Implementation of E-Way Bill system
With the new E-Way Bill schedule announced at the 26th Council meeting, opinions and hopes have been firing up. The date for implementation of the E-Way Bill system has changed to 1st April 2018.
The Finance Ministry’s press release notified rules for compulsory E-Way Bill implementation for intra-state goods movement on any date before 1st June 2018. Now some states have already adopted the E-Way Bill system. As a truck moves from one state or territory to another, the rules change and it becomes difficult to comply with the ever-changing rules.
At the top level, consignors and transporters would need to learn how to operate the E-Way Bill portal. They will also require knowledge about the different types of E-Way Bills, which E-Way Bill to generate in which situation and the inspection and verification rules. The trader or transporter company will also have to educate the vehicle drivers about the same.
Transporters will also have to prepare the drivers for unforeseen situations (for example, generating E-Way Bill in case of order cancellation). Majority of the drivers are not fluent in English. Navigating the portal could be an added challenge for them. Traders, transporters, and drivers will also require training to map the soft-copy of E-Way Bill (RFID inspection).
Fresh Bills & Multiple Invoices
As per E-Way Bill system rules, a driver/transporter has to generate
a fresh bill every time the mode of transport is changed. Retailers use several modes of transport to deliver the goods from the warehouse to the end destination. They will also have to generate fresh bills in case of returns or exchange.
Multiple challans/invoices cannot be clubbed to generate one E-Way Bill. Each invoice is equal to one consignment and hence, for each invoice, a separate E-Way Bill has to be generated. But, if the transporter moves all consignments in the same vehicle, the transporter can consolidate multiple E-Way Bills into one. For businesses such as E-Commerce operators, it would lead to generating many bills for every single shipment.
In case of transport of capital goods such as machinery and equipment, it might not be possible to move the entire machinery in one truck. One would have to transport the heavy machinery part-by-part in different trucks or vehicles. It would be difficult to generate one E-Way Bill for 10 trucks with one invoice.
Shift to IT-intensive
In an ideal world, this shift from paper documentation and verification aligns with the dream of a digitized economy. However, when one looks at it closely, the E-Way Bill system seems flawed. The first day of E-Way Bill implementation showed how insufficient the portal was to handle the incoming traffic. Internet connectivity is a major issue across India. Often, internet connection wavers just outside city limits so ensuring a strong connection while a truck is on the go would be a major hurdle the government has to cross.
If somehow a driver manages to secure the connection, logging in takes multiple attempts. Although there are other modes to generate the E-Way Bill such as SMS and Android app, both the options have their own set of flaws making them inoperable. It is paramount for an organization to have a reliant IT infrastructure to help and generate E-Way Bills in real-time.
Updating ERP software
You will have to provide invoice and transportation details on the E-Way Bill. It will be difficult to sort the invoices that qualify for E-way Bills from the ones that don’t. A company’s ERP software has to be updated for GST compliance. An efficient ERP software will allow you to track and identify the E-Way Bills for which invoices are yet to be generated. Your software should allow you to enter the E-Way Bill details while auto-generating the invoice.
Your ERP technology should include flexibility to generate any kind of bill (single or consolidated), anytime. Also, it should be able to generate E-Way Bill based on credit notes, delivery receipts or receipt notes. An added bonus is if it allows you to switch between the software and the portal.
Changes in tracking process
Paper-based delivery Challan during the VAT system was how the government could cross check shipments with taxation documents and reduce tax evasion. However, the entire process was unproductive. There were multiple entry/exit notes depending on the number of state borders to be crossed. Checking at Toll Nakas took hours. Now, the transporter cannot dispatch goods without uploading the relevant information on the E-Way Bill portal. Also, there are radio frequency inspection devices (RFID) and mobile verification squads to check tax evasion.
If an officer intercepts, stops or detains a vehicle is for more than 30 minutes, the transporter can upload this information to the common portal. The makers of this rule obviously mean well but implementing this rule is easier said than done. Firstly, the drivers would have to learn how to use the portal. Secondly, they’ll need to know which grievances to mention and in what format. Given the state of internet connectivity, it’ll be harder for the drivers to connect to the portal. And of course, it wouldn’t be natural for a truck driver to flaunt his rights to a tax official.
The E-Way Bill is tricky business, and complying right away would be the best bet. The business advantages of being compliant are in fact too tempting to resist. Apart from an uber-smooth system, suppliers and transporters alike can take benefit from the loss of business of non-compliant entities.
Author: Team GST Edge
Updated: 4th April 2018.