The “Report of the Comptroller and Auditor General on State Revenues, Government of  Tamil Nadu for the period ended March 2023 (Report No. 7 of 2025)” was placed before  the Legislature on 20 February 2026

Following are the major audit findings included in the above report:

The Report contains 10 Audit Paragraphs, including Subject Specific Compliance Audits on  “GST Registration” and “Department’s oversight on GST payments and Return filing” and  individual Audit Paragraphs on Stamp Duty and Registration Fees, involving ₹1,721.12 crore.  Some of the major findings are mentioned below:

I General

The total revenue receipts of the State during 2022-23 were ₹2,43,749.34 crore, comprising tax  revenue of ₹1,50,222.75 crore and non-tax revenue of ₹17,060.95 crore. ₹38,731.24 crore was  received from the Government of India as State’s share of divisible Union taxes and ₹37,734.40  crore as grants-in-aid. The revenue raised by the State Government in 2022-23 was  69 per cent of the total revenue receipts as compared to 65 per cent in 2021-22. Taxes on sales  and trade and Goods and Services Tax (₹1,12,966.24 crore) formed a major portion  (75 per cent) of the tax revenue of the State. 

(Paragraph 1.1)

Test check of records relating to Stamp Duty and Registration Fee, State Excise, Motor  Vehicles Tax and Land Revenue during the year 2022-23 revealed observations amounting to  ₹166.19 crore and were issued as Inspection Reports. 

(Paragraph 1.9)

II Goods and Services Tax

The Subject Specific Compliance Audit on “GST Registration” revealed the following:

➢ Rule 9(1)(a) prescribes mandatory physical verification if the applicant fails to  undergo Aadhaar authentication. As per Rule 9(1)(b), the Proper Officer (PO) is  empowered to conduct physical verification if he deems fit. Audit analysis of data  furnished by the Department showed that Registration was granted without  completing physical verification in cases where Aadhaar authentication was not done  and also in cases where the POs deemed fit for such verification.

(Paragraph 2.4.7 (I) (B))

➢ There has been delay in granting registration beyond the prescribed time limit of seven  working days from the date of application / date of reply to notice issued in 1,18,271  cases. The delay ranged from three to 174 days (average five days).

(Paragraph 2.4.7 (I) (D) (a))

➢ As per Section 10(1), 10(2) and 10(2)(e) of TNGST Act, 2017, a registered person,  whose aggregate turnover in the preceding financial year did not exceed one crore and fifty lakh rupees or is not engaged in making any supply through an electronic  commerce operator or not a manufacturer of notified goods is eligible for registering  as a composite taxpayer. Audit identified 952 taxpayers who were granted composite  status contrary to the above provisions. As a result, the 952 taxpayers had paid tax at  a lower rate.

(Paragraph 2.4.7 (II) (A) (a))

➢ As per Section 22(1) of TNGST Act, 2017, every supplier making taxable supplies  exceeding an aggregate turnover of ₹40 lakh in a financial year is required to be  registered. As per Section 24 of the TNGST Act, 2017, casual taxable persons making  taxable supply shall be required to be registered. Out of 5,628 companies having a  turnover exceeding ₹40 lakh and registered with Registrar of Companies, Chennai and  Coimbatore, 184 companies did not have GST registration. 60 GST registrants of  other states had not obtained GST registration in Tamil Nadu. Those who obtained  licence for selling crackers or participated in exhibitions did not apply for registration.  As a result, 244 taxpayers remained outside the ambit of GST. 

(Paragraph 2.4.7 (II) (B))

➢ As per Section 45 of TNGST Act, 2017, every registered person whose registration  has been cancelled shall furnish a final return (GSTR 10) within three months of the  date of cancellation or date of order of cancellation, whichever is later. Out of  2,98,223 taxpayers whose registrations were cancelled, 2,64,736 taxpayers did not file  GSTR 10. Out of 21,865 applicants 16,530 were granted fresh registration even  though they did not file GSTR 10. As a result, the Assessing Authority could not  ascertain the potential tax due to the 2,81,266 non-filers of GSTR 10.

