India being a federal nation, the Central Government is empowered by the Constitution to levy duties and taxes on the manufacturing and rendering of services. The government in the states are empowered to levy tax on intrastate sale of goods, in which movement of goods happen within state jurisdictions. When the sale of goods involves movement of goods between different states, the Centre is empowered to levy tax on such sales, and the revenue so collected, will be shared by the Centre and the State.
While the constitution clearly stipulates the powers to the governments at the Centre and the states, the biggest challenge especially for the states is to monitor the movement of goods – within the state and outside the state.
There was rampant evasion of taxes and leakage of revenue to the states. Thus, in order to tackle the tax evasion and misuse of the system, most of the states have multiple check-post along their national highways and borders. These check-posts mainly monitor the movement of goods and ensure that the relevant duties/ taxes have been paid on goods.
A person causing movement of goods has to be equipped with various documents like invoice, challan, road permits, way bill, and so on which need to be produced at the check-post for inspection.
Today, various state governments have devised their own system to track the movement of goods within and to outside their borders. For example, some states have necessitated the registered dealer to declare the details of the goods based on the consignment value or as designated/notified goods when they are transported. The documents like the permit form, way bill, among others have to be obtained. Apart from these, certain states mandate the transporter of goods to obtain the transit pass or declaration form.
With evolution of technology, there are significant efforts by various states to digitalize the procedures involved in the movement of goods, like the e-Sugam introduced by Karnataka. Under e-Sugam, a registered dealer transporting goods worth Rs.20,000 or more has to upload the details of the consignment and obtain a unique reference number. This is shared with the transporter and he can then simply quote the number to the officer at check-post.
In other states too, a similar mechanism has been introduced which facilitates the registered dealer to electronically declare the details of the consignment and obtain the required forms for the movement of goods.
Under GST, the process and procedural aspects for the movement of goods are prescribed in the e-way bill rules. E-Way bill stands for Electronic Way Bill. It is usually a unique bill number generated for the specific consignment involving the movement of goods. Under GST, a registered person who intends to initiate a movement of goods of value exceeding Rs 50,000 should generate an e-Way bill.
Applicability and generation of e-way bill
|When is the e-way bill applicable?||It is applicable for any consignment value exceeding Rs.50,000. Even in case of inward supply of goods from unregistered person, e-way bill is applicable.|
|When should I generate the e-way bill?||The e-way bill needs to be generated before the commencement of movement of goods.|
|Who should generate the e-way bill?||When goods are transported by a registered person, either acting as a consignee or consignor in his own vehicle or hired, the supplier or recipient of the goods should generate the e-way Bill.|
|When the goods are handed over to a transporter, the e-way bill should be generated by the transporter. In this case, the registered person should declare the details of the goods in a common portal.|
|In case of inward supplies from an unregistered person, either the recipient of supply or the transporter should generate the e-way bill.|
|What is the form applicable for generating e-way bill?||Form GST INS-1 is an e-way bill form. It contains Part-A, where the details of the goods are furnished, and Part-B contains details of the transporter.|
|Can the e-way bill be generated for consignments of value less than Rs.50,000?||Yes, either a registered person or a transporter can generate an e-way bill although it maynot be mandatory.|
|What happens if multiple consignments are transported in one vehicle?||The transporter should generate a consolidated e-way bill in the Form GST INS 02 and separately indicate the serial number of e-way bills for each of the consignment.|
|On generation of e-way bill, will there be any reference number generated?||Upon generation of the e-way bill, on the common portal, a unique e-way bill number called ‘EBN’ will be made available to the supplier, the recipient and the transporter.|
|What happens if goods are transferred from one vehicle to another vehicle in the course of transit?||Before transferring the goods to another vehicle and making any further movement of such goods, a transporter should generate new e-way bill in Form GST INS 01 by specifying the details of the mode of transport.|
|What happens if the consignor does not generate the e-way bill even though the value of consignment is more than Rs.50,000?||The transporter has to generate the e-way bill in Form GST INS 01 on the basis of the invoice, bill of supply or the delivery challan.|
|What happens if e-way bill is generated but goods are not transported?||An e-way bill can be cancelled electronically on the common portal within 24 hours of its generation. An e-way bill cannot be cancelled if it has been verified by an officer during transit.|
|Will the e-way bill be made available for acceptance to the recipient of goods?||Yes, the details of the e-way will be made available for the recipient of goods only if he is registered. The recipient of goods should communicate acceptance or rejection of the consignment covered by the e-way bill within 72 hours of the details being made available.|
|What happens if recipient of goods does not communicate the acceptance of rejection within 72 hours?||If the recipient of goods doesn’t communicate acceptance or rejection within 72 hours, it will be deemed as accepted by the recipient.|
|Is there a facility to generate or cancel the e-Way through SMS?||The facility of generation and cancellation of e-Way bills will be made available through SMS.|
Let us understand the process involved in the generation of e-way bills with an example.
Rana Traders, a registered dealer located in Maharashtra, agreed to make an outward supply of goods worth Rs.75,000 to Shiva Traders, a registered dealer in Karnataka. To deliver the goods to Shiva Traders, Rana Traders handed over the goods to Speed Transports.
Validity of e-Way Bill
|Less than 100 km||1 Day|
|100 km or more but less than 300 km||3 Days|
|300 km or more but less than 500 km||5 Days|
|500 km or more but less than 1000 km||10 Days|
|1000 km or more||15 Days|
The validity period will be counted from the time of generation of the e-way bill. The validity period of the e-way bill may be extended by the commissioner for certain categories of goods, as specified in the notification issued in this regard.
Documents, inspection and verification
The transporter or the person in charge of a conveyance should carry the following documents:
- The invoice or bill of supply or delivery challan, and
- A physical copy of the e-way bill or the e-way bill number.
At the place of verification, the officer may intercept any vehicle to verify the e-way bill or the e-way bill number in physical form for all interstate and intrastate movement of goods
To avoid verification of the physical copy of the e-way bill, a device Radio Frequency Identification Device (RFID) can be fixed to the vehicle and the e-way bill is mapped to the device. At the place of verification, the e-way bill mapped to this device will be verified through RFID readers. For certain class of transporters, fixing of RFID devices to the vehicle and mapping of e-way bill to device will be mandated. This will be notified by commissioner.
On the ground of suspicion of tax evasion, a physical verification of the vehicle can be carried out by an officer after obtaining necessary approval from the commissioner or an officer authorized on his behalf. If the physical verification of vehicle is done at one place –within the state or in any other state, no further physical verification will be carried out again during the transit, unless specific information of tax evasion is made available subsequently.
After every inspection, the officer needs to record the details of the inspection of goods in Part- A of Form GST INS-03 within 24 hrs of inspection and the final report must be recorded in Part B of Form GST INS 03 within 3 days of inspection. If the vehicle is detained for more than 30 minutes, the transporter has an option to complain by uploading the details in Form GST INS 04.
With GST, all the existing state-wise documentation required for movement of goods will be eliminated and the proposed e-way bill will be made common across the nation. Also, it is expected that the number to check-posts across state borders and national highways will be scaled down. This may result in ease of movement of goods.