E-Way bill: Simple is effective

The roll-out of the national e-Way bill on February 1 ran into trouble on the very first day; the implementation has been deferred to an indefinite date. While unpreparedness of the IT architecture is being blamed for this, deeper introspection is required on the design of the e-Way bill itself and the data requirements it puts in place.

Let us start by acknowledging that in principle the e-Way bill is a good idea. It is essentially an advance declaration of movement of goods issued under the cover of a particular invoice. It therefore provides another layer of safeguards to ensure that only genuine transactions (at least on the goods side) are being recorded by businesses since it tracks the goods actually physically being moved from one party to another.

In addition, advance declaration in itself allows authorities to verify whether or not such goods are actually moved, and implement a risk management system.

Achieving the objectives

To achieve these objectives, an e-Way bill needs to have three elements: (1) information about the two parties involved in a transaction; (2) details of the transaction as available on the invoice; and (3) information about the vehicle in which the goods are travelling.

Now it would be crystal clear to anyone with knowledge of business operations that first two elements of data are available in the invoice issued by the business for every transaction. The last element can easily be provided by the transporter in most cases. GSTN has given businesses the facility to file electronic invoices (called INV1 in GST parlance).

A simple e-Way bill should be nothing more than a list of all these invoices, with the vehicle or conveyance number in which the goods being carried being updated by the transporter.

But the electronic invoice or INV1 has not been made mandatory. The stated reason is that businesses, especially SMEs, may be inconvenienced by the need for such electronic filing. But making e-Way bills compulsory makes this electronic filing necessary anyway! In fact, it makes it even more onerous.

Alternative design

Here is an alternative design for the e-Way bill generation process.

INV1 is made compulsory. This will also increase transactional compliance of GST, and as such is in line with the thrust on digitisation.

The new e-Way bill is made a simple document which simply lists all the invoices related to goods being shipped by consignor to consignee. This is essentially the part of the e-Way bill that is generated by the consignor. GSTN itself provides a simple API that allows auto-generation of e-Way bill from INV1. Since no additional data would be required like in the current e-Way bill, this should make generation extremely easy and quick.

The transporter is allowed to update the vehicle number in ‘reasonable time’ after pick up. This ensures there is no delay while picking up shipments with the truck driver having had to first update the conveyance number in his handheld phone, subject to the vagaries of network connectivity — which most of us know is not always reliable in many places. In case of couriers who pick up many small shipments, this would seriously delay operations as the courier tries to update the vehicle number at every pick-up point.

E-Way bill is made mandatory only for inter-State movements, along with the current understanding that they would not be required at all for all shipments below ₹50,000. This would remove current challenges where even intra-city movements are being made subject to e-Way bills.

In the case of international imports, the e-Way bill would be a simple listing of bills of entry, with the conveyance number added ‘at a reasonable time’.

Some people will argue that such flexibility would make smuggling easy. This argument is counter-intuitive. Any compliance design is as good as the enforcement. If selective on-road inspections based on a risk-managed system are implemented well, then any experienced officer can verify the veracity of the goods based on the simple declaration described here.

If, however, the enforcement is weak and compromised, no amount of data can make it robust and prevent illicit activity. If a trucker is caught without an e-Way bill, and claims that he is still operating within ‘reasonable time’, the truck should be asked to proceed to a designated wait area, and allowed to continue its journey only after generating a genuine e-Way bill.

Far less stress

Such a system would put much less operational stress on businesses and transporters due to the fact that the absolute need for e-Way bills would reduce drastically if it applies only to inter-State movement. Second, the generation itself is made very simple — a mere listing of electronic invoices. Third, since the transporter gets a little more time to add the conveyance number, the hold-ups to the supply chain is reduced.

Of course, adequate checks and balances already included in the e-Way bill rules need to continue, and perhaps need to be made even more robust to ensure that a truly transparent and effective risk-based approach to on-road enforcement is put in place. For example, a check needs to be kept on how many vehicles are actually being stopped and for how long. State administrations need to be ruthless on governance that negatively impacts supply chains.

Making it compulsory to make an electronic record of all incidents of stopping and detaining conveyances by officials in every tax zone, and making the data on the number and frequency of such stops and percentage of actual non-compliance found subject to Right to Information Act (RTI) is another way to enforce checks and balances.

No other country requires such a data-onerous document for internal movement of goods. This all the more reason that the design, IT systems, and governance structure of e-Way bill are thought through carefully. Even a good policy needs to be backed by efficient compliance design. Stakeholders must give serious consideration to redesigning the one document that would have a maximum impact on India’s logistics and supply-chain efficiency and, therefore, the economy.

The writer is Senior Director, Corporate Public Policy (South Asia), Deutsche Post DHL Group. The views are personal

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