Bumps on e-way bill road worry industry

The Economics Times By Deepshikha Sikarwar, Ratna Bhushan Jan 17, 2018, 07.38 AM IST

NEW DELHI: With e-way bill trials having begun Tuesday ahead of a nationwide launch, companies are worried about their preparedness, supply disruptions and the ability of the goods and services tax network (GSTN) to bear the additional load. The e-way bill is a key element of GST but its implementation had been deferred to give companies time to get used to the indirect tax regime, which was put in place on July 1last year.

The e-way bill, which will be required to transport any item worth more than Rs 50,000 within the country, is to be made mandatory from February 1, earlier than scheduled, as per a December 16 decision of the GST Council. It's proposed to be a permit of sorts in electronic format that will contain details of the goods being transported.

The early adoption of the e-way bill follows a decline in GST revenue in the past few months amid fears of tax evasion. From a peak of over Rs 95,000 crore a month, GST revenue fell to about Rs 81,000 crore last month but that also follows a lowering of rates on about 200 items of daily use in November to lower retail prices. The e-way bill system was to have been started from April 1, 2018.

Large Volume of E-way Bills

Industry and experts worry the system may not be able to handle the large volume of e-way bills that will have to be generated. It's taken some time for the GSTN portal, which was riddled with glitches when filings began, to iron out the kinks.

The state-run National Informatics Centre (NIC) has created a specific portal to generate an e-way bill, a printout of which the truck crew will have to carry along with the invoice of goods. It is expected that digital formats will eventually be used. Another concern is how the system will be adopted at the stockist level and if it will lead to supply shocks.

"There could be some glitches at sub-stockist levels, when the bill is implemented at all state levels in June," said Sunil Duggal, chief executive of Dabur, maker of Vatika shampoo and Real juices. "Compliance at the wholesale could be impacted initially. Also, connectivity could be an issue in the smaller towns." Biscuit maker Parle Products' marketing head Mayank Shah said: "We will know the full impact once the trials begin. We are ready with compliances at our end. But the challenges would be infrastructurerelated."

The Confederation of Indian Industry (CII) pointed out that any disruption in the GSTN, even for a few hours, will bring operations to a standstill. In such a situation, it wouldn't be feasible to contact state officers and get waivers instantly. If not deferred, then at least the provisions should be made applicable only to select, notified products that, on the basis of past experience, are prone to evasion and not to all products, it said.

Fears of Arbitrary Inspections

Tax consultants raised fears of arbitrary inspections by mobile squads that were prevalent in the earlier regime.

"Many businesses, especially those operating in the states that have not had e-way bills in the past, are apprehensive that the countrywide introduction of e-way bills would lead to delays in transportation and arbitrary inspections of consignments by the mobile squads," said MS Mani, partner, Deloitte India.

Given the volume of e-way bills, the load on the NIC portal is going to be quite heavy, said Pratik Jain, indirect tax leader, PwC. "Since the test runs have just started, it is unlikely that companies will be able to automate this process by February 1," he added.

Understanding of the rules by stakeholders including small traders and transporters is also a worry.

"The provisions of the e-way bill are complex and require compliances which the industry is apprehensive about," said Bipin Sapra, partner, EY. "The e-way bills further dilute the benefits accruing out of an efficient GST model, simply because the matching envisaged through the GSTN portal has not successfully happened."

Confederation of All India Traders (CAIT) secretary general Praveen Khandelwal said it will have a negative impact on transport of goods and may hit supplies. He urged the government to delay the trial and initiate the system only after making sure the portal will work smoothly.

CAIT suggested that instead of the e-way bill, the government could use quick response (QR) codes to validate the goods being transported.

Fortigo Network CEO Anjani Mandal said there may be some concerns but the system will benefit the economy.

"With the move towards the eway bill, the organised part of the long-distance logistics industry would contribute towards the rapid growth of the Indian economy (the organised section) as a whole," said the cofounder of the logistics startup.

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