Nine years after the rollout of the Goods and Services Tax (GST), several structural and technological weaknesses in the tax administration and enforcement framework continue to create difficulties in detecting tax evasion and concluding investigations. According to an investigation published by Dainik Bhaskar, around 8,000 cases involving approximately ₹12,000 crore are reportedly stuck, even as authorities grapple with challenges ranging from inadequate data sharing to weaknesses in e-way bill monitoring.
The report, based on discussions with senior GST officials, tax professionals and large taxpayers, identifies seven major operational gaps which, according to the publication, are affecting GST enforcement. These include lack of access to case files for State authorities, absence of effective live tracking of e-way bills, registration-related verification gaps, inadequate infrastructure for anti-evasion operations, increasing use of cloud-based accounting systems, misuse of multiple UPI/QR codes and shortcomings in audit verification.
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The findings are significant because GST is fundamentally built around technology-driven compliance, invoice matching, electronic movement documentation and data analytics. Yet, the investigation suggests that technology gaps and coordination issues between different authorities may be limiting the effectiveness of enforcement.
States Reportedly Lack Access to Complete Case Files
One of the major issues highlighted relates to data sharing between the Centre and the States.
According to the report, departmental proceedings—including adjudication orders, notices and other case-related information—may be available with the concerned GST system or authority, but State-level officials do not always have access to the complete data relating to matters handled by other jurisdictions.
The practical consequence is that officers may not immediately know whether proceedings concerning a taxpayer are already pending or have been dealt with elsewhere. This can complicate coordination and contribute to cases remaining unresolved.
In a tax regime designed around “One Nation, One Tax”, seamless information sharing between Central and State authorities assumes particular importance, especially where taxpayers, transactions and supply chains extend across jurisdictions.
E-Way Bill System Lacks Effective Live Vehicle Tracking
The second major concern relates to the e-way bill mechanism, which is intended to electronically document the movement of goods.
The investigation claims that while e-way bills are generated rapidly across the country, the system does not necessarily provide authorities with continuous live tracking capable of establishing whether goods have actually travelled through the declared route and reached their stated destination.
The report further refers to delays in obtaining certain vehicle-location information from enforcement-related databases. Such delays can reduce the usefulness of location data in time-sensitive investigations.
This weakness can potentially be exploited where documentation is generated for one transaction while goods are diverted, substituted or otherwise moved differently from what is reflected in the electronic records.
GST Registration Without Adequate Physical Verification Raises Fake-Firm Risk
Another area highlighted is the GST registration process.
The investigation notes that registration applications may be processed within prescribed timelines where the applicant does not fall into categories requiring detailed physical verification. However, inadequate verification of the actual business premises can create opportunities for bogus or non-existent firms to obtain GST registrations.
Fake registrations have long been a significant enforcement concern because shell entities can allegedly be used to issue invoices without corresponding supplies and thereby facilitate fraudulent input tax credit claims.
The report suggests that where physical verification is absent or inadequate, businesses may obtain registration even when the declared premises do not reflect genuine commercial activity.
It further claims that fake entities can be used to circulate invoices and pass on input tax credit, potentially causing substantial revenue losses to the exchequer.
Anti-Evasion Wing Said to Face Infrastructure Constraints
The investigation also raises questions about the infrastructure available to anti-evasion teams.
It states that anti-evasion operations are conducted across several divisions with a significant number of officials, but expenditure on the establishment may substantially exceed the direct technological and operational resources available to officers for sophisticated investigations.
According to the report, officers conducting enforcement activities may face limitations in specialised analytical tools and infrastructure required to examine complex transactions.
The issue assumes greater importance as GST evasion becomes increasingly technology-driven, involving digital records, layered transactions, electronic invoices and interconnected businesses across multiple States.
Cloud-Based Accounting Makes Traditional Search Methods Less Effective
A particularly significant technological challenge identified in the report is the migration of businesses from traditional locally installed accounting software to cloud-based accounting and data storage.
Earlier, investigators conducting searches could potentially access accounting information stored on computers, hard disks or servers physically located at business premises. With businesses increasingly maintaining records through cloud services, remote servers, virtual private networks and web-based accounting platforms, the relevant information may no longer be physically available at the premises being searched.
The investigation claims that authorities may not always have immediate access to the technical tools necessary to identify, retrieve or secure such remotely stored information.
Consequently, conventional search-and-seizure methods designed around physical books, computers and local servers may become less effective unless supported by modern digital forensic capabilities.
