Odisha’s GST administration has drawn scrutiny from the Comptroller and Auditor General of India (CAG) after an audit revealed a substantial gap between amounts sought through show-cause notices and actual recoveries. Scrutiny of nearly 1.77 lakh GST returns during 2020-21 to 2022-23 led to notices involving ₹2,515.87 crore, while recoveries stood at just ₹110.36 crore.
The figures translate into a recovery of approximately 4.4% of the amount covered by the notices, highlighting weaknesses in follow-up action after discrepancies were identified. The amounts in show-cause notices, however, should be distinguished from liabilities finally determined through adjudication.
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Audit Examines GST Compliance And Goods Movement
The findings form part of the CAG’s Performance and Compliance Audit Report (Revenue) for the period ended March 2023. The report, designated Report No. 1 of 2026, was tabled on September 28, 2026.
It includes a performance audit of the electronic way bill system under GST and a subject-specific compliance audit of the department’s oversight of GST payments and return filing. Together, these examinations assess controls over tax compliance and the monitoring of goods movement.
Recovery Gap Particularly Wide In Selected Circles
The scrutiny findings were especially pronounced in eight tax circles that furnished information to the audit. These circles issued 5,444 show-cause notices involving ₹1,078.06 crore, against which only ₹19.94 crore was recovered.
This represents approximately 1.85% of the amount covered by those notices. The figures indicate that identifying discrepancies and initiating proceedings had translated into limited revenue collection within the period reviewed.
The eight circles had scrutinised 1,27,704 returns relating to 22,961 taxpayers. Separately, ₹17.34 crore was recovered after discrepancies were communicated through ASMT-10 notices.
Excess Input Tax Credit Of ₹1,228.31 Crore Flagged
A detailed examination of 79 selected taxpayers identified excess input tax credit of ₹1,228.31 crore availed by 52 taxpayers during 2018-19 to 2020-21.
The audit also found that 46 taxpayers within the same sample had not discharged tax liabilities amounting to ₹530.65 crore. These findings concern different compliance issues within a common sample; the taxpayer counts should therefore not be added together as separate groups.
The observations point to significant discrepancies in both credit claims and tax payments, requiring verification and appropriate departmental action.
Return Analysis Identifies ₹10,267 Crore In Inconsistencies
Using 15 parameters, the CAG identified 301 instances of inconsistencies involving ₹10,267.19 crore and referred them to the jurisdictional circles for verification and action.
The amount represents the value associated with identified mismatches and inconsistencies. It should not be treated as an equivalent amount of conclusively established tax evasion or recoverable revenue.
The subsequent departmental response included recovery of ₹100.86 crore in 13 cases and creation of demands totalling ₹35.76 crore in another 13 cases.
Department Reports Notices And Further Examination
The report records show-cause notices in 53 cases involving ₹853.63 crore and discrepancy intimations in Form ASMT-10 in nine cases involving ₹68.71 crore.
These steps reflect different stages of departmental proceedings. Issuing a notice or creating a demand does not, by itself, establish that the amount has been collected.
The findings consequently raise a broader question about the effectiveness of the state’s GST oversight: whether discrepancies detected through return scrutiny are being followed through to timely resolution and recovery.
CAG Calls For Timely Corrective Action
The CAG recommended that scrutiny proceedings comply with the established Standard Operating Procedures and that remedial action on identified compliance deviations be initiated before the cases become time-barred.
The audit places emphasis on completing the compliance process—from identifying a mismatch and obtaining the taxpayer’s explanation to determining liability and pursuing recovery where legally payable.
