In a bid to force non-compliant businesses to file returns regularly, the finance ministry has barred e-way bill generation while transporting consignment if the supplier or recipient of the cargo has not furnished returns for two consecutive tax periods under Goods and Services Tax (GST).
The e-way bill is required to be generated from a common portal by a business for movement of consignment worth more than `50,000. For this, the supplier/recipient furnishes part A of the form with details of GST identification number, value of goods and invoice number among others. Further, part B of the e-way bill form is furnished by the transporter with details of vehicle used.
“This effectively means that businesses who fail to file returns cannot transport goods at all,” Rajat Mohan, partner at AMRG & Associates, said.
The tax department has not been able to improve compliance in a significant manner since GST was launched in July, 2017. Nearly 30% of eligible taxpayers continue to fail to file summary return GSTR-3B by the deadline, which is set on the 20th of every month.
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For instance, nearly 29% of the eligible 98.4 lakh taxpayers had not filed returns for November by the end of December. Similarly, for composition scheme taxpayers who are required to file quarterly returns, over 25% of nearly 18 lakh eligible taxpayers had not filed returns for July-September quarter till December 27.
Combined with low compliance and truncated return-filing system, the tax department has found it difficult to rein in tax evasion as the flow of intelligence data is fragmented. The GST Council has announced that the new simplified return system would become operational from July this year. The cases of evasion has increased in the second year of GST.