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A little over one year has passed since the e-way bill system (an electronically generated document required for the movement of goods from one place to another) was mandated for inter-state movement of goods. This e-way bill system is now in place even for intra-state movement. How has this system fared? BusinessLine spoke with a few tax and legal experts.
Pune-based chartered accountant and GST consultant Pritam Mahure explains that, generally speaking, GST-related formalities, e-way bills included, have increased the compliance burden on bonafide businesses, even as tax evasion continues. “However, e-way bills do not allow much scope for fraud, except where the same e-way bill (which is valid for a certain distance and for a certain time) is used for carrying out multiple trips,” he says.
Till November 2018, there were 1,100 cases reported on e-way bill violations and the government has been making efforts to make the system more robust. However, according to a government release issued on January 8 this year, the quantum of evasion detected has gone up in 2018-19 (up to December 2018) over 2016-17. Of the ₹48,555 crore of tax evasion detected (Central excise, sales tax and GST) in April-December 2018-19, there has been recovery worth ₹13,907 crore. The number of cases detected in this period were 8917.
Mohan R Lavi, a Bengaluru-based chartered accountant says the removal of checkposts has smoothened goods movement, but mobile squads often charge a tax even on exempt items because they are not well informed. “The minimum threshold for generating an e-way bill varies from ₹50,000 in States such as Karnataka to ₹2 lakh in others. This creates difficulties,” Lavi explains. A circular issued by the Commissioner of Commercial Taxes, Chennai, on May 31, urging investigation squads to exercise restraint, is instructive. It says: “Instances were brought to the notice of the Commissioner of Commercial Taxes where the Roving Squad officers are levying maximum penalty in a routine manner even for minor breaches of tax regulations...”
The roving squad cannot levy a penalty where the offence amounts to less than ₹5,000. “Vehicle check shall be conducted only at such places as may be ordered by the Joint Commissioner and only during the hours of duty prescribed for the concerned squad,” the circular notes. Physical verification of goods should not be carried out more than once in a single State, it says.
An e-way bill is not needed where “goods are transported for reasons other than by way of supply,” the circular notes. The conveyance cannot be detained for not possessing an e-way bill.
Experts’ take
Pratik Jain, Partner and National Leader— Indirect Taxes, PwC India observes: “E-way bill has been a happy story so far. To what extent, e-way bill has been able to plug revenue leakages we can’t say. But with the proposed e-invoicing (which is seen as an extension of e-way bill) expected to come in during the next six months, it will only help plug revenue leakages”.
N Mathivanan, Principal Partner, Lakshmikumaran & Sridharan, a law firm, says that close to 55.77 crore e-way bills had been generated in the last one year which in itself suggests that the system has been accepted by the industry and is doing well.
On the prospects for revenue leakage, Mathivanan observes that the chances of leakage of revenue due to poor monitoring has become bleak.
“With the integration of GST returns with the E-way bill system and changes proposed in the new E-way bill system, like non-filers of two GST returns would be debarred from issuing E-way bills, it would be very difficult for a taxpayer to evade tax”, he says.
Abhishek Jain, Tax Partner, EY India says that the e-way bill system per se has been running quite smoothly and with time to time streamlining. “With the focus now also being on reconciliation between e-way bills generated and outward supply disclosures made by businesses, this system would enable better identification and check on tax evasion”, he said.
Saloni Roy, Senior Director, Deloitte India says that e-way bill has definitely increased the compliance for a businessman. “However, industry, government and consumer have emerged victorious,” she observes.
With inputs from A Srinivas
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