The recently released Comptroller and Auditor General (CAG) report has highlighted serious lapses and systemic weaknesses in the implementation of the GST E-Way Bill (EWB) system in Jammu and Kashmir, which is designed to capture details of goods before their movement.
The EWB system was introduced in April 2018 for all inter-state movement of goods valued above Rs 50,000. For intra-state movement in J&K, it was implemented in phases with the same threshold limit.
The audit found multiple irregularities, including ineligible taxpayers continuing under the Composition Levy scheme and taxpayers filing ‘nil’ returns or not filing returns despite generating EWBs. These cases involved a tax implication of Rs 2.29 crore.
Between 2018 and 2022, three taxpayers registered within two assessment circles generated 5,739 EWBs involving a tax effect of Rs 67.99 crore. However, only Rs 64.24 crore was reported through GSTR-3B returns, leaving Rs 3.75 crore unaccounted for. The audit noted that specific invoices linked to unpaid tax could not be identified due to the absence of proper reconciliation between GSTR-1 and GSTR-3B.
The report also pointed to compliance deviations. EWBs were generated by cancelled taxpayers, and some bills included invalid vehicle numbers such as scrapped vehicles, two-wheelers, and vehicles with cancelled or suspended registrations. In some cases, multiple EWBs were generated against the same invoice.
Further, the CAG flagged a significant shortage of staff in the Enforcement Wing during 2018–22. Vacancies ranged from 29 to 55 per cent among State Tax Officers, 43 to 72 per cent among Inspectors, 54 to 71 per cent among Sub-Inspectors, 36 to 92 per cent among Head Guards, 77 to 86 per cent among Guards, and 71 to 83 per cent among drivers. The reduced workforce likely impacted enforcement efficiency.
The report also noted that no specific targets were set for EWB verification during the audit period. Physical verification reports in Form MOV-04 were not prepared in 47 cases, making it difficult to confirm the correctness of goods assessment. Additionally, no Grievance Redressal Officer was appointed to address complaints filed through Form GST EWB-04.
Other inconsistencies included non-levy of late fees on delayed returns, failure to charge interest on late tax payments, delays in cancellation of registrations, and non-filing of GSTR-10 returns. Cases where action was initiated but not completed were also observed.
The audit identified broader compliance issues such as short or non-payment of interest, undischarged tax liabilities, irregular Input Tax Credit (ITC) claims, mismatches between returns, and availing ITC without supplier tax remittance. These deviations carried a total tax implication of Rs 439.36 crore, the report added.
