India: E-Way Bill Mechanism Under GST Regime: India Beckons Trade & Commerce On Electronic Highway

I. Introduction

Introduction of e-way bill system is a step under GST regime with an aim to ensure self-sustaining tax administration with increased reliance on self-reporting. A few states such as West Bengal, were already having their own e-way bill systems in place before introduction of Good and Services Tax (GST). However, GST has first time enabled uniform application of e-way bill system across India with a futuristic outlook, enabling the tax payers to report the movement of goods electronically, thus reducing the hold ups at check posts etc.

The implementation of e-way bills has been a matter of considerable deliberations in various GST Council's meetings. In 24th meeting of the GST Council held on December 16, 2017, it was agreed that e-way bills trials would start from January 16, 2018 and mandatory implementation from February 01, 2018. However, on Feb 1, 2018 the IT-platform set up to generate the e-way bills collapsed due to over load of 48 Lakh bills generated, which lead to postponement of the implementation.

Recently, in the 26th meeting of the GST Council it was decided to implement e-way bill on consignment exceeding INR 50,000/- on Pan India basis from April 01, 2018. The GST Council has also taken this opportunity to bring in some amendments in the rules governing e-waybill.

The group of ministers overseeing the information technology glitches during the implementation of the GST, had recommended phased introduction of the e-waybill requirement for intra-state movement of goods. This recommendation has been acceded to, and in the recent GST Council meeting it has been decided to roll out e-way bill for intra-state movement of goods, in a phased manner by June 01, 2018.

E-Way Bill is principally a compliance mechanism wherein by way of a digital interface the 'person causing' the movement of goods shall upload the relevant information prior to the commencement of movement of goods and generates e-way bill on the GST portal.

II. Legal Framework

Notable Features of E-way Bills – Before 26th Meeting of GST Council

Under Rule 138 of the CGST Rules, 2017, every registered person who causes movement (consignor/consignee/transporter) of goods of consignment value more than INR 50,000/- is required to generate e-waybill.

Further Rule 138 (4) encapsulates the list of supplies exempted from e-way bill requirement, which includes, transport of goods 154 specified goods; goods transported by a non-motorised conveyance; goods transported form customs port to inland customs station or depot; in respect of movement of goods within such area as are notified; consignment value below INR 50,000.

Rule 138 of the CGST Rules, 2017 mandates that the relevant information is electronically furnished prior to the commencement of movement of goods and every movement of goods is encompassed in the said Rule, whether the movement is in relation to a 'supply' or for 'reasons other than supply'.

E-way bill has two components - Part A comprising of details of 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).

Where neither the consignor nor consignee generates the e-way bill and the value of goods is more than Rs.50,000/- the responsibility for the e-waybill generation falls upon the transporter.

If the goods are sent by a principal located in one State to a job-worker located in any other State, the e-way bill shall be generated by the principal irrespective of the value of the consignment.

If handicraft goods are transported from one State to another by an unregistered person, the e-way bill is to be generated by the said person irrespective of the value of the consignment.

Amendments in Brief

E-way bill is not required to be generated where the value of the consignment is below Rs. 50,000/-. Therefore, 'presently' there will be no requirement to generate e-way bill where an individual consignment value is less than Rs. 50,000/-, even if the transporter is carrying goods of more than Rs. 50,000/- in a single conveyance.

Value of exempted goods is deductible from the threshold of INR 50,000 of the consignment value, to determine applicability of the e-way bill generation.

Consignor or Consignee would be required to generate e-waybill in case of transport of goods by public conveyance.

Consignor can authorize the transporter, courier agency and e-commerce operator to fill PART-A of e-way bill on his behalf.

Movement of goods from the place of consignor to the place of transporter up to a distance of 50 Km [increased from 10 km] does not require filling of PART-B of e-way bill. They have to generate PART-A of e-way bill.

Railways has been exempted from generation and carrying of e-way bill, however, they are required to carry invoice or delivery challan etc. Further, railways has to ensure that e-way bill is presented by the recipient at the time of delivery of the goods to the recipient.

Time period for the recipient to communicate his acceptance or rejection of the consignment would be the validity period of the concerned e-way bill or 72 hours, whichever is earlier.

In case of movement of goods on account of job-work, the registered job worker can also generate e-way bill.

Extra validity period has been provided for Over Dimensional Cargo (ODC).

If the goods cannot be transported within the validity period of the e-way bill, the transporter may extend the validity period in case of transhipment or in case of circumstances of an exceptional nature.

Validity of one day will expire at midnight of the day immediately following the date of generation of e-way bill.

