The Comptroller and Auditor General of India (CAG) has urged the revenue authorities to tighten oversight of the E-Way Bill (EWB) system under the GST regime to prevent revenue leakage. In its performance audit report on the EWB system presented in Parliament on Tuesday, the CAG recommended identifying taxpayers who generate high-value EWBs but fail to discharge corresponding tax liabilities and flagging them for scrutiny.
The report emphasised the need to alert both Composition Levy Scheme (CLS) taxpayers and departmental officers when the threshold limit is crossed, or when EWBs are generated for inter-State supplies in violation of CLS provisions. It also called for alerts on instances where multiple EWBs are issued against a single invoice, to detect potential misuse.
Calls for Action and Recovery
According to the audit, tax authorities should consider all EWBs generated by a taxpayer before cancelling their GST registration retrospectively and take necessary steps to recover dues where applicable. The CAG noted that preventive enforcement efforts were hindered by administrative shortcomings such as the absence of a dedicated verification unit, shortage of patrolling vehicles and manpower, lack of verification targets, and underutilisation of analytical EWB reports.
Audit Period and Scope
The performance audit covered EWB transactions between April 1, 2018, and March 31, 2022, with two primary objectives: to assess the effectiveness of the EWB system in safeguarding government revenue and to evaluate the efficiency of preventive enforcement activities.
Revenue Losses and Suppression of Turnover
The audit flagged 470 cases of non- or short-payment of tax by composition taxpayers generating EWBs for inter-State supplies or exceeding scheme limits, as well as cases of taxpayers generating EWBs but filing nil returns, failing to file returns, or continuing to generate EWBs after registration cancellation.
These irregularities accounted for an estimated revenue loss of ₹576.86 crore. Notably, 18 taxpayers across three Commissionerates were found to have generated 3,137 EWBs for outward supplies worth ₹168.21 crore without discharging tax liabilities of ₹81.11 crore, along with interest dues of ₹45.19 crore.
Strengthening GST Enforcement
The CAG's findings underline the urgent need for enhanced data analytics, inter-agency coordination, and targeted enforcement to close gaps in GST monitoring and ensure compliance. Implementing these measures, the report suggests, will be crucial for protecting revenue interests and deterring tax evasion under the EWB system.
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