A fear that the revenue from the goods and services tax (GST) might continue to decline unless the tax authorities get an efficient handle to verify the tax liabilities of businesses has prompted the government to advance the implementation of the electronic way (e-way) bill mechanism to February from April. However, industry and trade, along with a section of analysts, stress that the “cumbersome” system could lead to supply chain bottlenecks and undermine the economic utility of the new tax. Businesses, especially the smaller ones and transporters, are finding it difficult to comply with the e-way bill system, while the GST Network’s ability to provide reliable platform to operate the system is also doubtful. Under GST, movement of goods worth above Rs 50,000 beyond 10 kilometres requires the supplier/transporter to generate an e-way bill number on the GSTN portal and carry it or its virtual form during the course of transit and present it to tax inspectors on demand.
“The biggest hurdle in implementing e-way bill is the (lack of) reliability of the IT network (GSTN). Businesses and transporters need to log in on the portal to generate the bill but the system is yet to stabilise as is evident from the fact that it still takes multiple attempts to log in,” said Praveen Khandelwal, secretary general of the Confederation of All India Traders (CAIT). He added that the GST advisory committee had suggested an alternative to the e-way bill in the form of quick response (QR) code, which could be printed on each invoice of every trader. The validity of the transactions can then be authenticated by by scanning the code on the invoice. The code will protect traders from harassment since it will be self-generated and businesses’ access to GSTN portal won’t be a must, he said. Khandelwal, who was part of the advisory committee, expressed the hope that the GST Council would consider the suggestion in its next full-fledged meeting in January. QR codes are a combination of black and white squares containing information which can be read by a scanner. Several banks are already using QR code for digital payment transactions. Batting for a simpler alternative to the e-way bill, Pratik Jain of PwC India said that if its implementation was not done properly, it could lead to significant supply chain bottlenecks.
The GST Council’s decision came on the back of declining GST collections — October revenue slumped nearly 12% to Rs 83,000 crore from the average collection of the preceding three months. Moreover, tax officials estimate that November revenue collection could be even lower due to unusually high input tax credits including transitional ones claimed by taxpayers and presumed tax evasion due to the absence of invoice-matching after compulsory compliance with comprehensive returns was deferred.
That the GST Council was looking to plug revenue leakages came to the fore when last week when Bihar deputy chief minister Sushil Kumar Modi claimed that his state may have lost nearly Rs 10,000 crore in the absence of a system to verify movement of goods across state borders in the four months since GST was rolled out. This was, however, countered by Jagannath Singh, an official of the Bihar Transport Association, who said that Modi’s assumption of tax evasion was not based on facts. He added that the e-way bill system would encourage harassment and create a monopoly of big transporters at the cost of small ones. “The concerns over revenue leakages in GST could also have been addressed by bringing the e-way bill provisions for certain classes of sensitive goods initially. Businesses hope that there will be no technology issues in generating e-way bills and the system will be adequately tested before it is launched. A testing window of two weeks appears to be very small,” said MS Mani, senior director, Deloitte.