India: e-Way; The GST Way... The Journey Ahead

Last Updated: 11 January 2018
Article by Gagan Kumar and Rakesh Chhabra, CA

One of the ambitious aspects of GST is implementation of Electronic Way Bill ("E-Way Bill"). It is being envisaged that entire supply chain, especially from factory to the retailers remains documented and the movement of goods can be tracked on real time basis. Under the VAT regime also the way bill used to be there but the level of detailing and real time tracking can be game changer. While, there may be resistance from certain groups, particularly from transporters but this pain may have to be borne in order to develop a clean transparent and vibrant economy. In this article, we are touching upon certain critical aspects of the mechanism in which e-way bills would be utilised.

Presently, many states have their own E-way bill. However, in 24th GST Council meeting on 16th December, 2017 it is decided that E- Way bill will be compulsory from 1st February, 2018 for inter-state supply and from 01st June, 2018 it will be compulsory for both supplies i.e. Inter and Intra Supplies. However, states have options to implement this before 1st June, 2018.

GST is said to be destination-based or consumption-based tax. Each State may presume their tax collection through E-Way Bill. E-way bill may reduce time taken in multiple check posts and make movement efficient.

E-Way bill is a receipt or document evidencing movement of Goods which shall be carried by the person in charge of a conveyance. It contains details like name of consignor, consignee, the point of origin of the consignment, its destination and route. 

E-Way Bill will be generated for the movements of goods in relation to a supply of goods, for a reason other than supply (i.e. Import/Export, for Sale Returns, exhibition or fairs for own purpose, etc.) and due to inward supply from an unregistered person. It comprises two components – Part A and Part B wherein Part A comprises details like GST Identification Number (GSTIN) of recipient, place of delivery (Pin Code), invoice or challan number and date, value of goods, HSN code, transport document number (Goods Receipt Number or Railway Receipt Number or Airway Bill Number or Bill of Lading Number) and reasons for transportation and Part B comprising of transporter details (Vehicle number).

Role of Supplier of Goods:

  1. As per Rule 138 of the Central Goods and Service Tax Rules, 2017 ("CGST Rules"), every registered person who will transfer goods of consignment value more than Rs. 50,000/- will require to generate e-way Bill by filing details in Part-A on the common portal before commencement of such movement,  for furnishing information relating to the said goods.
  2. A registered supplier may obtain an Invoice Reference Number ("IRN") in Form GST Inv-1 from the common portal by uploading a tax invoice. This Form GST Inv-1 shall be valid for a period of thirty days from the date of uploading. The same may produce before the proper officer for verification in lieu of the tax invoice. In this case, the registered person may not have to file Part A of e-way bill, it shall be auto-populated by the common portal on the basis of information filed in Form GST Inv – 1. The information provided in Part A of the Form GST EWB-01 may also be used for preparing GSTR-1.
  3. A registered supplier may choose to generate and carry e-way bill even if the value of goods is less than Rs. 50,000/-.

Role of Transporter:

  1. The part B (transport details) to be furnished by the person who is transporting the goods.
  2. However, in case the movement of goods is caused by the registered person and handed over to the transporter for transportation by road, but the e-way bill has not been generated then it shall be the responsibility of the transporter to generate the e-way bill on the common portal (Both Part i.e. Part-A and B).
  3. When goods are transported by the unregistered person to registered person, either the recipient of supply or the transporter shall have to generate the e-way Bill. 
  4. The transporter may choose to generate and carry e-way bill even if the value of goods is less than Rs. 50,000/-.
  5. Transporters of unregistered persons may also choose to generate an e-way bill.
  6. If a transporter is transporting multiple consignments in a single conveyance, he shall have to generate a consolidated e-way bill, by providing the e-way bill numbers of each consignment.
  7. If both the consignor and the consignee have not created an e-way bill, then the transporter can do so by filling out PART A on the basis of the invoice/bill of supply/delivery challan given to them.
  8. There is a possibility that multiple vehicles may be used for carrying the same consignment to its destination, in that case any transporter transferring goods from one conveyance to another in the course of transit shall require to update the details in Part-B of the e-way bill on the common portal before such transfer.

