The government’s back and forth over implementation of the e-way bill, seen as a crucial piece of legislation for India’s road transport and logistics industry, seems to characterise the pitfalls in the ambitious GST regime. Never more than now, as India’s truckers and goods transporters continue to struggle with state enforcement machineries like in the pre-GST days, even as they complain about high input cost structure and under-the-radar goods’ transportation continues unabated.
Under the e-way bill facility, it was proposed that 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 and securing this e-way bill. This was meant to 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 was to be mandated to carry the e-way bill along with invoice/bill of supply/delivery challan. But sheer under preparedness of the GSTN network has thwarted the government and from initial implementation deadline of October; the deadline for e-way bill has now been pushed to June next year.
In a statement after the meeting of GST Council last Saturday, the Finance Ministry spoke of its decision on the e-way bill:
1) Nationwide e-way Bill system will be ready to be rolled out on a trial basis latest by 16th January, 2018. Trade and transporters can start using this system on a voluntary basis from 16th January, 2018.
2) Rules for implementation of nationwide e-way Bill system for Inter-State movement of goods on a compulsory basis will be notified with effect from 1st February, 2018. States may choose their own timings for implementation of e-way Bill for intra-State movement of goods on any date before 1st June, 2018.
3) A Uniform System of e-way Bill for inter-State as well as intra-State movement will be implemented across the country by 1st June, 2018.
The unpreparedness of government machinery and the haste with which the Goods and Services Tax (GST) was implemented from July this year is, by now, well known. Along with other glitches, the implementation of India’s biggest tax reform since Independence has been characterized by hampered goods’ movement across states as rules on goods’ movements have been slow in the making.
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 anywhere up to 100 trucks are 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.
So were checkposts, with varying levies across states and as any different tax formats ideal and should they make a comeback? Far from it. What transport experts had been pushing for was 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.
The President of the All India Motor Transport Congress, S K Mittal, said there is no logic in even beginning with the e-way bill system from June next year unless RFID or GPS is made mandatory in each vehicle.
“We want human intervention on highways to be removed completely. This can only happen when RFID is introduced. For at least national permit holders for inter-state movement, this should be a pre-requisite.” Mittal said that though border checkposts have been dismantled, tax inspectors stand with mobile phones across state highways, stopping trucks at will. “Truckers also need to know how to asses the value of the consignment being booked for transportation. How can this happen unless the consignee has registered digitally? We will be writing to Prime Minister to make inter-state goods movement free of human intervention and leave intra state movement up to state governments. We will also ask him to stop releasing input tax credit to traders unless they have paid our freight charges”.
But Senior Fellow at Indian Foundation of Transport Research and Training (IFTRT) S P Singh said speedy implementation of e-way bill is half the battle won and should be stressed upon. RFID or GPS trackers in vehicles can come in the second stage. He said Instead of making the e-bill facility voluntary, the government should make it mandatory from February one and that the delay was probably due to non-readiness of the GST network. Remember, before GST came into being, some states had a digital transit pass system but each state had a different format. This made the system ineffective and cumbersome. By pushing the e-way bill provision to June, there is unnecessary delay.
When GST came into effect from July this year, traders had stopped booking freight since they feared crackdowns but once they realized there was no digital billing, they came right back and continued old ways of tax evasion by under invoicing. This is what an e-waybill system will prevent in future. Under this process, the consignee has to book the consignment on the GSTN network, get an OTP (e-way bill no or EBN).
If there are 20 consignments on a truck, each over Rs 20,000 in value and traders who have booked have lodged invoices on GSTN, then the the EBN number thus generated will be on driver mobile phone. He will also carry paper invoices for consignments. This helps tax compliance. Government has earlier said that about 1% of consignments will be checked randomly and if any discrepancy found, the fine will be 10 times the value of the consignment.
But to do any of this, the GST network should be up and running. The government should ensure that.