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Complications in GST and E-Way Bills

In News:

Recently GST Council decided e-way bills will be introduced in a phased manner by March 2018.

Background

The e-way bill can be electronically generated (on the government portal) either by the supplier or recipient of the consignment, before the movement of goods.
The transporter needs to carry an electronically generated way bill or a permit, with every consignment having value exceeding INR 50,000.
The person can carry the invoice book with him and issue the invoice once the supply is delivered.
All such supplies will be inter-state supplies and attract integrated tax in terms of Section 5 of the Integrated Goods and Services Tax Act, 2017.
Till this completely gets implemented, the states have been allowed to follow their own way bill/road permit system, including the ones used prior to GST.

Recent decisions are based on communications received particularly from the suppliers of jewelry regarding issue of invoices when goods are sent on approval basis.

Complications in the Decisions

Numerical challenge –Under the GST law, invoices are supposed to be serially numbered.
If invoice books are sent through transporters, maintaining serial numbers could pose a numerical challenge during invoice uploading and subsequent assessments since one set of invoices will be at the head office and the other in a remote location.
State taxes –This would create confusion when a truck starts its journey in one State, travels through three other States before completing its journey in a Union Territory.
Approval slips –Complications can arise if the goods are sent on approval basis since there would be no invoice.
The circular assumes that acceptance or rejection of goods sent on approval will be done instantaneously.
A machining part sent by a supplier to a first time customer would take a few weeks to be approved, some parts may be approved while others rejected.
Jewelry based –Clarification would be applicable to all goods supplied under similar situations, it appears that the draftsman has kept only jewelers in mind.
To how many suppliers (apart from, maybe, jewelers) can send the invoice book along with the vehicle in which the goods are transported is not specified.

E-way bill

The e-way bill can be electronically generated (on the government portal) either by the supplier or recipient of the consignment, before the movement of goods.
The transporter needs to carry an electronically generated way bill, with every consignment having value exceeding INR 50,000.
It may possibly subject to few exemptions such as agricultural commodities
There are indications that it could come into effect from October 1, 2017.
Till then, the states have been allowed to follow their own way bill/road permit system, including the ones used prior to GST.

Complexities with E-Way Bills

The e-way bill, once generated, is valid for one day for consignment up to 100 km and then one additional day for every 100 km thereafter.
If e-way bill is generated, but the goods are not transported then it has to be cancelled electronically.
If the transporter transfers goods from one vehicle to another in the course of transit, then he will be required to generate a new e-way bill, before commencement of the movement.
Transporters may be required to obtain a unique Radio Frequency Identification Device (RFID) and get it imbedded on the vehicle and map the e-way bill to the RFID prior to the movement of goods.
It is important to note that e-way bill is required even in case of intra-state movement (beyond 10 km), which was not the case earlier.
Also, there were many states which did not have a system of way bill or a road permit in the erstwhile regime.

Concerns

The industry is sceptical that this could result in Inspector Raj and the associated corruption, which GST was otherwise supposed to eliminate.
There is a fear that the e-way bill system could undo reduction in commodity prices
The GST rates are uniform across states against this backdrop, e-way bill would serve limited purpose.
The mechanism proposed requires a certain level of maturity in terms of technology, systems and processes.
Large proportion of transport sector is still unorganized and may not be equipped to deal with technology-led compliances.
It appears to be too stringent in terms of the reporting requirement.

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