For quick and easy movement of goods across India without any hindrances, the concept of check-posts that existed in the earlier regime was abolished in GST. However, within a year of GST introduction, the concept of the E-way bill was introduced which is a document to be carried by the person in charge of conveyance, generated electronically from the common GST portal.
GST calls for digital transformation. Hence, automation has been a key factor to meet compliance requirements. The main advantage of a technology-driven system is the easy detection of the tax evader. With regard to changes in automation, we would be discussing in this article the integrations made in systems of E-way bill and implication on taxpayers.
Systems Integrated: Following are the various facilities that are integrated with the E-way bill portal:
1. Integration with RFID/FasTag: From January 1, 2021, RFID/FasTag has been integrated with the E-way bill system. The transporter is required to have a radio-frequency identification (RFID) tag in his vehicle and details of the E-way bill generated for goods being carried by the vehicles are uploaded into the RFID system. When a vehicle passes the RFID tag reader on the highway, the details fed into the device get uploaded on the E-way bill portal on a near real-time basis. The information is later used by revenue authorities to validate the supplies made by a GST registered person. The authorities can also identify dummy E-way bills that are generated, though no movement of goods takes place, thereby detecting bill trading and circular trading.
2. Integration with Vahan System: The E-way bill system has also been integrated with the Vahan System administered by the Ministry of Road Transport and Highways which contains digitalised data of registered vehicles. The vehicle number entered in the E-way bill system is verified for their existence/correctness in the Vahan system. Incorrect vehicle number cannot be entered while generating an E-way bill which will hence enable to track the movement of commercial vehicles.
CBIC has issued some of the FAQs with respect to the Verification of Vehicle number in EWB Portal mentioned in this link
3. Integration with E-invoicing portal and GST portal: E-invoicing has been implemented in a phased manner for registered person having turnover of more than Rs.50 crores. E-invoicing is the generation of Invoice Reference Number on the government portal which would directly be auto-populated in the E-way bill portal where HSN is mentioned for goods and also auto-populated in GSTR 1.
Reports generated from the integration: Based on the RFID information received, the following reports are made available in the MIS System and also on the Officer’s mobile App:
1. Vehicles passing through the selected tolls could be identified by getting the details of the vehicle along with E-way bill details and passage details in near real-time. Access to google maps has also been given for better conception. Also, vehicles details mentioned in the given E-way bill number passing through tolls can be identified.
2. Commercial vehicles passing through the selected tolls without E-way bill in near real-time which would help to curb bill trading and circular trading. Taxpayers need to ensure that the E-way bill has been generated without being dependent on the transporter.
3. Vehicles having critical commodities specific to the State and have passed the selected toll can be viewed. In the present COVID 19 scenario, oxygen storage/ shortage has led to being a critical commodity.
4. Any suspicious vehicles (watch listed vehicle) and vehicles of EWBs generated by suspicious taxpayer GSTINs (watch listed GSTIN) that have passed the selected toll on a near real-time basis.
5. Details of Last 10 toll which are passed by the specific vehicle can be known. This would help in identifying the wrong route taken by the vehicle. Even details of tolls passed by vehicle between two dates can be known.
Aid to the officers: EWB system is being integrated with RFID for monitoring the movement of goods by vehicles and provide various analytical reports for identifying the vehicles that ply with the same EWBs multiple times, moving without EWBs etc. Following other reports are also provided to the officers:
1. Analytical Report: These reports provide depicting the probable taxpayers who are evading tax, re-cycling EWBs, bill trading or circular trading e.g. One such report is ‘EWBs Cancelled after 2 hours of the generation when distance is 100 Km’
2. Trend Analysis: Patterns of taxpayers into fraudulent activities have been studied e.g., EWBs generated by newly registered taxpayers amounting to high value and deregistered soon.
3. Supply Chain: Circular trading is a means of claiming false Input Tax Credits by the taxpayers. The supply chain helps to identify the chain of taxpayers who are involved in this activity.
4. Risk-Based Analysis: A set of 10-15 Key Risk Indicators (KRIs) has been identified to identify the tax evaders.
5. Analysis on Blocked / Unblocked GSTINs: Reports on blocked taxpayers and their corresponding EWB transactions give a fair estimation of the tax liability.
These reports would provide the following to identify the fraudulent taxpayers and also identify the taxpayers involved in Circular trading and Bill trading.
