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GST evasion: Traders deploy horse-carts to transport produce across states to skirt e-way bill system

In what could be described as the abuse of a loophole in the Goods and Services Tax (GST) regime, some traders are reportedly sidestepping the regime's e-way bill system, or a permit required to transport goods, by moving produce, water and some goods across state borders via horse-drawn carts or manual carts, according to a media report.

Traders, who don't generate an electronic-way bill in order to evade GST, have resorted to this medieval method of transporting goods, according to the Financial Express, because the rules say that e-way bills are applicable only for motorised vehicles.

The e-way bill for moving goods within a state became mandatory from 3 June, with the country-wide roll out of the mechanism. The union government rolled out the e-way bill system for moving goods worth over Rs 50,000 from one state to another from 1 April .

Representational image. PTI

Representational image. PTI

Touted as an anti-tax evasion measure, transporters of goods worth over Rs 50,000 are required to present an e-way bill to a GST inspector, if asked. The e-way bill rules allow for random verification by a tax officer. The measure was expected to help boost tax collections by clamping down on trade that happens on a cash basis. However, traders are transporting goods beyond the exemption limit, reported the Financial Express.

The finance ministry had asked the GST Network (GSTN) to develop a foolproof system before the re-launch of the e-way bill. In March, Finance Secretary Hasmukh Adhia said the company handling the backbone of the new indirect tax regime was much better prepared to roll out the new system.

"No E-way Bill is required for movement of goods in non-motorised conveyance and also for certain class of goods like fruits, vegetables, fish and water," the GSTN said in a statement in January.

With inputs from PTI

Updated Date: Jun 12, 2018 21:26 PM

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