Complications in GST and E-Way Bills

Complications in GST and E-Way Bills

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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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