E-Way bill under the GST
The inherent objective of any tax legislation has been to navigate the revenue collections through smooth passage and move towards growth trajectory taking along all the stake holders. In order to achieve this objective, not only does tax legislation tries to achieve an optimum balance between all the relevant parameters such as tariff rates, exemptions etc but also imposes certain restrictions and conditions so that the smooth passage envisaged in the statue is not deviated.
The history of Way bill can be traced back to the imposition of tax on sale of goods itself. The key motivator for introducing the way bill is to account for the movement of goods, for if such movements remain unaccounted, there remains a large obscurity as to the nature and type of movement and the levy of the sales tax. While the original objective for introducing the Way bill is to bring on record the movement of goods and ensure movements triggered by sales are subjected to tax, the Eway bill in current scenario encompasses much broader object.
With the passage of time, way bill found its place in GST legislation with greater push from the state Governments in the form of E-way bill. E stands for Electronic although it is not for the first time that Electronic Way bill is introduced in the country, it had its presence even prior to GST in some states such as Andhra Pradesh, Kerala etc. However, there are more than one distinct objectives of E-way bill in GST which are unique and for which the stakeholders were not accustomed to. One such objective is to collect and store the some pivotal data to feed the same into various software applications and tools and study the results for example tagging an invoice with e-way bill, advance intimation to tax officers on vehicle movements etc and take necessary actions. However, another inherent objective that has come into sight in recent days is to use the E-way bill as a measure to push for greater compliance for example one cannot generate an E-way bill if returns are not filed for more than two tax periods. It is obvious that this could be achieved only through broad basing of the very objective of E-way bill i.e. to account for the movement of goods.
However, it has to be seen whether these objectives have been achieved as intended with minimum stress on the trade and industry. It would be difficult to argue as we have seen innumerable instances of detention and seizure which have also resulted in adverse impact on the trade in the form of in the form of unwanted penalties, loss of precious working capital and business time. But, this can also be justified with an optimistic tone there could be large benefits in long term that may accrue to all the stake holders including Government, Genuine Businesses etc in lieu of these initial hiccups.
The E-way bill is a delegated legislation driven by the rules. Rule 138 of the GST rules was inserted w.e.f 30 August 2017 i.e. after two months of introduction of the GST law. It is also very interesting to study the data for July and August 2017 where the industry witnessed the movement of goods without the way bill for the first time in history in many states.
The Original E-way bill rules did not fully capture certain key practical aspects relating to physical movement of goods such as transport through railways, transit issues, definition of consignment value and intimation of generation of E-way bill by the recipient etc which prompted the Government to substitute original rules within a span of 5 months with the new set of rules on 23 January 2018. These new rules also brought certain new options given the technological advancements and experience of 5 months.
However within three months, the E-way bill rules were again substituted to accommodate certain other unforeseen practical aspects such as allowing transport operator to furnish the details, e-commerce operations, validity period in case of Over Dimensional Cargo etc which resulted in substitution of Rule 138 in March 2018. Thus within 7 months of introduction of E-way Bill rules and 9 months of implementation of GST law, the E-way bill rules were replaced twice. One can gauge with fine certainty of the negative impact due to this kind wobbling in one of the most important matter of tax policy.
The era of amendments continued throughout the financial year 2018-19 and continues even today through the current financial year i.e. 2019-20 to harbour certain practical aspects that were otherwise missed earlier such as bill to ship to etc. Parallelly one can also witness launching of new facilitation tools in E-way bill portal (www.ewaybill.nic.in) as the technology and experience of E-way bill advances combined with an appetite to make full utilisation of the same For example auto calculation of route distance.
The most remarkable amendment has been insertion of Rule 138(E) which not only broadened the scope of E-way bill but has taken the E-way bill to next step as a tool to enforce the compliance notwithstanding the fact that the same may have an adverse impact on the trade if the Government intervenes into the level of physical movement of Goods.
Rule 138(E) is linked to monthly returns wherein the E-way bill facility gets automatically blocked if the monthly returns are not filed for two consecutive tax quarters/periods as the case may be. One cannot have imagined that this will completely bring to halt the sale transactions by suppliers without their fault as the E-way bill cannot be generated by them if the recipient has not filed the monthly returns for the designated period. One can only wonder as to the objective of tax policy i.e. in order to enforce a petty compliance on monthly return can this completely shatter the businesses which may translate negatively into the overall economic growth.
There is still no clarity on clearing the goods by importers when the E-way bill is blocked despite having compelling reasons for not filing the monthly returns by such importers. Rather than facilitating, this could only lead to crippling impact on trade chain.
The journey of E-way bill can be seen passing through a rough passage through these years due to flickering at policy level in the form of frequent amendments and several introductions of new features due to technological advances. While this being so, making the situation more hard Section 129 allowed uncontrolled powers of detention to enforcement machinery looking the other way when the very own rough passage of E-way bill existing through these years and posing significant challenge to stakeholders who are still under learning curve. Rule 138(E) multiplied these challenges on the stakeholders who were already reeling under the pressure of technological challenges on the one hand and despotic detention provisions on the other. In coming few days, the trade is expected to remain on tenterhook in view of the upcoming of landmark changes in the form of introduction of E-invoicing, new return filing system, advancement of FASTag, RFID etc. While there being a relentless pursuit by the Government to transform the tax policy to next level, the best way-out for all the stakeholders seems to be to keep pace with advancements in tax policy and make necessary changes at organisational level at faster pace on a proactive basis.