GST’s e-way bill system can hit flow of goods
When GST went live on July 1, it was announced that the facility for online generation of e-way bills would be notified later. Over the first few months of the GST’s implementation, many technical issues came up, forcing the GST Council to further postpone mandating e-way bills. As with all other major GST concepts, it was announced that the e-way bill system would be introduced by March 31.
After the recent meeting of the GST Council, it was announced that all inter-State movement of goods worth over Rs. ₹50,000 and those that travel more than 10 km from their origin would be tracked for e-way bills with effect from February 1. Individual States would need to notify their e-way bill rules by June 1. Some States (eg: Karnataka) already have a robust e-way bill mechanism while others would toe the line drawn by the GST Council.
This is going to create a lot of confusion (especially during February-June 2018) as some States would have a system in place while others would not. Truck drivers passing through different States would have to carry a copy of the local GST legislation of each State to find out if they need an e-way bill or not!
The decision to announce some dates for the e-way bill system to be introduced was probably an easy one for the GST Council to take since there is a concern over dipping GST revenues. When they meet next, they would need to debate many implementation issues. For instance, they should consider whether there is a case to increase the limit of ₹50,000 per day to ₹100,000 since the GST Council has been more than liberal in doling out concessions.
They need to consider whether the limit would apply to all goods or they would like to provide some exceptions to some sensitive/perishable goods. It is apparent that the limit of 10 km per day has been arrived at only to provide some limit. For instance, 10 km per day in Bengaluru (considering traffic density, this distance in Bengaluru would feel like 50 km) would not be the same as in a smaller town where the entire town may be 10 km long.
The distance should be fixed based on the size of the city and the distance between its business hubs. It is also not clear how and by whom this distance of 10 km would be measured. For instance, a transport which makes stops at multiple customer locations in one single trip would have nightmares explaining to the GST officers where he spent the last 10 km. This much of needless minutiae are uncalled for in a tax which touts transparency as one of its objectives.
Generation of the e-way bill does not end the compliance bit. In lieu of checkposts, GST officers can intercept any transport and check its documentation and contents. Once physical verification of goods being transported on any conveyance has been done during transit at one place within the State or in any other State, no further physical verification of the said conveyance shall be carried out again in the State. Taking into consideration the fact that the GST Department has already commenced friendly visits to customer places to check transitional credits, one can expect many trucks to be intercepted after February 2018.
The GST Council should rethink the provisions regarding e-way bills taking ground realities into consideration. They should introduce it for large value transactions before including everyone.
The writer is a chartered accountant