Of the various “no tax evasion” objectives of the pre-GST regime, the requirement of state permits for the movement of goods into various states has been adopted by the GST law as well. The GST law has contemplated the requirement of a document, the E-Way Bill, for any movement of goods exceeding a consignment value of INR 50,000.
Originally, the E-Way Bill related provisions were intended to be implemented from 1 February 2018, but owing to the heavy load/technical glitches, the portal crashed within hours of its launch. To address the same, the government deferred the launch of the E-Way Bill system, citing technical glitches as the reason for such rescheduling. Post testing, the government proposed a phased launch of the E-Way Bill system from 1 April 2018, with E-Way Bill being mandatory only for inter-state movements from 1 April and staggered the launch for intra-state movements.
While the requirement of a document for movement has been inherited from the pre-GST era to the GST regime, the mechanics/ technicalities have been reformed with modifications such as uniformity in the document for movement/ entry into any state, primary liability in most cases being that of the supplier vis-à-vis the earlier recipient liability, requirement for all movement of goods irrespective of supply or not, etc.
While clarity on various issues has been provided through FAQ’s by the government, such as remedies for unconfigured vehicle number formats, consignment refusal by customer, bill from- dispatch from scenarios, movement in SKD/ CKD form, etc., some issues still remain unclear, entailing apprehensions of unwarranted detention and requirement of bank guarantee by businesses.
Of the various open issues, a sizeable area of concern has been the modalities for generation of E-Way Bills in cases of multiple consignment movements against a single document. While the FAQ’s have explicitly clarified the mechanics for generation of E-Way Bills in SKD/ CKD forms, technicalities for movement of consignments of a single invoice in multiple conveyances is still awaited. A clarity on the said issue could aid bringing about uniformity in practices and deter any unwarranted hassles by GST officers.
Further, the E-Way Bill related rules contemplate deemed acceptance of a consignment by a recipient, where he does not communicate his acceptance or rejection within 72 hours of the details being made available to him or time of delivery of goods, whichever is earlier. While there is a provision for deemed acceptance in case of non-communication of a response, the same could become quite tedious, where at the time of audits/ inspection, businesses are required to provide a reconciliation of e-way bills generated for delivery to them and actual receipt of goods. While the requirement of communicating a response for each consignment received by a business is in itself stressful, communicating a response before actual receipt of goods (where the delivery time is more than 72 hours) with no option of modifying the same is practically challenging.
Also, while the law provides for an option for cancelling an E-Way Bill generated for reasons like non-transportation/ incorrect details, etc., the said is only allowed for a period of 24 hours from the generation of E-Way Bill. The said provisions do not address practical business scenarios, where a shipment may be cancelled on account of order cancellation by customer after 24 hours of scheduled movement of goods, etc. While such cases could be reconciled and explained to the revenue authorities, any unfounded actions by the lower level authorities of not accepting such reconciliations with related demand notices could entail unwarranted disturbances for businesses.
While the E-Way Bill related provisions might help the government check tax evasions, harassment by ground level authorities may lead to disruptions for businesses. Also, while the efforts of the government to achieve the “one nation, one tax” objective through standardization of E-Way Bill for the entire country is appreciable, the performance of the IT infrastructure post the full-fledged roll out of the E-Way Bill compliance would be critical to assess the true accomplishment of the objective.
The author of the blog is Abhishek Jain, Partner, Indirect Tax, EY India