E-way bills: The next set of GST's confounding rules are here

With effect from April 1, a second attempt is being made to implement the e-way bill system under GST. There are some who feel that considering that their previous attempt was an epic failure, the GST Council should have chosen any day other than Fools' Day for the roll out. With an intention to avoid any last minute embarrassment, the e-way bill system is being introduced in instalments. Initially, it would be applicable only when there is movement of goods in excess of Rs 50,000 between two or more states. Mandating e-way bills for movement of goods within a state would be introduced gradually. Karnataka is the outlier to this process, having mandated e-way bills even for movement of goods within the state. This is not surprising, considering the fact that in the erstwhile VAT regime, Karnataka ran an extremely successful e-way bill system called e-sugam.


The rules provide a number of exemptions for generating e-way bills -- these bills are not required for eight goods specified in an annexure; when the goods are being transported by non-motorised conveyance (non-motorised conveyance has not been defined anywhere); where the goods are being transported from the customs port, airport, air cargo complex and land customs station to an inland container depot or a container freight station; where the goods being transported are alcoholic liquor for human consumption, petroleum crude, high-speed diesel, motor spirit, natural gas or aviation turbine fuel; where the supply of goods being transported is treated as 'no supply' under the Act; where the goods are being transported under customs bond from an inland container depot or a container freight station to a customs port, airport, air cargo complex and land customs station, or from one customs station or customs port to another customs station or customs port, or under customs supervision or under customs seal; where the goods being transported are transit cargo from or to Nepal or Bhutan; where the goods being transported are exempt from tax under specific notifications; any movement of goods caused by Defence formation under Ministry of Defence as a consignor or consignee; where the consignor of goods is the central government, government of any state or a local authority for transport of goods by rail; where empty cargo containers are being transported; and where the goods are being transported up to a distance of 20 km from the place of the business of the consignor to a weighbridge for weighment or from the weighbridge back to the place of the business of the said consignor, subject to the condition that the movement of goods is accompanied by a delivery challan.

For rules' sake

The e-way bill rules had always behind them the thought of a fixed validity period for the bills. As per these rules, e-way bills will be valid for one day if the distance being covered is 100 km and in multiples of one day for each additional 100 km. The lawmakers suddenly got a new idea and added another 20 km/day and similar multiples for over-dimensional cargo. "Over-dimensional Cargo" shall mean cargo carried as a single indivisible unit and which exceeds the dimensional limits prescribed in rule 93 of the Central Motor Vehicle Rules, 1989. However, rule 93 of the Central Motor Vehicle Rules details the overall dimension of motor vehicles and does not use the word cargo at all. Rule 93 has some very specific dimensions -- for instance, the overall length of the construction equipment vehicle in travel shall not exceed 12.75 metres; however, that in the case of construction equipment vehicle with more than two axles, the length shall not exceed 18 metres.

The million-dollar question is whether so much of hair-splitting is required for an e-way bill that is more in the nature of a document to transport goods as per tax laws. Another exemption has been provided wherein where the goods are transported for a distance of up to 50 km within the state or Union territory from the place of business of the consignor to the place of business of the transporter for further transportation, the supplier or the recipient, or as the case may be, the transporter may not furnish some of the details required in the air way bill. There is bound to be a lot of confusion on the rules regarding how the distance of 50 km would be calculated as there is no manner of cross-verification. It would be much simpler for the e-way bill rules to state that one e-way bill would be valid for, say, seven days in the case of inter-state transactions and three days in the case of intra-state transactions.

There is also a rule which states that where a vehicle has been intercepted and detained for a period exceeding 30 minutes, the transporter may upload the said information in a separate form on the common portal. Apart from the fact that it would be very difficult for a transporter to upload a GST form from the highways of India, the rule does not state what will happen once the form is filed and within what time the detained vehicle would be released.

With the concept of matching of invoices also failing, the tax authorities have to only rely on the e-way bill system for some sort of authentication on turnover and taxes uploaded by a taxpayer. Since GST revenue is showing no sign of growing dramatically, one would not be surprised if trucks are randomly stopped and its personnel questioned only for the purpose of getting some additional taxes. The first few legal cases under GST have been in areas such as stopping a vehicle and asking for e-way bills when they were not mandatory. Under these circumstances, training truck drivers on the nitty-gritty of e-way bills will surely be a lucrative business proposition.

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