Govt: E Way bill Systemic Deficiencies & Corrective measures

Systemic Deficiencies in e way bill and corrective measures taken by Govt

E-Way Bill System: The e-way bill is an electronic document required for the movement of goods exceeding INR 50,000 in value under the Goods and Services Tax regime. It was introduced to improve transparency, traceability, and compliance in the movement of goods across State and intra-State boundaries. Systemic Deficiencies Highlighted that systemic deficiencies have been noted in the e-way bill system under GST. The government identified three major deficiencies in the e-way bill system. The following issues are listed:

1. Generation of Multiple E-Way Bills for the Same Invoice
2. E-Way Bills by Non-Filers
3. E-Way Bill Generation by Cancelled GSTINs
4. Weak Integration with GST Portal
5. Composition Taxpayers Misuse
6. Gaps in Data Reconciliation

Major Systemic Deficiencies Identified:

The CAG flagged several systemic & operational weaknesses in e-way bill mechanism that could undermine its effectiveness & lead to revenue leakage. The following measures were taken by the Govt via the issue of the MOF. Corrective measures are described:

• Multiple E-Way Bills for Same Invoice : The system allowed generation of more than one e-way bill against the same invoice due to weak validation and lack of strict deduplication controls. Variations such as changes in case (upper/lower), spacing, or formatting allowed multiple bills on the same transaction. The issue is fix by validation developed to prevent multiple bills for the same invoice. Documents older than 180 days are not allowed for e-way bill generation.
• Generate E-Way Bills by Non-Filers of GST Returns : Taxpayers who did not file required GST returns were still able to generate e-way bills. This created a loophole where non-compliant entities could move goods without fulfilling core tax obligations. The issued fix by the system blocks e-way bill generation for taxpayers who have not filed the previous three returns. Filing status is checked before permitting generation.
• E-Way Bill Generation by Cancelled GSTN : The system did not always prevent e-way bill generation using GSTINs that were cancelled or inactive. This risked misuse by nonexistent or defunct entities, potentially enabling fraud or revenue evasion. Issue fix by validation ensures no e-way bill can be generated by/against a cancelled GSTNs.
• Weak Integration with GST Portal : Lack of tight integration between the e-way bill portal and the main GST portal meant key validations like compliance status, filing history, and registration status were not always updated in real time.
• Composition Taxpayers Misuse : The system couldn’t consistently distinguish between inter-State and intra-State movement for composition scheme taxpayers (who generally can’t transact interstate), leading to incorrect bill generation.
• Gaps in Data Reconciliation : Comptroller and Auditor General of India found mismatches between e-way bill transactions and GST returns data, leading to discrepancies in tax reporting and Input Tax Credit reconciliation.

Government’s Corrective Measures

• In response, the Government of India (through the Ministry of Finance and GST Network/National Informatics Centre) has implemented several technological and compliance-oriented fixes:
• Blocking Duplicate E-Way Bills : The system now prevents more than one e-way bill for the same invoice number and date, regardless of case or minor variations. E-way bills cannot be generated using documents older than 180 days.
• Linking Bill Generation with GST Return Filing : E-way bill generation is now blocked automatically for taxpayers who have not filed their previous three GST returns. This ensures that only compliant taxpayers can generate bills, tying transport permissions to compliance behavior.
• Real-Time Validation of GSTIN Status: The portal now performs real-time checks on GSTIN status to ensure that bills cannot be generated by or against cancelled or inactive GSTINs. This closes a major loophole previously exploitable for fraud.
• Enhanced System Controls and Validations: Stronger invoice deduplication logic that normalises data (ignoring differences in upper/lower case, spacing, etc.). Integrated checks that cross-verify e-way bill data with GST filing and registration databases.
• Limiting Misuse by Composition Taxpayers: Validation rules now enforce correct bill issuance for composition taxpayers, limiting incorrect inter-State bill generation.
• Continuous Upgrades and Monitoring: Ongoing system upgrades and periodic audits ensure validations are kept up to date and that new loopholes are addressed quickly.

Overall Impact of Corrective Measures

Stricter validations ensure e-way bill data is more accurate and reflective of real transactions. Blocking non-filers and cancelled Goods and Services Tax Identification Numbers of users helps reduce fraudulent movement of goods. And enhanced technology checks build trust in the GST digital compliance ecosystem. Linking bill generation to compliance history incentivizes regular tax filing.

Business Perspective Remaining Practical Issues.

While systemic fixes have been introduced, some operational and procedural challenges still affect users:

• Errors in data entry (Goods and Services Tax Identification Numbers, vehicle numbers) continue to cause bill rejections or transit delays.
• Businesses sometimes face difficulties reconciling e-way bills with accounting systems.
• Small enterprises may still struggle with understanding and complying with technical requirements.

Conclusion

The e-way bill system has been substantially strengthened through targeted corrective actions following the identification of systemic deficiencies by audit authorities. Technological enhancements, real-time validations, and stronger compliance‐linked controls have bolstered the integrity and effectiveness of the system, reducing the scope for misuse and improving GST compliance.  Government of India via issue Minister of State in the Ministry of Finance Implemented validation checks to prevent misuse:

• • Restrict multiple bills for same invoice.
  • Block non-filers from generating bills.
  • Disallow bills for cancelled Goods and Services Tax Identification Numbers.