E-way Bill: The Low-Down
report on the website of the road and transport ministry claims that before the Goods and Services Tax, or GST, came into force, "a typical truck would spent 20 per cent of its run time at interstate check posts". It says that after GST, interstate check posts have been removed, due to which travel time of long-haul trucks and other cargo vehicles has fallen at least one-fifth. Transporters say while these claims may be a little exaggerated, transit time has indeed reduced. An analysis by the All India Motors Transport Congress, a body of transporters (cargo and passenger) representing 9.3 million truckers, has found that the time to cross state borders has come down by two-five hours. Most states have done away with the requirement for physical transit pass, stamping, online transit and document checking at border check posts, it found.
However, these improvements may be reversed if e-way bill - a system for online tracking of goods being transported across the country - is not implemented properly. The system, started from April 1, is an anti-evasion measure and states and the Centre are leaving no stone unturned to implement it strictly.
Transporters fear that governments may end up introducing the corrupt practices of the old system in their zeal to implement this tracking mechanism. Commercial tax office (CTO) check posts have been replaced by flying squads of commercial tax officers who can now stop vehicles on suspicion of wrong declaration or under invoicing. This may lead to delays in truck movement and harassment of transporters.
Naveen Gupta, Secretary General, All India Motor Transport Congress, says, "As per our feedback, transit time has reduced to an extent, but not as much as expected. Physical check posts of only CTOs have been removed but regional transport office (RTO) check posts are still there. RTOs are extorting money. Then there are other state officers, police, traffic police." He highlights the practice of Rajasthan commercial tax officers compulsorily issuing penalty receipts of Rs 5,000 at the border in lieu of entry fee. "The challans have no mention of penalty charged, the Section slapped, or violation. You either pay Rs 5,000 against the challan or pay Rs 2,000 without the challan," says Gupta.
Going Whole Hog
Both central and state governments see e-way bill as crucial to plugging tax leakage and are going all out to ensure compliance. Showing the strict vigil that the states are keeping on the system's working, the Maharashtra State Tax Department recently issued a circular hinting that some people might be transporting goods without e-way bills. It said the number of e-way bills generated in Maharashtra as on April 3 was 1,00,938 compared with the 1,75,851 generated by Gujarat. It said this was surprising given that the number of transporters enrolled in Gujarat was 1,980 compared to Maharashtra's 2,669.
"The government will focus on data analysis to collect GST," says Anita Rastogi, Partner, Indirect Taxes, PwC. She admits that over-zealous implementation may create bottlenecks in movement of goods.
Meanwhile, five states - Gujarat, Uttar Pradesh, Kerala, Telangana and Andhra Pradesh - have implemented e-way bill for intra-state goods movement too. More are likely to do so in the coming days. Earlier, only a few states had intra-state way bills. Transporters fear intra-state e-way bills may increase arbitrary checks by state authorities and lead to more delays and harassment. Some say intra-state e-way bill is not really required as there are minimal chances of tax evasion on goods shipped and consumed within a state.
"Though it can be seen as a deterrent, one can always argue that a state like Maharashtra never had an intra-state way bill system and yet saw healthy revenue collections," says Waman Parkhi, Partner, Indirect Tax, KPMG. He says intra-state way bill will create many issues for which solutions are not clearly given in the law. He fears that the e-way bill portal may get clogged when all states roll out the intra-state system. According to the finance ministry, more than 63 lakh e-way bills had been generated till April 1; this comes to seven lakh bills a day The portal can generate up to 75 lakh e-way bills every day. Earlier, on February 1, the government had to postpone the implementation of the e-way bill system after the portal faced technical glitches.
Also, since generation and update of e-way bills are done digitally, internet and mobile connectivity is crucial. Will transporters and truck drivers have access to smartphones and internet to complete the process? "We are judging the success (or failure) of the process by looking at connectivity in urban areas. But for the whole process to be successful, we have to also see if rural areas have proper internet and telecom connectivity," says Raaja Kanwar, Managing Director, Apollo LogiSolutions.
An over-zealous state machinery is not the only cause for concern. Many grey areas in the law are giving rise to practical problems that need to be addressed. One of the biggest is the validity of the e-way bill. For a distance of up to 100 km, the e-way bill is valid for a day. There is an additional day for every 100 km beyond this. Raaja Kanwar of Apollo LogiSolutions says this could be a constraint in cities where truck entry is barred during day time. The government, though, has given some relief by clarifying that the validity of the bill will start from the day the transporter fills Part B of the bill (see E-way Bill: The Lowdown).
There are also issues with extension of the validity period. An e-way bill can be extended four hours before and after the expiry. The validity expires at 12 midnight and so the extension period does not fall during business hours. Industry is demanding a longer extension - eight hours before and after the expiry. It is also asking for a system for intimation of expiry of multiple bills that a transporter may generate.
J.P. Singla, Chief Executive, All India Transporters Welfare Association, points out another issue. "While transporting goods to hilly areas, a large truck can go up to a certain destination and after that the goods have to have transported through, say, three small trucks. The law does not allow us to sub-let the e-way bill," he says.
Also, Part A of the e-way bill, once generated, cannot be edited. "If certain details are wrongly filled, the only option is to cancel the bill and generate a fresh one. The option to cancel is available for 24 hours from the time of generation. And, if it has been verified by a proper officer within these 24 hours, it cannot be cancelled," says Rastogi of PwC. Apart from this, once the validity is extended, a new form with a new e-way bill number is generated. This, say experts, may result in reconciliation issues, as there will be two unique way bill numbers against one invoice.
The government should also clarify the bill-to-ship scenario in cases where three parties are involved. Suppose an agency in, say, Maharashtra asks a supplier based in Tamil Nadu to ship goods to another party in Karnataka. Here, there are two legs of transactions - one between the agency in Maharashtra and the supplier in Tamil Nadu, and another between the agency in Tamil Nadu and the buyer in Karnataka. "The issue is whether two e-way bills would be required to be generated for two legs of the transactions," says Rastogi of PwC.
So far, the government has been receptive and came out with many changes and FAQs in response to queries and issues raised by industry. E-way bills are required for movement of goods exceeding Rs 50,000. The government recently clarified that the value of exempted goods would not be considered while calculating this number. Earlier, e-way bills generated after filing the first part were valid for 72 hours. The authorities have increased this to 15 days, providing a reasonable time for updating Part B of the bill.
Similarly, the authorities have extended the option to generate Part A to transporters, e-commerce operators, courier agency and job-workers. "Extending the option to generate Part A of e-way bills to transporters, e-commerce operators, courier agency, job-workers, etc, would provide the much-needed flexibility to the supply chain team to decide the best course of movement without worrying about statutory compliance," says Harpreet Singh, Partner, Indirect Taxes, KPMG.
In another relief, vehicle details will be required only in case of movement beyond 50 km, up from the earlier limit of 10 km. "This is expected to help smaller businesses operating within a state once e-way bills are enforced for intra-state movement as well," says Singh of KPMG.
Whether the e-way bill system facilitates smooth transit of goods or creates bottlenecks will depend on how well governments iron out the lacunas and ambiguities in the law.