Can e-way bills proposed in GST be the solution to India’s logistics woes?


By Archit Gupta

Road transport in India is a crucial part of the country’s transport and logistics industry. With a 10% annual growth every year, the sector has reaped the benefits of rapid expansion in the automobile industry, changes in taxation, and the boom of the e-com sector which relies on logistics for pan-India service.

Now, the introduction of GST is expected to increase the need for integrated logistics solutions as companies decrease the number of warehouses they maintain in different states. The changes brought about by GST are also expected to solve one of the major problems this sector faces – the inter-state transport of goods without the hassle of documentation and long waiting queues at check posts. The GST Council and CBEC’s answer to this problem is the E-way Bills which will replace the waybills and transport bills that transport companies use today.

So, what exactly are these e-way bills?  ..
Great question! The easy way to explain (and understand) these bills is by looking at them as a pre-signed order for transport of goods that is obtained electronically through the GSTN (Goods and Services Tax Network). A consignment, which is worth Rs 50,000 in value, cannot be transported without an e-way bill.

The e-way bill has to be generated before the goods are transported and the transporter can choose to carry it with them even though a physical proof is not needed. The bill can be generated by both registered and unregistered persons, or by the transporter. It is also important to understand that the total value of the consignment is considered when generating the bill and not the maximum value of individual items. The person generating the e-way bill has to fill certain forms and provide relevant information about the consignment to comply with the rules.
What are the compliances associated with e-way bills?

Compliance has been the bane of the Indian logistics industry for a while now. The waybills obtained currently from VAT authorities are notorious for restricting movement of goods across states. While e-way bills should help in free-flow of goods, it does not mean that transporters do not need to follow rules anymore. The CBEC has already released a detailed guideline on the use of e-way bills which list out  the following compliances:

– A new e-way bill must be generated whenever the mode of transport of a consignment is changed.
– When more than one consignment is transported across state borders, the serial number for the e-way bill associated with each consignment must be indicated on the common portal.
– E-way bills generated for goods not transported must be cancelled within 24 hours. They cannot be cancelled if verified during transit.
– Recipient of the consignment must accept or reject the bills. The system will assume the bill has been accepted if no alternate communication is provided within 72 hours.
– The person in-charge of the conveyance must carry certain documents such as the invoice or bill of supply for verification.
– The transporter can also carry the details of the e-way bill on an RFID device (Radio Frequency Identification Device).
– Physical verification of the consignment can be done if there is any ‘specific information’ relating to tax evasion or any other malpractice. Otherwise, goods once verified can continue unimpeded through the rest of the journey.
– Verifying officers would need to submit summary of inspection within 3 days of verifying a consignment.
– Transporters will have the right to upload queries on the GSTN portal if their vehicle is detained for more than 30 minutes without valid reason.
– E-way bills will be valid only for certain period of time.

The rules look easy to follow. How will they impact the industry?

On the face of it, the rules for e-way bill compliance do look really easy to follow. The fact that it can all be done online aligns well with the dream of a digitised economy. But realistically speaking, ensuring that every transporter – especially in the smaller towns – knows how to use the GSTN portal properly will be a headache for the government. Internet connectivity in India, especially while on the go, is also an issue so there is no guarantee that transporters will be able to use the GSTN portal to address their grievances (If any) while on the road. The same goes for the RFIDs and RFID readers. The idea of an automatic mode of verification for transport vehicles at major checkpoints seems very ideal, but ensuring this delivers may be difficult.

Let us also look at what this means for the e-com industry. The rules say that a fresh e-way bill must be generated every time the mode of transport is changed. E-com retailers use several modes of transport to ensure that goods reach their required destination from the warehouse or the manufacturer’s location. A shipment from Kerala can be transported by a goods truck till a warehouse in Delhi, and then a bike courier could be employed to deliver the product to the customer’s doorstep. E-com retailers can potentially end up generating a large number of bills for every shipment due to this reason.

Many times customers end up cancelling orders even while the goods are in transit, or return goods already purchased. Fresh e-way bills have to be generated each time this happens. E-com retailers who use third party logistics will be able to generate e-way bills only when the transporter also uploads details on the GSTN, which can cause potential delays in shipment.

But the documentation is not the only reason, e-com companies are miffed.

The major reason for concern is the strict timelines for validity of e-way bills. The validity has been calculated according to the distance travelled and some industry leaders find it unrealistic. Below is a table with the proposed validity of e-way bills for different distances:

So, we see that an e-way bill for a distance of 1000 kms is valid only for ten days from the date on which it is generated. A report by EY and RAI published in December 2013 clearly states that the average speed of Indian truck drivers is 20-40 km/hour, and the average distance covered daily is 250-400 kms. Compare this to the average speed of 60-80 km/hour and daily distance of 500-800 kms that truck drivers cover in developed countries and the problem becomes apparent. It needs to be seen how realistic these timelines will be. Besides, truck industry is very fragmented and rid with theft and driver downtime.

Will these bills change the Indian logistics industry for the better?

The AITAF (All India Tax Advocates’ Forum) seems to think e-way bills will only make logistics more ‘cumbersome and costly’. But many experts do hold favourable opinion of the e-way bill, provided it is implemented flawlessly. RFID verification of transport vehicles, if possible, can reduce wait times at checkpoints which is the number one reason for delayed shipments.

Digitisation of the documentation process will ensure accountability and easier verification. For all of this to come about though, the government will have to take care of the technological aspects such as internet coverage and e-literacy. The transition from pen and paper to online documentation will have to be done in phases with ample scope for necessary changes. And most importantly, the government will also have to factor in unavoidable delays (say due to natural or man-made calamities) and list out the rules for expired e-way bills in such cases.

If implemented wisely, e-way bills have the potential to reshape the logistics industry and make transport of goods easier and faster. However, one cannot unequivocally say that they are the panacea to all the woes of this sector, yet.




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