E-Way Bill Implementation

In the pre-GST era, goods could not be supplied without obtaining waybills from VAT authorities. These waybills were physical documents that allowed movement of goods. Obtaining these waybills was a cumbersome process and caused restricted movement of goods.

Even while GST was under development, it was hailed as the biggest tax reform that would turn India into a common market, eliminating discrepancies in inter-state movement of goods. The weapon of choice to iron out these pre-GST transportation woes is the E-way Bill.

E-way bill is an electronic way bill for movement of goods worth more than Rs. 50,000 which can be generated on the GSTN by the supplier, transporter or recipient. The validity of the e-way bill depends on the distance to be covered and the goods in transit will be inspected only once. If the vehicle is detained for more than 30 minutes, the transporter can upload the details on the GSTN regarding the same. The E-way bill can be generated or cancelled via SMS as well. Pretty neat, isn’t it?

Except it may not be. Read the reasons:

1)     Check posts dismantled: Dismantling check posts was considered a major achievement. Until state governments realized that the corruption and tax evasion had increased. The state government inspectors now have mobile vans. If traders and truckers are to be believed, the corruption has increased manifold. The dismantling of check posts which was supposed to speed up the movement of goods has slowed it down.

2)     Validity: The validity is based on the distance and is calculated from the date and time of generation of e-way bill. For up to 100 km, an e-way bill will be valid for 1 day, and so on. If there is a change in the destination or the system fails, the validity may expire. In either situation, a fresh e-way bill would have to be generated. The transporter might not be equipped to generate the bills. Also, there are possibilities of the portal crashing if too many people are using it at once.

3)     Documentation: Let’s understand this point with an example. Two separate bills would have to be generated to transport a refrigerator costing more than Rs. 50,000 from the factory to the dealer and then to the customer’s house. One more bill would have to be generated in case the mode of transportation is changed. If the customer cancels the order and the refrigerator is sent back, another bill has to be generated.

Further, e-way bill would also be required for intra-state movement of goods. This increases the paperwork and the documentation for dealers who have more than one client.

4)     Reconciliation: As explained in the 3rd point above, the documentation increases depending on the situation. Generating so many bills would add the burden on the GSTN which is already struggling. All these bills have to be matched with the invoices adding another complex layer to the whole process.

5)     Increased Cost: Tracking the transport vehicle and mapping the soft-copy of the e-way bill would require installation of a radio frequency identification device in the transporter’s vehicle. This will be an additional cost. The transporter would have to train the drivers to operate the E-way bill portal if they are to upload any information while in transit. The training costs will have to be borne by the transporter. It could be a recurring cost for the transporter considering the labor turnover ratio.

6)     IT Network: One of the biggest challenges in implementing the E-way bill would be the reliability (or lack thereof) of the IT Network. The consignor, consignee or the transporter would have to log in to generate the bill. The first challenge crops up here – in some cases, it takes multiple attempts to log in. The portal maybe unable to handle the heavy traffic and crash leading to delay in the supply of goods.

Kerala had introduced its own e-way bill system. According to statistics, approximately 1, 20, 000 bills were generated every day. This figure is with respect to one state. It is indeed a commendable and mammoth effort that the GST Council is taking to implement the GST before the decided date. However, a two week trial period seems like a short time.

The NIC has been assigned the task of creating the E-way bill portal.