for nearly a year, users at all levels are satisfied. Registered dealers have been assigned unique IDs and their details entered into the system. All returns are undergoing system based assessment. New dealers are being registered on the system. CMC has delivered 100 per cent server uptime, since the system went live.

The leased line networking recommended by CMC has given more than 95 per cent availability. More than 450 online users from all parts of the state test the system — both the computing infrastructure and the communication bandwidth - to its fullest, all day, every day. During the peak season, thousands of returns are processed through the system each day. Between May and December, 2003, the system handled about 500 new dealer registrations.

Benefits

	The defaulters' list is most accurate and tracked completely, with an automatic audit trail of actions. No defaulter gets away without complying with the law
	Advance tax notices are being dispatched as soon as they are due; therefore the recovery is timely
	Bank challans (delivery notes) reconciliation is done electronically. The revenue position of the state, at any point of time, is around 60 hours old. Earlier, it used to be up to 60 days old!
	Around 55,000 bogus registrations have been weeded out. They were cornering a large number of concessional forms and costing the exchequer dear.
	Data pertaining to dealers across the state is available on the system and can be used for reconciling intra-state transactions. Inter-state transactions can be reconciled with states that have automated commercial tax operations.
	All official actions which involve discretion are now recorded in the system and duly reported, bringing them under scrutiny and tracking. All rescheduling of due dates gets recorded in the system calendar, and pop up when they are due. Nothing can go out of mind, because it no longer goes out of sight.
	The system works on a centralised architecture. All offices enter data into the server and all calculations are done only on the server. This ensures that all 96 offices always stay in sync and changes need to be made only in one place.

Employees have their own reasons for being happy with the system. It has made life a lot easier and significantly boosted their productivity. All HR matters and payroll are now handled through the system, faster and more accurately. The greatest achievement in implementing this project is not just in terms of benefits, but the trickling in of an IT culture into the department. The employees have been transformed from an indifferent lot to curious IT enthusiasts.

The project has won a certificate of recognition as an exemplary implementation of an eGovernance initiative at the 7th National Conference of eGovernance, held at Chennai in 2003.

	Download of forms without having to visit the office
	All queries through email and the website
	All judgments and relevant policy changes through the website
	Online applications for registration, cancellation, amendment and transfer of dealership
	Online payment through a secure gateway

Later, the department plans to make extensive use of data warehousing and data mining technology, for decision support.