Once verified by any tax officer, the same conveyance will not be subject to a second check in any State or Union territory, unless and until, specific information for the same is received.

In case of movement of goods by railways, airways and waterways, the e-way bill can be generated even after commencement of movement of goods.

Movement of goods on account of Bill-To-Ship-To supply will be handled through the capturing of place of despatch in PART-A of e-way bill.

III. The Missed Opportunity

The term 'consignment value' is still nor defined, neither any guidance has been provided in the rules to ascertain the consignment value. Further, if the goods are being provided for a service valuing less than INR 50,000, however the value of goods is more, for example supply of mandap keeper services of tent house.

The relaxation in terms of exemption of e-waybill to transporter wherein the individual consignment is of lesser value than INR 50,000, is deferred and not completely done away with. Therefore, it leaves the window open for future distress to transporters. It is hoped that atleast by then the system is equipped to handle the volumes of e-waybill generated by the huge base of stakeholders.

Further, the transporter has been empowered to extend the timelines in 'circumstances of an exceptional nature', here again wide unguided discretionary powers have been given to the appropriate officers which may create hinderances in the smooth logistics flow.

For example, in a country as diverse as India, wherein cultural festivals, designated entry time in some territories such as Metro cities or other upheavals is the norm, whether the appropriate officer would a lot extra time to the transporter or this provision would prove onerous, only time will tell.

E-waybills provisions have been viewed as onerous the business right from there inclusion in the Model GST law, because it has direct impact of the businesses and may lead to huge losses if caused more delays during movement of goods. Therefore, the grey areas have potential of further increasing the tax litigation post implementation.

IV. Apprehended Increased Litigation Post GST

Recent Economic Survey pointed out that more than 200,000 tax cases, amounting to nearly 4.7% of India's gross domestic product (GDP), are stuck in appellate litigation across all levels of the judiciary. The introduction of a rather complex goods and services tax (GST) may aggravate the problem.

As per the same Economic Survey the department loses 65% of its cases and the success rate of the department has been declining.

Measures announced in Union budget to smooth the dispute resolution processes and to reduce litigation. Improvements have been made in the advance rulings system, pre-notice consultations and in the rules for show cause notices. However, given the size of the Indian economy, GST-related teething troubles could last for more than three years.

V. Simpler E-Waybill Mechanism

Tracking of movement of goods by E-Waybill would require three essential sets of information: (1) information about the two parties involved in a transaction; (2) details of the transaction as available on the invoice; and (3) information about the vehicle in which the goods are travelling.

CGST Rules, 2017 have provision of uniform electronic invoicing in Form INV-1 which is not implemented as of now.

Therefore, a simple e-way bill could have been nothing more than a list of all the invoices in form INV-1, with the vehicle or conveyance number in which the goods being carried being updated by the transporter. However, the electronic invoice or INV1 has not been made mandatory.

VI. Some Useful Suggestions

An alternative method with continued checks and balances already included in the e-way bill rules can be as under:

  • The electronic invoice or INV1 be made mandatory
  • New e-Way bill is made a simpler document which lists all the invoices related to goods being shipped by consignor to consignee
  • GSTN itself provides a simple API that allows auto-generation of e-Way bill from INV1
  • Transporter is allowed to update the vehicle number in 'reasonable time' after pick up
  • E-Way bill is made mandatory only for inter-State movements, wherein they would not be required at all for all shipments below ₹50,000
  • For international imports, the e-Way bill would be a simple listing of bills of entry, with the conveyance number added 'at a reasonable time'.
  • Selective on-road inspections based on a risk-managed system are implemented well, and any experienced officer can verify the veracity of the goods based on the simple declaration

Merits of the suggested alternate method are as under:

  • Less operational stress on businesses and transporters since it applies only to inter-State movement
  • The generation itself is made very simple
  • Since the transporter gets a little more time to add the conveyance number, the hold-ups to the supply chain is reduced

VII. In Conclusion

It is commendable on the part of the Government to bring about a uniform pan India based e-waybill system for achieving uniform market for India. However, the brilliant ideas in the GST regime have seen practical hiccups on the ground right from the registration stage to return filing on GSTN and failed attempts of e-waybill implementation as well. Though the Government has rightly depicted pragmatism allowing deferment of the e-waybill implementation, formulation of group of ministers committee to solve the practical issues and others.

Having averred so, the past experience does not muster enough confidence for the moment one can only keep the fingers crossed and hope the trade and commerce is not further saddled as it struggles with the GST phenomenon. Hoping against hope maybe, we will see!

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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Authors
Shikha Bhardwaj
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