Role of Recipient of Goods:

  1. When goods are transported by the unregistered person to registered person, either the recipient of supply or the transporter shall have to generate the e-way Bill.
  2. Upon generation of e-way bill, a unique e-way bill number ("EBN") shall be made available to the supplier, the recipient and the transporter on the common portal. The details of e-way bill will be sent to recipient of goods for their acceptance. Recipient of goods has to accept or reject the e-way bill within seventy two hours, if the recipient does not communicate then it is presumed he has accepted the said details.

Validity of E-way Bill:

An e-way bill or a consolidated e-way bill generated under this rule shall be valid for the period as mentioned below:-

S.No.

Distance

Validity 

1

Upto 100 KM

One day

2

For Every 100 KM or part thereof thereafter

One additional day

However, for exceptional circumstances if the goods cannot be transported within the validity period, the transporter may generate a new e-way bill after updating the details in Part-B.

Cancellation of E-Way Bill:

There is a provision of cancellation of e-bill in case goods are not transported. It can be cancelled within 24 hours of generation by electronically on the common portal, either directly or through a Facilitation centre notified by Commissioner.

E-Way Bill may also be generated or cancelled through SMS.

Person who will not require to generate E-Way Bill:

An E-way bill is not required in the undernoted conditions:-

  1. where the goods being transported are specified in Annexure to Rule 138 of the CGST Rules, 2017;
  2. where the goods are being transported by a non-motorised conveyance;
  3. where the goods are being transported from the port, airport, air cargo complex and land customs station to an inland container depot or a container freight station for clearance by Customs;
  4. in respect of movement of goods within such areas as are notified under Rule 138(14)(d) of SGST Rules of the concerned State;
  5. Where the goods are being transported at a value less than Rs. 50,000/-.

Also, there is no need of conveyance details when the distance of transport is less than 10 Km within the state.

Enforcement (GST Check Post/Online Tracking):

The person in charge i.e. Driver, Conductor, Guard, Pilot etc. has to carry the e-bay bill or e-way bill number along with Invoice or delivery challan either physically or mapped to Radio Frequency Identification Device ("RFID") embedded on to the conveyance.

The Commissioner may by notification require a class of transporters to obtain a unique radio frequency identification device and get the said device embedded on to the conveyance and map the e-way bill to the radio frequency identification device prior to the movement of goods.

The Commissioner may authorise proper officer for physical verification of conveyances. The Commissioner shall get the Radio Frequency Identification Device readers installed at various place and verification of movement of vehicles shall be done through such device readers where e-way bill has been mapped with the device.

The proper officer will record the summary report of inspection of goods in part A of Form GST EWB 03 within 24 hours of inspection and final report in Part B of Form GST EWB 03 shall be recorded within 3 Days of inspection.

An e-way bill cannot be cancelled if it has been verified in transit in accordance with the provisions of rule 138B.

Consequence of non-compliance:

If e-way bills are not issued in accordance with the provisions of the CGST Rules, 2017, then a taxable person who transports any taxable goods without e-way bill shall be liable to a penalty of Rs. 10,000 or tax sought to be evaded, whichever is higher. Also, as per the section 129 of the CGST Act, 2017 such goods and conveyance used as a means of transport shall be liable to detention or seizure. 

Potential Challenges:

As mentioned earlier, lack of adequate infrastructure may be a major impediment in implication of e-way bill mechanism. Apart from the Logistic issues, we fed the following additional constraints:

  1. The E-way bill could come as a compliance burden for the transporter. Transporters, especially in smaller towns, who are uneducated may fail to comply with the process or complain about detention. Also, given the cost involved in installing RFID devices to the vehicle, not many transporters may opt for it.
  2. Recipient of goods has to accept or reject the e-way bill within seventy two hours. There can be instances where goods is in transit may be cancelled and in that case new e-way bill have to be uploaded. It may create problem for the transporter.
  3. In E-commerce business, goods movement involve multiple stages. For each stage, there is a requirement of e-way bill. This may cause delay in delivery of goods.
  4. Retailers, who supply goods for a value more than Rs. 50,000/- and beyond a distance of 10 Km then such goods when transported through a motorised vehicle, may require an e-way bill for movement of goods. 

It is easier to said than done.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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