admin
Odisha’s tax administration has come under scrutiny in the latest audit by the Comptroller and Auditor General (CAG) of India, with the state’s revenue machinery facing significant gaps in GST compliance, recovery of assessed dues and monitoring of goods movement.
The Performance and Compliance Audit Report (Revenue) for the period ended March 2023 flagged instances involving unpaid tax, excess input tax credit, weak recovery of demands and inadequate enforcement of the electronic way bill (EWB) system.
The audit found that scrutiny of GST returns in 177,000 cases between 2020-21 and 2022-23 resulted in demands of more than ₹2,500 crore, but only around ₹110 crore was recovered, indicating a substantial gap between detection of tax liabilities and actual realisation of government revenue.
The problem was evident in the eight circles selected for detailed audit, where only ₹19.94 crore was realised against demands of ₹1,078 crore raised through show-cause notices, leaving the bulk of the assessed amount outstanding.
The CAG also identified significant revenue exposure through its analysis of GST return data. In a detailed examination of 79 selected taxpayers, 52 taxpayers had availed excess input tax credit of ₹1,228.31 crore and 46 taxpayers had not discharged tax liabilities amounting to ₹530.65 crore across those 79 cases during 2018-19 to 2020-21.
The CAG examined GST returns using 15 parameters and identified 301 instances of inconsistencies involving ₹10,267 crore, which were referred to the concerned circles for verification and action. The department subsequently reported remedial action in 88 cases, including recovery of ₹100.86 crore in 13 cases, while demands of ₹35.76 crore were raised in another 13 cases. Show-cause notices were issued in 53 cases involving ₹853.65 crore, and assessment notices were issued in nine cases involving ₹68.72 crore.
The audit also found that the department had already initiated action in 92 cases involving ₹2,088 crore before the audit queries were raised, while 40 cases involving ₹621.26 crore were still under examination.
The CAG pointed out that the audit could not examine in detail mismatches identified through data analysis involving ₹2,528.12 crore because financial statements and invoices of 43 of the 79 selected taxpayers across 12 of the 24 selected circles were not produced for audit.
The report also highlighted shortcomings in the electronic way bill mechanism, which was introduced to track the movement of goods and help prevent tax evasion. The audit found several instances where the EWB system did not adequately protect the state’s revenue interests.
Six taxpayers generated 2,340 EWBs for outward supplies valued at ₹79.81 crore, involving a tax implication of ₹11.9 crore, but did not file GST returns and consequently did not discharge the corresponding tax liability.
In another instance, four taxpayers generated 43 EWBs after cancellation of their GST registrations for outward supplies worth ₹1.93 crore, involving tax of ₹35 lakh. The department had not assessed the corresponding tax liability.
The audit also detected possible duplication in the EWB system. Four taxpayers used the same or similar invoices to generate multiple EWBs for movement of goods valued at ₹1.86 crore, involving GST liability of ₹10 lakh. Similarly, four taxpayers generated 96 EWBs for outward supplies worth ₹5.59 crore, with a tax liability of ₹99 lakh, but filed nil returns. The CAG observed that the department had not initiated action against these taxpayers.
Use of suspicious vehicles was another major concern, as 14 taxpayers generated 1,113 EWBs covering goods valued at ₹80.3 crore and tax implications of ₹13.78 crore using 235 suspicious vehicles. These included stolen, surrendered, cancelled and suspended vehicles and even two-wheelers.
The CAG found deficiencies in monitoring vehicle movement through Radio Frequency Identification Devices, non-use of the Comprehensive Analytics Report module, inadequate personnel and insufficient patrolling vehicles.
It also indicated gaps in coordination between different state departments. The Forest Department had seized or confiscated forest produce, including timber and Kendu leaf, valued at ₹9 lakh, but the potential GST liability arising from such transactions was not addressed because information was not exchanged between the Forest and State GST departments.
Similarly, the Motor Vehicle Department had seized 1,893 tonnes of overloaded goods, but the potential GST implications were not examined due to the absence of information sharing with the State GST Department.
The CAG’s findings also extended to taxpayers whose GST registrations had been cancelled. Of 4,730 cancellation orders issued during 2020-21 in nine selected CT & GST circles, only 809 taxpayers filed the mandatory final return GSTR-10. The department initiated action for non-filing in only 53 cases, exposing the state to the risk of unrecovered tax and non-reversal of input tax credit.
The report also identified substantial discrepancies between GSTR-2A, GSTR-3B and GSTR-9 returns. The audit’s detailed examination found excess ITC of ₹1,228.31 crore and unpaid tax liabilities of ₹530.65 crore, underscoring the revenue implications of weak reconciliation and scrutiny mechanisms.
Beyond GST, the CAG identified a separate revenue loss in the Excise Department. Non-compliance with the Excise Commissioner’s orders issued in May 2008 and failure to issue demand notices for collection of transport fees on locally collected Mohua flower from 21 Out Still licensees resulted in non-realisation of ₹61.04 lakh in government revenue during 2018-19 to 2021-22.
GIPHY App Key not set. Please check settings