In a significant move to strengthen tax recovery and prevent revenue leakage, the Government of Odisha has issued detailed guidelines for recovering pending GST dues from works contractors through the Works and Accounts Management Information System (WAMIS). The new mechanism aims to institutionalise deductions directly from government payments made to defaulting contractors, ensuring more efficient realization of tax arrears.
Background: Rising Defaults Among Works Contractors
The Finance Department noted that several contractors executing government projects had been defaulting on GST obligations despite receiving substantial payments. Common irregularities observed included non-filing of returns, filing NIL returns despite receiving payments, and under-reporting of turnover. These discrepancies often resulted in tax demands being raised by the Commercial Tax and GST authorities, followed by recovery proceedings when dues remained unpaid.
Traditional recovery methods such as attachment of bank accounts were found to be ineffective in many cases because accounts maintained by contractors often had insufficient balances. This prompted the government to explore alternative recovery channels linked to the flow of public funds.
Legal Framework for Recovery
The guidelines rely on Section 79 of the Odisha GST Act, 2017, which empowers tax authorities to recover unpaid tax, interest, penalty, or other dues through various modes, including deduction from government payments, sale of goods or property, recovery from third parties, and proceedings through revenue authorities or magistrates.
Recovery action can be initiated only after a demand order has been issued, the taxpayer has been served with the order, the prescribed time for voluntary payment has expired, and no stay order is in force.
WAMIS Module: Key Features
To streamline recovery, a dedicated recovery module has been developed in WAMIS. The system allows authorised officers to upload GST attachment orders against contractors, including details such as GSTIN, amount to be recovered, and validity period.
When a payment to a contractor is processed, the system automatically checks for pending recovery orders and deducts the recoverable amount before releasing payment. The deducted sums are temporarily parked under designated recovery heads and later deposited into the GST system through treasury procedures.
The module also generates reports, maintains audit trails, and enables monitoring of recoveries and outstanding balances to ensure transparency and accountability.
Mandatory Deduction Before Payment
Under the new framework, once recovery details are uploaded, all government departments processing payments to the contractor are required to deduct the specified amount until the liability is fully recovered. The system ensures that no bill in favour of a defaulting contractor can be processed without accounting for the recovery order.
Where multiple departments are making payments to the same contractor, deductions can be made proportionately from different bills until the full recovery is achieved.
The guidelines also prescribe a strict order of priority for recovery, with tax dues being recovered first, followed by interest, penalties, fees, and other components.
Step-by-Step Recovery Workflow
The recovery process has been integrated into the billing workflow. Bills are first prepared and verified by section and divisional officers, after which the system validates contractor details against uploaded recovery orders. Once approved, payments are forwarded to the Integrated Financial Management System (IFMS), and the deducted amounts are credited and recorded with full traceability.
Guidelines relating to recovery…
The system also updates a recovery ledger in real time, enabling tax officers and departments to track recoveries and outstanding liabilities.
Roles and Responsibilities Defined
The guidelines assign specific responsibilities to various officers. Nodal officers in each GST circle are required to monitor recovery cases daily and coordinate with tax recovery officers. Tax recovery officers must ensure that recovery through WAMIS is used only as a last resort after exhausting other legal methods and must promptly adjust recovered amounts in the taxpayer’s cash ledger.
Divisional and accounts officers handling works bills are responsible for ensuring mandatory deductions and accurate component-wise recovery in accordance with the recovery orders.
Integration with IFMS and GST Systems
The mechanism also provides for integration between WAMIS, IFMS, and GST systems to ensure accurate classification of recovered amounts, contractor-wise tracking, and reconciliation. Alerts and notifications are to be generated to ensure timely set-off of recovered amounts against outstanding liabilities, preventing misuse of funds.
