E-Way Bills, Delayed Truths: CAG’s Audit That Arrived Too Late

Extrapolated to 200 crore E-Way Bills (2018–22), the leakage jumps to an absurd ₹7.25 lakh crore—nearly half of GST’s annual haul.

By P SESH KUMAR

NEW DELHI, August 17, 2025 — The Comptroller and Auditor General’s performance audit of the E-Way Bill system under GST, presented in August 2025, captures a litany of tax leakages, administrative lapses, and enforcement failures between 2018 and 2022.

Composition taxpayers breaking thresholds, taxpayers generating bills without returns, and mismatches in input tax credit claims are quantified in hard numbers. Yet the report suffers from a fatal handicap—it comes three years late, long after many of these flaws were already acknowledged and partly corrected by government.

Instead of breaking new ground, the audit largely confirms what policymakers and trade experts knew, while its recommendations—alerts, officer instructions, and vehicle patrolling—sound more like incremental patchwork than bold reforms. The absence of a deeper root cause analysis on why enforcement intelligence lay idle and why state GST departments failed to act makes the report read more like an overdue diagnosis than a prescription for real change.

The CAG’s E-Way Bill audit reads less like a scalpel exposing systemic rot and more like a belated case-sheet—thin on materiality, late in diagnosis, and leaving everyone guessing whether GST is bleeding by crores or by lakhs of crores.”

The CAG’s performance audit on the E-Way Bill system, tabled in Parliament in August 2025, lands with the weight of authority but also the unmistakable drag of delay. The period under review stops in March 2022, but the report itself surfaces more than three years later.

In a rapidly evolving GST environment, that gap is not just a technical lag, it is a distortion: many of the weaknesses flagged—composition dealers straying into inter-state sales, taxpayers churning out EWBs while ignoring returns, or the mismatch between GSTR-2A and GSTR-3B—were already well ventilated in government and trade circles by 2021–22.

By the time the report is published, some remedial steps—NIC analytics, tighter e-invoicing integration, system-based ITC matching—are already underway. The report, therefore, risks being read as a rear-view mirror when policymakers and administrators are peering ahead.

That timing problem also affects the sharpness of its critique. It lists tax leakages amounting to hundreds of crores, but stops short of asking why the system architecture, despite having real-time data, failed to generate red flags earlier.

Coal Imports: A Policy-Made Problem, Not a Resource Constraint

The report’s recommendations—alerts for threshold breaches, warnings on multiple EWBs with one invoice, and more systematic use of NIC’s analytical reports—sound sensible but hardly pathbreaking.

These are refinements that any agile GST Council or CBIC team should have implemented as course corrections between 2020 and 2023, long before an audit report compelled them.

What is missing is a deeper root cause analysis: is it poor data integration between GSTN and EWB portals, lack of human capacity to interpret alerts, or a deliberate tolerance of leakages at the field level?

The audit notes administrative deficiencies like the absence of dedicated enforcement setups and patrolling vehicles, but those surface-level descriptions stop short of examining whether state GST departments simply lack incentives or funding, or whether the architecture of federal revenue sharing has dulled enforcement zeal.

The findings also raise a provocative question—how many of these issues were genuinely uncovered by the audit, and how many were already known within government? Tax mismatch between GSTR-3B and GSTR-2A was a running sore, composition taxpayers breaching limits had been flagged in GST Council deliberations, and the use of multiple EWBs for one invoice was whispered about in trade forums.

The CAG has collated these threads into an authoritative record, but it is difficult to escape the impression that the report confirms more than it reveals. For the taxpayer and policymaker alike, the shock value is low.

What was expected was not just a recital of revenue foregone but a sharp dissection of why enforcement intelligence lay dormant in databases instead of being channelled into recovery

The materiality of the CAG’s quantified findings is its Achilles’ heel. The audit flags about ₹813 crore worth of irregularities, which sounds weighty until you hold it against GST revenues of nearly ₹15 lakh crore in 2021–22—barely a drop in the ocean.

Yet when one tries to extrapolate the sample to the entire universe of over 200 crore E-Way Bills generated during 2018–22, the implied leakage shoots up to an absurd ₹7.25 lakh crore, almost half of GST’s annual haul.

That statistical whiplash shows the real flaw: the sample is too tiny and too skewed to tell us whether we are dealing with isolated lapses or systemic hemorrhage. By not giving a credible sense of scale, the CAG ends up leaving policymakers with a riddle—are the leakages a mere mosquito bite on GST’s vast body, or is the patient secretly bleeding out?

Perhaps the most telling weakness lies in the audit’s recommendations. They are practical in wording but timid in scope. Alerts and instructions to officers are procedural tweaks; what is missing is the leap into systemic reform.

Should there be automatic suspension of EWB generation once a composition dealer breaches turnover limits? Should ITC claims above a threshold be frozen until GSTR-2A reconciliation? Should enforcement be insulated from local administrative pressures by creating a national cadre for EWB interception? These are structural questions left untouched. Without them, the report risks being a manual of incremental fixes rather than a roadmap for overhaul.

In the end, the CAG’s performance audit on the EWB system succeeds in placing official stamp on known frailties and quantifying their limited and unclear impact. But its tardiness blunts its relevance, its diagnosis skirts the root causes, and its prescriptions lack the boldness that could have made it a catalyst for reform.

In doing so, it highlights a paradox of Indian auditing—its ability to gather uncomfortable facts is unmatched, but its translation into timely, actionable reform still lags behind the churn of governance.

Waking up Far Too Late

The E-Way Bill audit is a reminder of both the strengths and limits of the CAG. It can marshal numbers, expose evasions, and collate the scattered failures of revenue machinery into a neat record. But when that record arrives years after the fact, its sting is dulled.

The report identifies hundreds of crores in leakages but stops short of asking why systemic fixes—real-time suspension of errant taxpayers, automated ITC freezes, or national enforcement cadres—were never considered.

Instead, it confines itself to alerts and advisories, recommendations that feel like telling a doctor to “monitor the patient” after the patient has already slipped into crisis. What could have been a trigger for systemic reform ends up as a belated certification of known weaknesses.

In that sense, the CAG’s audit of the E-Way Bill system is less a scalpel cutting into the rot and more a rear-view mirror reflecting flaws everyone had already seen.

(This is an opinion piece, and views expressed are those of the author only)

The Great Coal Import Conundrum Amid Deafening Silence of CAG

Follow The Raisina Hills on WhatsApp, Instagram, YouTube, Facebook, and LinkedIn

About The Author