Under the Goods and Services Tax (GST) regime, to strengthen the E-Way Bill (EWB) system, the Comptroller and Auditor General of India (CAG) has sought that revenue authorities determine taxpayers generating high-value EWBs but not releasing their tax liability and report such taxpayers for scrutiny.
For crossing the threshold limit and generating EWB for inter-State supply, caution the Composition Levy Scheme (CLS) taxpayer, along with the departmental officer, as per the CAG’s audit report on E-Way Bill System presented in Parliament.
Regarding the generation of multiple EWBs with a single invoice/similar invoice, authorities need to caution the taxpayer and departmental officer. Authorities must issue instructions to the proper officers for considering EWBs generated by the taxpayer before cancellation of registration retrospectively and taking action for tax recovery wherever applicable.
CAG audit for the preventive functions of the revenue department noted that the shortcomings of the administrative like no specific setup for EWBs verification, insufficient patrolling vehicles, insufficient manpower, lack of targets, insufficient verification of EWBs against the targets, and insufficient use of analytical reports on EWBs.
Audit Highlights Gaps in GST Oversight and Preventive Controls
A performance audit (PA) was conducted on the E-Way Bill (EWB) System under the Goods and Services Tax (GST) regime. This audit had two primary objectives: first, to assess how effectively the EWB mechanism safeguards the revenue interests of the Government; and second, to evaluate the efficiency and effectiveness of the Department’s preventive activities in enforcing EWB provisions. This audit encompasses EWB transactions from April 1, 2018, to March 31, 2022.
Tax Evasion and Turnover Suppression Cases Exceed ₹576 Crore
The effectiveness of the Electronic Way Bill (EWB) system in safeguarding revenue has been called into question by the Comptroller and Auditor General (CAG), which identified 470 instances totalling Rs 576.86 crore where composition taxpayers either did not fulfil or only partially met their tax liabilities.
These issues include cases of taxpayers generating EWBs for inter-state supplies while exceeding the threshold limit of the composition scheme, as well as generating EWBs but subsequently filing nil returns or failing to file returns altogether. Additionally, instances were noted where EWBs were issued after the cancellation of tax registration and cases where the same invoice was used to generate multiple EWBs.
Read Also: What is GST E Way Bill & How To Generate Via Online or SMS in Your State?
Audit discovered the turnover suppression by 18 taxpayers for three Commissionerates who generated 3,137 EWBs for outward supplies of Rs 168.21 crore but did not release the tax liability of Rs 81.11 crore with interest of Rs 45.19 crore because of either not filing returns or non/short reporting the turnover in their returns.
