Mumbai, April 15: Has CBEC added another burden on the compliance of GST by proposing “e-way bills” in the movement of goods worth more than Rs 50,000?
Let’s find the answer below.
The CBEC on Thursday detailed the proposal which made it mandatory for the movement of all goods above Rs 50,000 within the state or across states to incur online registration of the consignment prior the movement and secure an ‘e-way bill’ so that tax officials can inspect them anytime during the transit and check tax evasion.
However the industry experts say that the multi-layered process would make transport of goods a cumbersome, delayed and costly affair.
The draft rules that were outlined on Thursday also say that the transit bills will also be required for transport of goods that are outside of the GST ambit including petrol or diesel and agricultural products.
The practical problem of implementing the e way bill is the fact that it would require participation of three parties– the supplier, the transporter and the recipient. All of them would be required to submit their acceptance or rejection of the consignment by the e-way bill within a short span.
The TOI quotes Prashant Deshpande, indirect tax partner at Deloitte-India who says, “The introduction of e-way bills defeats the design of GST, which is a self-policing mechanism. If at all, e-way bills could have been introduced only for specific goods where past experience reflected tax evasion.”
To simplify the process let’s understand how the e way bill be generated? The consignee or supplier would upload details of consignment over Rs 50,000 onto the GSTN portal. If goods are transported by a transport company, the information uploaded by the sender will be updated by the transport company to create a final e-way bill. Now the final bill will be carried along the goods.
After the e-way bill is generated on the GSTN portal, a unique EBN or e-way bill number will be provided to the supplier, the transporter and the recipient of goods.
The industry experts have cited many issues with the compliance of E-way bills:
- Issues of lorry transporters
“At times, a lorry may not have a pan-India permit, or there could be unforeseen circumstances such as an accident. Thus, in the course of transit, goods would be transferred from one vehicle to another. In such circumstances, the transporter has to create a new e-way bill on the GSTN portal, before further transit. A lot rides on the transporter’s ability to be able to keep up with the new rules. It also puts an additional load on the GSTN portal,” says Sunil Gabhawalla, chartered accountant and GST specialist.
- Multiple consignments
Sometimes multiple consignments are transported in one vehicle and in such cases a consolidated e way bill would be required to be generated. The transporter would be required to mention serial number of each e-way bills in respect of each such consignment on the GSTN portal.
An industry expert says to TOI, “A consolidated e-way bill in the required form is to be generated by the transporter prior to the movement of goods — this will make tracking cumbersome for all parties involved.”
- The validity
Next practical issue pertains to the period of the e-way bill. It is indeed the great cause of concern as it is not only strict but impractical says industry. As per the notification, for distance less than 100 kms, the validity period is mere one day. While maximum validity is 15 days for the distance more than 1,000 kms.
“The timeline is very strict and impractical — exigencies can arise in the course of transport entailing delays in transit beyond the specified number of days. The draft rules permit physical verification of the goods in transit. Thus, a stale e-way bill could result in detention of the vehicle,” adds the Transporter.
- The issues for buyer
After the consignment is reached the destination, the recipient would be required to communicate its acceptance or rejection covered by the e-way bill, and that too within 72 hours, else it assumed that the recipient has accepted the details.
“There was no need for this additional layer of verification of e-way bills by the buyer as the GSTN system, which operates on a matching concept, already captures such a requirement. The supplier is to provide outward supply details in GST Returns -1, by the 10th of each subsequent month. Details are auto-populated on the GSTN portal and made available to the recipient in GST return 2A for verification within a stipulated time. Changes, if any, on verification, are again to be accepted by the supplier,” explains another transporter.
Last but not the least, a buyer will be required to keep checking the GSTN portal. Plus, if there is a rejection an erroneous e-way bill will result in legal and tax consequences for the buyer.
Public comments on the drafts are invited until April 21. The GST council has announced that it will finalise the draft rules in their May meet.