(Paragraph 2.4.7 (II) (C)(ii))

The Subject Specific Compliance Audit on “Department’s oversight of  GST payments and return filing” revealed the following:

➢ Audit was conducted and reported in three parts viz. Audit of circles, Centralised Audit  and Detailed Audit. In the Audit of circles, the oversight functions were evaluated in  10 circles; in the Centralised Audit, 431 taxpayers were test checked for deviations  from rules and inconsistencies. In the detailed Audit, the returns and allied granular  records 70 taxpayers were test checked in detail to identify incorrect claims of ITC  and non/short payment of taxes. 

(Paragraph 2.5.3)

➢ As per Section 61 of TNGST Act, 2017, the Proper Officer (PO) may initiate  appropriate action to determine the tax and other dues under Section 73 within three  years. The POs did not complete assessments in 98 cases for more than three years.  The notices issued to the taxpayers and the replies received were not followed up.  Also 59 taxpayers whose registrations were cancelled did not pay a tax of ₹2.58 crore.

(Paragraph 2.5.5)

➢ The Centralised Audit was performed based on 16 pre-set parameters derived from  data. Audit pointed out irregularities in 337 cases amounting to ₹1,538.18 crore.  Department accepted and issued notices in all cases and recovered ₹8.64 crore. 

(Paragraph 2.5.6)

➢ The scope of detailed Audit was restricted due to non-production of records of 7  taxpayers and partial production of records of 45 taxpayers out of the sampled 70  taxpayers. Yet Audit could identify deficiencies relating to incorrect claim of ITC and  non/short payment of tax amounting to ₹101.86 crore.

(Paragraph 2.5.7)

Audit of Works Contract Services revealed the following:

➢ Two taxpayers assessed in NSC Bose Road and Perambalur circles did not report the  turnover relating to Joint Development Rights which resulted in short payment of tax  of ₹2.98 crore.

(Paragraph 2.5.8.7 (A) (I) (a))

➢ From the data relating to 14,494 works contract transactions from 12 departments,  Audit ascertained that a turnover of ₹260.95 crore was not reported by 625 taxpayers  assessed in 221 circles. This resulted in non/short payment of tax amounting to  ₹31.31 crore.

(Paragraph 2.5.8.7 (A) (I) (d))

III Stamp Duty and Registration Fee

The test check of records in the Registration Department revealed the following:

➢ Check of records at Sub-Registries Thiruporur and Joint-IV Kancheepuram revealed  that members of a Co-operative Society did not reveal true consideration of lands they  purchased from third parties with an intention to sell them to the Co-operative Society.  Recitals of the instruments showed that the Societies had entered into an agreement to  purchase the lands from these members at a much higher price. The loss of revenue  in these cases was ₹9.53 crore.

(Paragraphs 3.4.1 (a) and 3.4.1(b))

➢ In six Sub-Registrar offices, vacant lands leased out were surrendered back to the  owner with buildings. The Registering Officers collected only the registration fees on  buildings. Since there was a transfer of immovable property in these cases, stamp  duty also should have been collected. Escapement of stamp duty was ₹7.04 crore.

(Paragraph 3.4.2)

➢ Transfer of properties during restructuring of companies have been judicially held as  conveyance. The Government of Tamil Nadu notified reduction of stamp duty to two  per cent on the market value of properties for such transactions. In six Sub-Registrar  offices, 10 properties were transferred during amalgamation / demerger of companies  as revealed by recitals of instruments relating to subsequent transactions. However, these transactions were not registered. The loss of revenue due to non-registration of  the transactions was ₹5.86 crore.

(Paragraph 3.4.3)

➢ Windmills were judicially held as immovable properties and hence transfer of  windmills are compulsorily registrable under the Indian Stamp Act. In Sub-Registrar  office, Mylapore, the value of windmills was not included in the value of property  transferred. Although the CCRA remitted back the instrument with an instruction to  follow the principles of due assessment of properties, windmills were not assessed by  the RO. This resulted in a short collection of stamp duty and registration fee of  ₹1.62 crore.

(Paragraph 3.4.4)

➢ In the Sub-Registrar office, Sunguvarchatram, a property of 5.55 acres in  Mambakkam village was sold for ₹3.20 lakh, far below the guideline rate. The RO  adopted guideline value and stamped the instrument. However, the same property  was sold for ₹9.89 crore the very next day. Since the value of a property cannot vary  so widely in a single day, the RO should have adopted the higher value for the first  transaction also. Non-adoption of higher value resulted in a loss of revenue of  ₹83.21 lakh.