1. Details for near real-time tracking of vehicles and E-way bill.
2. Objective for checking the vehicle.
3. Tracing the movement of the vehicle on a map using the mobile app.
4. Analysis of data for detection of fraud.
This also helps in conducting inspections and audits. Also, officers have an Action Response System for updating the result of the inspections conducted on taxpayers based on the MIS reports is provisioned. This will help all the officers in the department in creating awareness and keeping them well informed about the behavior of the taxpayer.
Officers can use these reports while conducting vigilance and make the vigilance activity more effective. Moreover, officers of the audit and enforcement wing can use these reports to identify fraudulent transactions.
Benefits for taxpayers: Integration of various facilities provides few benefits as below:
1. Scepticism of the officer on the genuine taxpayer may be reduced as watch listed GSTIN/vehicle will be highlighted in the mobile app.
2. Reduction in unnecessary stoppage of vehicle and inconvenience to the logistics
3. Reduction in time spent on the field by the officer for gathering information on cross-questioning as details of a vehicle, E-way bill, and goods will be available.
4. Vehicle number would be entered correctly most times which would benefit the taxpayer to locate the goods.
5. Part A of the E-way bill would be auto-filled where an e-invoice has been generated reducing the time to be spent for keying the same data.
6. Helpful in tracking where e-invoice would be auto-populated in E-way bill portal and E-way bill not generated.
Implications of Non-compliance of E-way bill provisions: Integration of all the three portals has led to ensuring to some extent identify the defaulter/tax evader and not to allow to continue the business. Following are the implications of non-compliance of E-way bill provisions:
1. Blockage of E-way bill portal where following situations arise:
a. Where taxpayer opted for composition scheme not filed CMP 08 for two consecutive quarters or taxpayer opted for the regular scheme not filed returns (GSTR 3B/GSTR 1) for two tax period (quarterly or monthly).
b. Where the taxpayer’s registration has been suspended for the following reasons:
i. Suo-moto cancellation of registration
ii. Proper officer has a reason to believe that registration needs to be cancelled under section 29 or section 21.
iii. Where comparison of returns with GSTR 1/2A/2B shows significant difference indicating contravention of a provision of the Act, leading to the cancellation of registration.
However, the government has recently amended the provisions stating that blockage of E-way bill would be only for the outward supplies made by the taxpayer and E-way will be generated for all the inward supplies as the supplier who is not at fault should not be penalized.
2. Notice is been issued demanding the reconciliation of outward supplies and E-way bill raised during the period under ASMT 10.
3. Also, where the non-compliance of a particular taxpayer has been found through these reports and verification of vehicle, Section 129 and Section 130 can be invoked and tax penalty and fine can be charged accordingly.
Precautions by the taxpayers/transporters: While understanding the integration of the various systems and implications thereof, taxpayers and transporters should also ensure that following precautions can be taken to ensure hurdle free transaction.
1. Taxpayers and transporter shall now need to be more cautious with regard to the following points while supplying or transporting the goods where the vehicle is moving through the highways.
a. Ensuring the commercial vehicle has not deviated from the route even if the E-way bill has been issued and
b. Also ensure vehicle in which goods are transported has goods which are mentioned in E-way bill and do not have critical goods with it.
Any deviation in the compliance of E-way bill procedures may lead to the introspection of vehicles where the officer on the field would be having the evidence through this facility.
2. Taxpayer should add the clause in the agreement with the transporter that any deviation from the transporter leading to the detention of goods or any consequence due to default of transporter, transporter would be liable for penalty and release of goods.
3. Track of goods transported which may be treated as supply or not under GST whether E-way bill has been raised or not.
4. Knowledge and experience of the person generating and tracking is up to date and if required training to be provided.
5. Reconciliation of E-way bill data and outward supplies reported in return to be maintained. Note it is not necessary that every E-way bill be reported in returns as goods not treated as supply also would require an e-way bill.
Conclusion: The revenue secretary has also indicated the replacement of E-way bill with the implementation of E-invoicing in a phased manner which has been made applicable for registered taxpayer having turnover above Rs 50 crores. However, seeing the enhancement of the E-way bill system and provision such replacement is not expected in the near future.
Where a various report has been provided to the officers, it would therefore be appreciated if officers make use of such facility in the interest of revenue and do not harass the genuine taxpayers for a procedural lapse.
Integration of various facilities also indicates that the government is taking steps to avoid the upcoming fraud happening in the country. These initiatives shall be welcomed to ensure avoidance of tax evasion, circular trading and bill trading like frauds.
Special thanks to CA Mahadev R for vetting the article. The author could be reached at [email protected] for any queries /feedback.