MUMBAI: E-way bills will be required for movement of all goods, whether within the state or across states. The multi-layered process involved will make transport of goods a cumbersome, delayed and costly affair under the GST regime, according to industry watchers. E-way or transit bills will also be required for transport of goods outside the GST ambit, such as petrol or diesel or even exempt goods like agricultural products. Draft rules in this regard were released late on Thursday.
The entire process requires participation by the supplier, the transporter and even the recipient, which has to communicate its acceptance or rejection of the consignment covered by the e-way bill within a short span. “The introduction of e-way bills defeats the design of GST, which is a self-policing mechanism. If at all, e-way bills could have been introduced only for specific goods where past experience reflected tax evasion,” points out Prashant Deshpande, indirect tax partner at Deloitte-India.
In simple terms, for transport of goods, where the consignment value exceeds Rs 50,000, the first step is for the consigner (eg: supplier) to upload details onto the GSTN portal. If the goods are being transported by a third-party transport company, then based on such information uploaded by the sender, the transport company will upload further details to create a final e-way bill. This e-way bill is to be carried along with the goods that are being transported.
Upon generation of the e-way bill on the GSTN portal, a unique e-way bill number (EBN) shall be made available to the supplier, the transporter and the recipient of goods. Now the complexities begin.
“At times, a lorry may not have a pan-India permit, or there could be unforeseen circumstances such as an accident. Thus, in the course of transit, goods would be transferred from one vehicle to another. In such circumstances, the transporter has to create a new e-way bill on the GSTN portal, before further transit. A lot rides on the transporter’s ability to be able to keep up with the new rules. It also puts an additional load on the GSTN portal,” says Sunil Gabhawalla, chartered accountant and GST specialist.
Where multiple consignments are to be transported in one vehicle (say, a lorry is catering to three different suppliers), the transporter is required to indicate the serial number of the e-way bills generated in respect of each such consignment on the GSTN portal. “A consolidated e-way bill in the required form is to be generated by the transporter prior to the movement of goods — this will make tracking cumbersome for all parties involved,” explains Gabhawalla.
The validity period of the e-way bill, which is dependent upon the distance involved for transport of goods, is another great cause of concern. A wide range is provided: If the distance is less than 100 kms, the validity period is one day. The maximum validity period is 15 days, where the distance is more than a 1,000 kms. “The timeline is very strict and impractical — exigencies can arise in the course of transport entailing delays in transit beyond the specified number of days. The draft rules permit physical verification of the goods in transit. Thus, a stale e-way bill could result in detention of the vehicle,” adds Gabhawalla.
The recipient of the goods, if it is a registered entity under GST, has to communicate its acceptance or rejection of the consignment covered by the e-way bill, within 72 hours of the details being available on the GSTN portal. Else, the recipient is deemed to have accepted the details.
“There was no need for this additional layer of verification of e-way bills by the buyer as the GSTN system, which operates on a matching concept, already captures such a requirement. The supplier is to provide outward supply details in GST Returns -1, by the 10th of each subsequent month. Details are auto-populated on the GSTN portal and made available to the recipient in GST return 2A for verification within a stipulated time. Changes, if any, on verification, are again to be accepted by the supplier,” explains Deshpande.
Public comments are invited until April 21. The GST council will finalise the draft rules in their meeting in mid May.