 

AD/SE

The “Report of the Comptroller and Auditor General on State Revenues, Government of  Tamil Nadu for the period ended March 2023 (Report No. 7 of 2025)” was placed before  the Legislature on 20 February 2026

Following are the major audit findings included in the above report:

The Report contains 10 Audit Paragraphs, including Subject Specific Compliance Audits on  “GST Registration” and “Department’s oversight on GST payments and Return filing” and  individual Audit Paragraphs on Stamp Duty and Registration Fees, involving ₹1,721.12 crore.  Some of the major findings are mentioned below:

I General

The total revenue receipts of the State during 2022-23 were ₹2,43,749.34 crore, comprising tax  revenue of ₹1,50,222.75 crore and non-tax revenue of ₹17,060.95 crore. ₹38,731.24 crore was  received from the Government of India as State’s share of divisible Union taxes and ₹37,734.40  crore as grants-in-aid. The revenue raised by the State Government in 2022-23 was  69 per cent of the total revenue receipts as compared to 65 per cent in 2021-22. Taxes on sales  and trade and Goods and Services Tax (₹1,12,966.24 crore) formed a major portion  (75 per cent) of the tax revenue of the State. 

(Paragraph 1.1)

Test check of records relating to Stamp Duty and Registration Fee, State Excise, Motor  Vehicles Tax and Land Revenue during the year 2022-23 revealed observations amounting to  ₹166.19 crore and were issued as Inspection Reports. 

(Paragraph 1.9)

II Goods and Services Tax

The Subject Specific Compliance Audit on “GST Registration” revealed the following:

➢ Rule 9(1)(a) prescribes mandatory physical verification if the applicant fails to  undergo Aadhaar authentication. As per Rule 9(1)(b), the Proper Officer (PO) is  empowered to conduct physical verification if he deems fit. Audit analysis of data  furnished by the Department showed that Registration was granted without  completing physical verification in cases where Aadhaar authentication was not done  and also in cases where the POs deemed fit for such verification.

(Paragraph 2.4.7 (I) (B))

➢ There has been delay in granting registration beyond the prescribed time limit of seven  working days from the date of application / date of reply to notice issued in 1,18,271  cases. The delay ranged from three to 174 days (average five days).

(Paragraph 2.4.7 (I) (D) (a))

➢ As per Section 10(1), 10(2) and 10(2)(e) of TNGST Act, 2017, a registered person,  whose aggregate turnover in the preceding financial year did not exceed one crore and fifty lakh rupees or is not engaged in making any supply through an electronic  commerce operator or not a manufacturer of notified goods is eligible for registering  as a composite taxpayer. Audit identified 952 taxpayers who were granted composite  status contrary to the above provisions. As a result, the 952 taxpayers had paid tax at  a lower rate.

(Paragraph 2.4.7 (II) (A) (a))

➢ As per Section 22(1) of TNGST Act, 2017, every supplier making taxable supplies  exceeding an aggregate turnover of ₹40 lakh in a financial year is required to be  registered. As per Section 24 of the TNGST Act, 2017, casual taxable persons making  taxable supply shall be required to be registered. Out of 5,628 companies having a  turnover exceeding ₹40 lakh and registered with Registrar of Companies, Chennai and  Coimbatore, 184 companies did not have GST registration. 60 GST registrants of  other states had not obtained GST registration in Tamil Nadu. Those who obtained  licence for selling crackers or participated in exhibitions did not apply for registration.  As a result, 244 taxpayers remained outside the ambit of GST. 

(Paragraph 2.4.7 (II) (B))

➢ As per Section 45 of TNGST Act, 2017, every registered person whose registration  has been cancelled shall furnish a final return (GSTR 10) within three months of the  date of cancellation or date of order of cancellation, whichever is later. Out of  2,98,223 taxpayers whose registrations were cancelled, 2,64,736 taxpayers did not file  GSTR 10. Out of 21,865 applicants 16,530 were granted fresh registration even  though they did not file GSTR 10. As a result, the Assessing Authority could not  ascertain the potential tax due to the 2,81,266 non-filers of GSTR 10.

