Can E-Way Bills Be Delayed? No. Are There Still Problems? Yes.

The e-way bill, an electronic invoice for carriage of goods between states, is a tool for the government to check tax evasion after the Good and Services Tax (GST) regime came into force. It requires the consignee to register the value of goods on the GST portal and obtain the e-way bill before transporting them from one state to the other or even for long distances within the same state. From 1 February this year (2018), all inter-state movement of goods worth more than Rs 50,000 will require such a bill; for intra-state movement the e-way bill deadline is 1 June this year (2018). The e-way bill will do away with the present system of transit pass which is needed for transporting goods from one state to the other. Defaulters could face upto 200 per cent penalty vis-a-vis value of goods being transported.

This Indian Express piece says, 10 states have started trial runs of the e-way bill system as of now. Karnataka implemented the system in September 2017, followed by Rajasthan, Uttarakhand and Kerala. Six more states – Haryana, Bihar, Maharashtra, Gujarat, Sikkim and Jharkhand – started trial runs for e-way bills on 15 January. The GST system can handle 50 lakh bills per day.

Till now, after the GST regime kicked in, states were allowed to have their own versions of the e-way bill – the transit pass. This created confusion and some amount of tax injustice since transporters were facing harassment at state borders many times. With a nation-wide roll out, there will be uniformity in the taxation format and perhaps less number of instances of unwarranted harassment of transporters.

Under the e-way bill facility, movement of goods worth more than Rs 50,000 by a registered entity will require prior online registration of the consignment on the GST portal. This will be a change from the present system where no electronic invoice is required and checks instead happen through border checkposts or inspectors at each state. The entity carrying the goods will have to carry the e-way bill along with invoice/bill of supply/delivery challan.

Analysts at Antique Stockbroking said in a note to clients that once the e-way bill is in place, central and state tax authorities will be able to “track inter-state and intra-state movement of goods. A tax commissioner will be authorised to intercept any conveyance to verify the e-way bill or the number in physical form for all supplies. However we don't know how many times these intercepts can be done enroute for goods (which may accordingly impact the seamless movement of goods on the route).”

So clearly, while mandating an e-way bill system is a good move by the government, it continues to create fear in the minds of transporters and consignees and these fears need to be adequately addressed before the system becomes operational from next month. One doubt the transporters have is about the number of times a consignment will be checked while moving inter-state. This will hamper seamless movement of goods and increase the cost of transportation. Another doubt the industry has is about the consignee actually declaring the correct value of goods being transported – the entire idea of the e-way bill is for the government to be able to tackle tax evasion but the transporters fear they will be caught in this cross-fire.

As explained by brokerage firm Edelweiss in its report last year, a registered entity – denoting the consignee which is already registered in the GST portal as a tax payer – must generate the e-way bill for any consignment above Rs 50,000. In case the e-way bill is not generated by the registered entity and the goods are handed over to a transporter, the registered entity should then furnish the information relating to transporter on the common portal. In this case, the e-way bill should be generated by the transporter.

The registered entity is also required to furnish the information and generate the e-way bill for all inward supplies from an unregistered player. Meanwhile, the entity carrying the goods will be required to carry the e-way bill along with invoice/bill of supply/delivery challan. The facility of generation and cancellation of e-way bill will also be made available through SMS.

The Edelweiss note explains that details of the e-way bill will have to be made available to the registered recipient on a common portal and will have to be approved or rejected by the registered recipient within 72 hours. Otherwise, it would be deemed to be approved by the recipient.

These e-way bills will have a validity period of 1-15 days, depending on the distance to be travelled. Authorised tax officials can intercept conveyance during transit to verify e-way bills to check tax evasion.

Tax experts and some logistics industry veterans have been seeking the implementation of the e-way billing system since last year and undoubtedly it will be a good move. But one, which may be fraught with initial hiccups.

Remember, the government had, initially, pointed out that states had dismantled border checkposts after the GST system kicked in and this was one of the major achievements of the entire process. What it failed to do, however, is check tax evasion and increased corruption regarding inter-state movement of goods post-GST. Instead of checkposts, state government inspectors now have mobile vans for inspections of inter-state goods movement, which traders and truckers say has increased bribe payments etc manifold. Some allege hundreds of trucks remain stranded outside states like Uttar Pradesh and Madhya Pradesh as haggling over value of consignments continues between truckers and inspectors. Obviously, this has also slowed down the movement of goods, further costing the transporters.

What transport experts had been pushing for is a two-step process, central to which was the e-way bill:

1) Get every consignment valued above a certain benchmark figure (Rs 50,000 to start with) for inter-state movement registered on the GST Network via an e-bill. This will generate an e-bill number (EBN) on the trucker’s mobile phone and act as an e-way bill for goods’ transit

2) Over some time, ensure GPS is installed on all trucks and vehicles used for inter-state truck movement so that goods’ movement can be tracked and appropriate tax levied.

Transport industry representatives say there is no logic in even beginning with the e-way bill system unless radio-frequency identification (RFID) or global positioning system (GPS) is made mandatory in each vehicle and human intervention on highways is removed completely. At least for national permit holding transporters, this should be implemented. But for this, there is no need to defer the e-way bill system – this should be implemented as per the deadline even as the GPS and tracking facilities are also put in place gradually.