Analysing the First Month of the E-Way Bill in Action

Ashay Anand
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Ashay Anand

Ashay is a lawyer turned serial entrepreneur with multiple ventures under his belt. He has a Bachelor's degree in Law from Campus Law Centre, Delhi University & a Diploma in Business Laws from NUJS, Kolkata. He is also a cited author, researcher and book reviewer at BookReview Circle.com
Ashay Anand
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The E-Way Bill was launched on 1st April, 2018 to regulate the inter-state and intra-state transportation of goods under the GST regime. Now, a month after its implementation we take a look at how this new apparatus fares in action; it’s advantages, lacunas and how it can be improved.

This is Part-2 of a two part series on the E-Way Bill Series. To know about what the e-way bill is, read the first part of the series, only on “Perennials”.

Introduction

More than a month has passed since the implementation of the Electronic Way (e-way) Bill system. While it is still too early to analyze how it is faring, or how it shall turn out to be, we can still make an educated guess as to the pros and cons of the e-way bill from its provisions, our infrastructure and the facts that emerged since its implementation, based on a few real-life inputs from the people who were affected by it and through the analysis of experts on the subject-matter.

Based on the above, here is our analysis of the E-Way Bill-

Advantages of E-way bill[1]

  1. Fast and easy generation of e-way bill: There is no difficulty to generate e-way bill. Its easy and quick process makes it manageable for each and everyone.
  2. User-friendly e-way bill system: E-way bill system is easy to download without anyone’s assistance.
  3. Cost reduction: E-way bill will reduce logistic cost and reinforce better and efficient invoicing, granting in reduction of tax avoidance.
  4. Less time consuming: No waiting time at check post for vehicles or transports, as a result faster movement of goods can be witnessed. Taxpayers or transporters need not visit any tax officers.

Less documentation: Documents for transportation of goods won’t be required in any State. Another benefit for the transporters is the establishment of Radio Frequency Identification (RFID)[2]device in the vehicle used to transport consignment on a regular premise. The person in charge of the vehicle never again needs to convey physical copies as the device required is attached to the vehicle and the e-way bill can easily be located, mapped and verified through the device.

Analysis of the E-Way Bill since its implementation: The Pros

 It has been reported that on the first two days of the e-way system, which included a Sunday, 5.5 lakh e-way bills were generated which would clear any apprehensions the public, academia and industry might have had regarding the capacity of the GST network to cope with a copious amount of traffic that is bound to be on the network. While one cannot foresee the future, it is heartening that that the GST Network claims that the system is geared up for substantially higher capacity to cater to the demands of our booming economy. Equally heartening is the revival in GST collection that had dipped to Rs. 83,716 crore in November 2017, after a fairly robust Rs.90,000 crore plus inflow for the first three months of the new indirect tax system. As per official data collections, February recorded a collection of Rs. 89,264 crore, the highest since September 2017 giving fair indication that the implementation of the e-way bill apparatus should provide a further boost to the GST Regime.

Though the e-way bill apparatus has already shown signs of being an efficacious system to curb tax evasions and bring desired regulation India’s transport sector, there are many things that could go wrong with this new apparatus. The largely unorganized transport sector and a majority of vehicle drivers not fully conversant with the technical nuances, the system could end up creating a bottleneck for transporting goods in a nation where movement of goods already takes inordinately long due to infrastructure deficiencies. As such the frequency of inspections under this new regime and the execution of this apparatus would be challenging.[3]

Disadvantages of E-way bill

 As the implementation of the e-way bill apparatus is still in its nascent stage, experts and businessmen alike have raised several apprehensions regarding the success of this new regime, and a plethora of foreseeable challenges. A few challenges that need to be addressed to ensure the success of this apparatus are:

  • Network disturbance: Poor network connection and availability in most of the locations can be a big concern and may cause difficulty for the transporters and manufacturers.
  • Opinion may vary from one state to another: Most of the States have agreed with the implementation of the e-way bill but some states have decided to have their own implementation of e-way bill.
  • Glitches in generating e-way bills: The e-way bill was terminated by the Government of India due to technical glitches during its trial runs. It is not unforeseeable that such glitches might crop up in future and hamper the entire apparatus and even potentially cast a looming shadow on the GST Regime.
  • Problem for industries: Industries engaged in multiple modes of transportation will end up piling a large number of bills for every shipment.