(Paragraph 2.4.7 (II) (C)(ii))

The Subject Specific Compliance Audit on “Department’s oversight of  GST payments and return filing” revealed the following:

➢ Audit was conducted and reported in three parts viz. Audit of circles, Centralised Audit  and Detailed Audit. In the Audit of circles, the oversight functions were evaluated in  10 circles; in the Centralised Audit, 431 taxpayers were test checked for deviations  from rules and inconsistencies. In the detailed Audit, the returns and allied granular  records 70 taxpayers were test checked in detail to identify incorrect claims of ITC  and non/short payment of taxes. 

(Paragraph 2.5.3)

➢ As per Section 61 of TNGST Act, 2017, the Proper Officer (PO) may initiate  appropriate action to determine the tax and other dues under Section 73 within three  years. The POs did not complete assessments in 98 cases for more than three years.  The notices issued to the taxpayers and the replies received were not followed up.  Also 59 taxpayers whose registrations were cancelled did not pay a tax of ₹2.58 crore.

(Paragraph 2.5.5)

➢ The Centralised Audit was performed based on 16 pre-set parameters derived from  data. Audit pointed out irregularities in 337 cases amounting to ₹1,538.18 crore.  Department accepted and issued notices in all cases and recovered ₹8.64 crore. 

(Paragraph 2.5.6)

➢ The scope of detailed Audit was restricted due to non-production of records of 7  taxpayers and partial production of records of 45 taxpayers out of the sampled 70  taxpayers. Yet Audit could identify deficiencies relating to incorrect claim of ITC and  non/short payment of tax amounting to ₹101.86 crore.

(Paragraph 2.5.7)

Audit of Works Contract Services revealed the following:

➢ Two taxpayers assessed in NSC Bose Road and Perambalur circles did not report the  turnover relating to Joint Development Rights which resulted in short payment of tax  of ₹2.98 crore.

(Paragraph 2.5.8.7 (A) (I) (a))

➢ From the data relating to 14,494 works contract transactions from 12 departments,  Audit ascertained that a turnover of ₹260.95 crore was not reported by 625 taxpayers  assessed in 221 circles. This resulted in non/short payment of tax amounting to  ₹31.31 crore.

(Paragraph 2.5.8.7 (A) (I) (d))

III Stamp Duty and Registration Fee

The test check of records in the Registration Department revealed the following:

➢ Check of records at Sub-Registries Thiruporur and Joint-IV Kancheepuram revealed  that members of a Co-operative Society did not reveal true consideration of lands they  purchased from third parties with an intention to sell them to the Co-operative Society.  Recitals of the instruments showed that the Societies had entered into an agreement to  purchase the lands from these members at a much higher price. The loss of revenue  in these cases was ₹9.53 crore.

(Paragraphs 3.4.1 (a) and 3.4.1(b))

➢ In six Sub-Registrar offices, vacant lands leased out were surrendered back to the  owner with buildings. The Registering Officers collected only the registration fees on  buildings. Since there was a transfer of immovable property in these cases, stamp  duty also should have been collected. Escapement of stamp duty was ₹7.04 crore.

(Paragraph 3.4.2)

➢ Transfer of properties during restructuring of companies have been judicially held as  conveyance. The Government of Tamil Nadu notified reduction of stamp duty to two  per cent on the market value of properties for such transactions. In six Sub-Registrar  offices, 10 properties were transferred during amalgamation / demerger of companies  as revealed by recitals of instruments relating to subsequent transactions. However, these transactions were not registered. The loss of revenue due to non-registration of  the transactions was ₹5.86 crore.

(Paragraph 3.4.3)

➢ Windmills were judicially held as immovable properties and hence transfer of  windmills are compulsorily registrable under the Indian Stamp Act. In Sub-Registrar  office, Mylapore, the value of windmills was not included in the value of property  transferred. Although the CCRA remitted back the instrument with an instruction to  follow the principles of due assessment of properties, windmills were not assessed by  the RO. This resulted in a short collection of stamp duty and registration fee of  ₹1.62 crore.

(Paragraph 3.4.4)

➢ In the Sub-Registrar office, Sunguvarchatram, a property of 5.55 acres in  Mambakkam village was sold for ₹3.20 lakh, far below the guideline rate. The RO  adopted guideline value and stamped the instrument. However, the same property  was sold for ₹9.89 crore the very next day. Since the value of a property cannot vary  so widely in a single day, the RO should have adopted the higher value for the first  transaction also. Non-adoption of higher value resulted in a loss of revenue of  ₹83.21 lakh.

 

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