A sensational revelation in the CAG audit report shows how taxpayers’ money collected in Gujarat is being looted in broad daylight. Due to suspicious indifference and negligence of officials in the Commercial Tax Department, discrepancies exceeding ₹51,057 crore have been detected.
To cover up this mega-scam, officials hid accounting books of 63 large taxpayers, effectively halting investigations.
Fake e-way bills worth billions of rupees were generated using ‘dead’ (cancelled) GST numbers, and fake Input Tax Credit (ITC) was claimed using duplicate invoices, siphoning off crores from the government treasury. Serious questions are now being raised regarding tax administration.
Government officials exhibited severe non-cooperation by withholding audit records to conceal the scam.
Out of 65 high-risk taxpayers selected for inspection, bank ledgers, account statements, and original accounting books for 63 taxpayers vanished from government offices.
Documents were not presented in 96.92% of these cases, serious administrative investigations into ₹1,234.71 crore remain incomplete.
Flaws in the online portal and deliberate delays of up to 3 years in cancelling GST registrations gave fraudsters free rein. Shocking figures surfaced in sample audits, suggesting that if thorough, multi-level investigations are conducted, the figures could rise significantly higher.
How was the scam committed? Understand in detail:
Over 1.25 lakh e-way bills generated on 4,520 cancelled GST numbers; government officials hid records to prevent an administrative probe into transactions worth ₹1,234 crore:
- Billions in trade on cancelled GST numbers: In Gujarat, 4,520 traders whose GST numbers were retrospectively cancelled by the government were identified. However, because system blocks were not enabled on the portal, 1,43,539 e-way bills were generated on these dead numbers, showing a total trade of ₹7,655.28 crore. While e-way bills were shown to bypass road check-posts, the government could not collect tax or returns as the GST numbers were cancelled. A tax liability of ₹15.80 crore was caught in only 27 sample cases.
- One invoice, multiple duplicate bills: Due to a lack of cross-verification software between the GST and E-Way Bill portals, 15,455 taxpayers repeatedly reused single invoice numbers. In this way, 64,469 duplicate e-way bills were generated to show the transport of goods worth ₹3,271.01 crore. Multiple trucks ran on a single bill while claiming crores in fake Input Tax Credit (ITC), dealing a double blow to the state treasury.
- Files suppressed; delays up to 3 years in cancellations: To allow fraudsters to continue their loot, officials deliberately delayed processing registration cancellation files by 1 to 997 days. In 10 units, delays exceeded 1,237 days. Following cancellation, taxpayers are required to file GSTR-10 final returns, but taxpayers did not file them, nor did the administration issue notices to determine tax liability.
- Creaming the Composition Scheme; theft on paper worth crores: Despite a turnover limit of ₹1.5 crore for small traders under the Composition Scheme, traders entered turnover figures ranging from ₹3,046 crore to ₹20.73 lakh crore. Yet, the software system failed to block them. In just 84 sample taxpayer inspections, illegal ITC worth ₹1,555.51 crore was claimed by creating fake purchases on paper.
Scam at a Glance (Figures):
- Total detected discrepancies: ₹51,057.14 crore
- Hidden trade on cancelled GST numbers (1.43 lakh e-way bills): ₹7,655.28 crore
- Missing files hiding transactions: ₹1,234.71 crore (63 large taxpayers)
- Goods movement on duplicate invoices (64,469 e-way bills): ₹3,271.01 crore
- Difference in tax credit (ITC) in only 84 cases: ₹1,555.51 crore
- Direct loss caused to the treasury in 291 cases: ₹2,606.62 crore
Not a discrepancy, duplicate bills were due to technical flaws and corrected
Roopwant Singh, Chief Commissioner, GST Department said, “The CAG audit covered amounts totaling ₹3,51,05,709 crore across 738 cases. Of these, audit queries were dropped in 399 cases as no discrepancies were found. Action has been taken in the remaining 291 cases.”
He added, “The ₹1,234.71 crore cited by CAG for 63 large taxpayers was estimated due to lack of records, not an established discrepancy. Based on CAG findings, out of ₹7,655.28 crore e-way bills across 4,520 taxpayers, tax worth ₹1,159.55 crore was shown, and no discrepancy was found after verification in 899 cases.”