 The e-way bill rules had to be modified before the apparatus was implemented on 1st April 2018, following representations from the industry, after the aborted and short-lived tryst with the e-way bill three months ago during its trial run. A few of such modifications were:

  • The value of goods exempted from GST is not considered in calculating the minimum consignment value of Rs 50,000.
  • It was 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 warehouse to the transporter within a state, was increased from 10 km to 50 km.
  • E-commerce agencies could generate e-way bills after being authorized by the consignor to do so.
  • Empty containers will not require e-way bills.[4]

While these regulations might seem to lend much desired clarity to the e-way bill apparatus they still lead to much confusion as has been pointed out by experts like senior columnist S. Muralidharan. He has raised a few pertinent questions on the implementation of the e-way bill apparatus. He provides and interesting example to further explain the situation. In his exact words, “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. Breakdown of a truck, all too common on Indian highways, might produce its own quota of problems – the consequent transshipment onto another truck might be looked upon with suspicion.”

The questions, raised by him are not without valid foundation. A budding businesswoman from Meerut had her vehicle stopped on her way to Lucknow for an exhibition a day after Uttar Preadesh implemented the e-way bill apparatus. Having valid GST receipts for the entire cargo that she was carrying but unaware of the recent implementation of the new e-way bill system she was held along with her vehicle for hours by inspectors who themselves did not have a clear idea as to how would those goods be classified and charged under the new system. After a couple of hours and relentless badgering to get her to bribe them, they finally let her off, unable to extract even a single penny as the value of goods and the exact rules of implementation could not be ascertained. However, she knows a few of her fellow business women who were not so lucky and had to bribe their way out in the chaos and confusion created by the new apparatus of which, most of them were  unaware of due to the ever so frequent changes that were made before the implementation of this system.

As such Mr. Muralidharan’s warning that the e-way bill heralds the return of the inspector raj[5] on highways doesn’t seem to be far-fetched. Since the implementation of this apparatus is entirely dependent on officials, it is corruption prone. An unobtrusive system needs to be adapted to ensure that there is no harassment or delay in the course of movement of goods.[6] Without such a system in place, the e-way bill might plunge the transport of goods into chaos and herald the return of inspector raj which would inadvertently stifle our economic progress and especially affect uninformed small businessmen (who might not even be governed by the e-way bill) making them prone to corrupt officials in an ever changing tax regime.

REFERENCES

[1] Refer: https://www.google.com/amp/www.financialexpress.com/opinion/why-benefits-of-e-way-bill-must-be-contrasted-with-its-disruption/999445/lite/

[2] Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects. The tags contain electronically-stored information.

Refer: https://www.epc-rfid.info/rfid

[3] The Hindu, Editorial, “Back on track: On GST e-way bill system”, April 4, 2018. Retrieved on May 4, 2018

http://www.thehindu.com/opinion/editorial/back-on-track/article23427693.ece

[4] First Post, Business, S. Muralidharan, “E-way bill hurls movement of goods back into chaos, signals the return of the Inspector Raj on highways” April 2, 2018 Retrieved on May 4, 2018

https://www.firstpost.com/business/e-way-bill-hurls-movement-of-goods-back-into-chaos-signals-the-return-of-the-inspector-raj-on-highways-4414613.html

[5] “Inspector Raj” refers to a period between independence in 1949 and India’s near-bankruptcy following the first Gulf War, when trading licences were handed to a narrow and super-wealthy business elite the government favoured.

Refer: IFRE, All Special Reports, “ Inspector Raj still Rules”

www.ifre.com/inspector-raj-still-rules/1521691.fullarticle

[6] First Post, Business, S. Muralidharan, “E-way bill hurls movement of goods back into chaos, signals the return of the Inspector Raj on highways” April 2, 2018 Retrieved on May 4, 2018

https://www.firstpost.com/business/e-way-bill-hurls-movement-of-goods-back-into-chaos-signals-the-return-of-the-inspector-raj-on-highways-4414613.html

About Ashay Anand

Ashay is a lawyer turned serial entrepreneur with multiple ventures under his belt. He has a Bachelor's degree in Law from Campus Law Centre, Delhi University & a Diploma in Business Laws from NUJS, Kolkata. He is also a cited author, researcher and book reviewer at BookReview Circle.com

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