Para 3.7.21 — MSO (Audit)
Original Rule Text
3.7.21 It is obligatory on the part of each and every department of the Central, State and Union Territory Governments to procure stores required on a recurring basis, and borne on the rate contracts entered into by the DGS&D, either through the Directorate General or, if the officer concerned has been declared as a Direct Demanding officer, directly from the firm concerned. Failure to avail of the benefit of these rate contracts and resorting instead to local purchases at higher prices, either by splitting the purchase orders so as to ensure that the financial powers delegated to the officers for local purchases are not exceeded, or under some other pretext, including the ground that the officer concerned was not aware of the conclusion of the rate contract for the particular item, results in avoidable extra expenditure to Government. The Accountant General (Audit) and the Principal Directors of Audit should point out such cases, if any, noticed in the course of audit of the accounts of the departments concerned. In case such failures are found to be widely prevalent in a department or of a large magnitude, appropriate comments should be proposed for inclusion in the Audit Report.
- Payments made abroad for stores, supplies, etc.
# A. Stores purchases
3 7.22 Stores transactions passed on to India through the Remittance Account between England and India or the accounts of the India Supply Mission, Washington, as well as transactions pertaining to the separated accounts offices, which are initially classified under “Pay and Accounts Offices" and intimated to the Accounts Officers in India under the heading "Miscellaneous Transactions", can be classified broadly as follows:
(i) Stores obtained directly from firms abroad on FOB basis subject to inspection by the Director General, India Stores Department, London, or the India Supply Mission, Washington.
(ii) Stores purchased through the agency of the Director General, India Stores Department, London, or the India Supply Mission, Washington in terms of Rule 7 of Appendix 8 of the General Financial Rules (Revised and Enlarged),. 1963).
(iii) Food grains, fertilizers, etc. purchased through other agencies.
What This Means
Every government department — Central, State, and Union Territory — is required to procure stores available on DGS&D rate contracts either through the Directorate General or directly from the contracted firm if the officer is a Direct Demanding Officer. Departments that bypass these rate contracts and instead make local purchases at higher prices commit avoidable extra expenditure. Splitting purchase orders to stay within local purchase financial limits, or pleading ignorance of the rate contract, are not acceptable justifications. Audit must flag such cases, and serious or widespread violations should be proposed for inclusion in the Audit Report.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1All government departments must use DGS&D rate contracts for items covered by them
- 2Bypassing rate contracts for local purchases at higher prices is an avoidable extra expenditure
- 3Splitting orders to remain within local purchase limits is a violation
- 4Ignorance of rate contracts is not an acceptable excuse
- 5Widespread violations should be proposed for inclusion in the Audit Report
Practical Example
An Accountant General notices during audit that a district office purchased 200 printer cartridges locally at Rs 1,500 each, when a DGS&D rate contract existed at Rs 900 each. The office split the purchase into four orders of 50 each to stay within the Section Officer's local purchase limit of Rs 1 lakh. The Audit Officer calculates the avoidable extra expenditure of Rs 1.2 lakhs and, finding similar patterns across the department, proposes the matter for inclusion in the Audit Report.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Who is a 'Direct Demanding Officer'?▼
What if the department genuinely did not know about a rate contract?▼
When should such cases be included in the Audit Report?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.