E-way bill hurls movement of goods back into chaos, signals the return of the Inspector Raj on highways

The e-way bill rules have been modified this time round, following representations from industry based on the aborted and short-lived tryst with e-way bill two months ago

S Murlidharan April 02, 2018 11:21:55 IST
E-way bill hurls movement of goods back into chaos, signals the return of the Inspector Raj on highways

The central government was keen on rolling out the e-way bill dispensation from the Budget day, 1 February, 2018, but failed apparently due to technical glitches so much so that it had to be aborted no sooner than it was started. In the two months since then, it says it has put through a sufficient number of trial or dry runs on the e-way bill portal and is satisfied that actual transactions will go through smoothly.

Some 11 lakh businesses have already registered. Finance Secretary Hasmukh Adhia, last Wednesday, asked businesses and transporters to get ready for it and enroll for the new system, which they have to use to dispatch goods for inter-state sales when their value exceeds Rs 50,000. He has also said that for intra-state sales, the e-way bill regime would kick in after a fortnight of the rollout of the inter-state system, though Karnataka has already rolled it out for sales taking place within Karnataka.

The e-way bill is like an excise gate pass that had to be issued by a factory as a proof that goods were excise-paid. The pass mentioned the truck number so that the trucker was in the clear and not accused of transporting goods on the sly i.e. without payment of tax. The e-way bill under the Goods and Services Tax (GST) is designed for the same purpose except that it has to be generated by logging into the official e-way bill portal. Each e-way bill eventually has to be related to a GST invoice. Of course, this one-to-one relationship between movement and sale has to be established only for sales in excess of Rs 50,000.

Eway bill hurls movement of goods back into chaos signals the return of the Inspector Raj on highways

Representational image. Reuters

Why did the government feel constrained to introduce the e-way bill dispensation when the very purpose of the GST was to usher in a self-policing mechanism, eschewing the obtrusive and stifling physical controls of the past with its corrupting potential?

The GST is a variant of the Value Added Tax (VAT), and naturally one thought the stifling, irritating, dilatory and corrupting physical inspection of trucks at check posts would be a thing of past. But sadly, that hasn’t been the case mainly because the revenue collections from the comprehensive GST have not met expectations of Rs 1 lakh crore a month. The actual collections have been averaging between Rs 85,000 crore to Rs 90,000 crore a month.

The e-way bill then is a knee-jerk reaction to plug tax evasion. And how? By empowering GST inspectors to fan out on national highways and expressways to stop a vehicle, or set up check posts at vantage points to intercept trucks and verify papers i.e. the e-way bill which should find a mention in the GST return. In other words, we are hurtling back to chaos and hence this is a retrograde move. What happened to the self-policing mechanism that consists in each preceding and succeeding seller in the supply chain acting as a bulwark against GST evasion? Apparently, this is not working. Did the GSTN software developed by software major Infosys not provide for this elementary built-in auditing mechanism?

The e-way bill rules have been modified this time round, following representations from industry, after the aborted and short-lived tryst with the e-way bill two months ago. For instance, the value of goods exempt from the GST will not be considered in calculating the minimum consignment value of Rs 50,000 necessitating generation of an e-way bill. It has now been clarified that the value of Rs 50,000 will apply to a single consignment and not to an assortment of goods from different parties. The minimum distance allowed for movement of goods without the requirement of an e-way bill, such as between, say, a consignor’s godown to the transporter within a state, has been increased from 10 km to 50 km. E-commerce agencies can generate e-way bills after being authorised by the consignor to do so. Empty containers will not require e-way bills.

All these sound reasonable on paper but, on ground, might trigger chaos. To wit, how would the inspector determine in the short time whether goods are exempt or not especially if the consignment is a mix of both. And if a truck carries multiple consignments from different sellers, all hell will break loose. Will the inspector have the power to seize goods not accompanied by an e-way bill? And would it be the word of the seller against that of the inspector when it comes to the determination of the value of consignment---whether it is more than Rs 50,000 or less.

Will the riposte of the sellers and transporters be to divide the consignment into smaller lots so that they fall below the dreaded Rs 50,000 value though in doesn’t make financial or costing sense to do so? Breakdown of a truck, all too common on Indian highways, might produce its own quota of problems—the consequent transshipment into another truck might be looked down upon with suspicion.

All in all, the e-way bill heralds the return of the inspector raj on highways. The system should be able to flag off tax evasion. Human intervention is both dilatory and corruption prone. In American stores, there is no physical frisking or touching and patting of shoppers but shoplifters are caught by an alarm that is programmed to go-off when a package goes out without payment. The alarm and bar code on the package are connected. A similar unobtrusive system needs to be put in place under the GST regime this time round to ensure that there is no harassment or delay in the course of movement of goods.

(The author is a senior columnist and tweets @smurlidharan)

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