A performance audit by the Comptroller and Auditor General of India (CAG) has uncovered serious systemic deficiencies in the e-way bill system under the GST regime, highlighting lapses that could lead to significant revenue losses.
The report, tabled in the State Assembly on Thursday, revealed that inadequate coordination between the e-way bill common portal and the GST common portal has resulted in the failure of key automated validation controls undermining the integrity of tax data and compliance monitoring.
Introduced in April 2018 to streamline the movement of goods worth over Rs 50,000, the e-way bill system was intended to enhance transparency and traceability by capturing details of consignments before transportation. However, the CAG audit shows that technical and procedural shortcomings have diluted its effectiveness.
Key Audit Findings
The audit pointed out that the e-way bill system allowed generation of e-way bills by non-filers of GST returns and even by taxpayers whose registrations had been cancelled, exposing a major compliance loophole.
Further, the system permitted multiple e-way bills to be generated for the same invoice number, due to the absence of cross-verification controls on the e-way bill portal.
The CAG also found that taxpayers under the GST composition scheme who are not permitted inter-State transactions were able to generate e-way bills for both inter-State and intra-State movements of goods.
Alarmingly, the system even enabled taxpayers who had filed nil returns to generate e-way bills for outward supplies, suggesting possible misuse and leakage of tax revenue.
Recommendations to Strengthen the System
In light of these findings, the CAG has urged the government to direct the National Informatics Centre (NIC) which manages the e-way bill common portal to rectify system deficiencies and strengthen automated checks to prevent fraudulent or duplicate e-way bill generation.
It has also recommended that authorities prescribe clear verification guidelines and develop mechanisms to detect and penalize taxpayers transporting goods without generating e-way bills.
Need for Stronger Digital Integration
The report emphasizes that the e-way bill system, envisioned as a key pillar of India's technology-driven tax compliance framework, needs better integration and real-time data exchange with the GST common portal to ensure accuracy and prevent misuse.
Tax experts have echoed the CAG's concerns, stating that bridging the technological and procedural gaps is critical to maintaining the credibility of the GST ecosystem and safeguarding government revenues.
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