Multiple UPI and QR Codes Pose New Challenge for Detecting Suppressed Turnover
The rapid growth of digital payments has created another enforcement challenge.
According to the report, some businesses may display or use multiple UPI QR codes linked to different personal or related bank accounts instead of routing all business receipts through the principal business account.
For example, a single establishment could potentially receive payments through separate QR codes connected with accounts belonging to different persons.
Such practices can make it more difficult to establish the complete turnover of the business solely by examining its declared bank account or books of account.
The report suggests that this technique can be used to suppress actual turnover, thereby reducing the taxable value disclosed to GST authorities.
This represents an important evolution in tax enforcement: while digital payments create electronic trails, fragmented use of accounts and payment identifiers can make reconstruction of the complete transaction trail more complicated.
Audit Verification Also Flagged as a Weak Point
The seventh issue highlighted concerns GST audits and verification of departmental assessments.
The investigation claims that mechanisms for systematically examining or auditing certain decisions taken by tax officials remain inadequate.
It refers to the possibility of significant tax demands being substantially reduced during departmental proceedings without a sufficiently robust independent audit mechanism capable of automatically flagging such cases for examination.
The report also notes that the verification of assets and declarations of officials themselves is another area requiring stronger scrutiny.
According to the publication, a system for examining property declarations of a significant number of officers is now reportedly being initiated in Indore.
₹12,000 Crore Reportedly Locked in Around 8,000 Cases
The most striking figure highlighted in the investigation is that approximately ₹12,000 crore is reportedly involved in around 8,000 cases that remain pending or stuck.
If accurate, the figure illustrates the financial consequences of delays in adjudication, coordination and enforcement. Pending tax disputes do not merely affect government revenue; they also create uncertainty for businesses whose tax liabilities remain unresolved for prolonged periods.
The report indicates that some cases may remain unresolved because officials lack access to information regarding proceedings conducted by other authorities or jurisdictions.
This becomes particularly problematic in GST because businesses frequently operate across State boundaries while Central and State tax administrations exercise concurrent or allocated jurisdiction.
GST Enforcement Entering a New Technological Phase
The issues highlighted by the investigation demonstrate how the nature of GST enforcement has evolved since the tax was introduced in July 2017.
Traditional enforcement largely depended on physical invoices, books of account, warehouses and bank transactions. Modern tax evasion, however, can involve cloud-hosted accounting systems, digitally generated invoices, multiple payment accounts, remote servers, shell registrations and interstate supply chains.
Consequently, merely digitising tax filings may not be sufficient. Enforcement agencies also require integrated databases, real-time analytical tools, digital forensic capabilities and seamless information sharing between Central and State authorities.
The concerns surrounding e-way bill tracking are particularly relevant because the mechanism was introduced precisely to create an electronic trail for the movement of goods. Where authorities cannot effectively correlate the e-way bill with actual vehicle movement, an important layer of enforcement may become less effective.
Similarly, registration systems must strike a balance between ease of doing business and prevention of fraudulent registrations. Excessively burdensome verification can delay genuine businesses, while inadequate verification can enable fake entities to enter the GST ecosystem.
GST Authorities Say Information Is Being Shared Through Portals
The Dainik Bhaskar report also carries the response attributed to GST authorities. Officials reportedly stated that there is no separate system for sharing data directly with States in the manner suggested, but information is exchanged through departmental portals and coordination mechanisms.
On the question of approximately ₹12,000 crore being stuck in thousands of cases, the response reportedly indicated that the position would have to be verified from official records and that information could be obtained from the concerned States.
Authorities also indicated that relevant information regarding the issues raised would be communicated to the appropriate jurisdictions where necessary.
Need for Greater Integration Between GST Technology and Enforcement
The investigation ultimately points to a broader challenge facing GST administration: the technology used for tax enforcement must evolve at least as quickly as the methods used to circumvent it.
GST has created an enormous electronic database comprising registrations, returns, invoices, e-way bills and tax payments. But the enforcement value of this information depends on how quickly different datasets can be connected and accessed by officers having jurisdiction over a case.
Real-time integration of vehicle movement information, stronger verification of suspicious registrations, better access to interstate proceedings, sophisticated digital forensic tools and mechanisms to identify fragmented digital payments could therefore become increasingly important.
With GST approaching a decade of operation, the issues highlighted in the investigation suggest that the next stage of reform may need to focus not merely on increasing digitisation, but on integrating the different digital systems already operating within the tax administration.
