Mr. Somesh Arora
(B. Com, LLM UQ-Australia, CAIIB, PGD in LL & LA)

Mr. Somesh Arora

Traditionally an E-Way Bill is considered as a document issued by a carrier giving details relating to a shipment of consignment of goods, also the names of consignor and consignee, the points of origin and destination and in some cases the route. With digitalization the Electronic Way Bills have come into vogue. While these documents are typically a contract of carriage but of late the tax systems specially the Indirect Taxes have come to use the same to their advantage to prevent leakage of revenue through tracking of movement of goods from the enforcement angle. The enforcement logic is that there should be documentary trail of goods right from production/importation point to the consumption point to reduce evasion. As nothing can be better than a documentary evidence, to prove a case or to shift the onus.  On Customs side, there have been detected cases where goods were imported in the name of existing companies without their knowledge and were diverted to the venue or godowns of the smugglers. There have also been instances when goods through forged documents were cleared in the names of Export Oriented Units (EOUs) at concessional rates and were diverted and smuggled without even the knowledge of concerned Export Oriented Unit.  Disappearance of vehicle or goods brought under carnet systems are also known in many domains. On the side of the Value Added Tax (VAT), Karnataka VAT Authorities were the first to introduce computerized entry and exit system to ascertain movement of goods that entered in the state, after diversions were noticed. In Central Excise side the famous, Surat fraud Case in 2005 involving hundreds of Crores, in which massive rebates were taken by procuring fake Invoices  raised an alarm with the authorities,  as most of the factories providing such Invoices, were found non existent and there was hardly any accompanying movement of goods. This led to export of cheap apparels and even rags, thereby duping the Government Authorities.

So Taxmen in India had red flagged two things, right from the beginning when discussions relating to GST in 2006 were underway. Firstly, that there has to be system based matching of the Invoices to eliminate fake Invoices to be introduced in the system and their detection has to be at the earliest stage, if not instant. Secondly, the movements of high value consignments within India should be recorded in a system, so as to identify, confront and question any wrongdoer. Therefore concept of Electronic Way Bill was envisaged as a response.  It is supposed to cover not only intra state movements, interstate movements but also movements from various Custom Ports by any importer after the goods are cleared by a Custom Port.  To keep petty transactions out of the ambit of Electronic Way Bill, transaction with consignment value of less than Rs.50,000/- and movements of less than 10 Kilometre of distance have been kept out, though in the case of latter transaction, Part-A of the Electronic Way Bill is required to be filled up. Similarly, the consignments cleared on other than motorised vehicle have been kept out of the purview, and so have been the consignments of gold, gem and jewellery for security reasons. The system broadly works on the basis, that the person legally made responsible to issue Electronic Way Bill will generate a system based E-way bill number, which will eventually be placed on the Invoice. And only on generation of such a Electronic Way Bill Number the goods shall move and the transporters must have this Electronic Way Bill Number with them, on any inspection of goods being done during transit.   The transit time has also been stipulated and is one day for first 100 KM and thereafter in multiples of 100 for every extra day.  For extraordinary circumstances the transgression from schedule can be explained to the Commissioner to seek his approval.  There is also a provision that if the vehicle is stopped for any reason by any authority, then details of such intervention should also be reflected in the Electronic Way Bill System. For Customs, every movement of the cleared goods will require generation of Electronic Way Bill, but not for the goods which are still in Customs custody whether symbolic or actual.  Therefore, containers moving from Gateway ports to Inland Container Depots, which are still having bottle seal or electronic seal (when imported) may not require an Electronic Way Bill.  The Central Government had initially started a trial run on Electronic Way Bill System from 16.01.2018 to notify the procedure and make the requirement of Electronic Way Bill effective from 1st February, 2018, however, due to technical glitches the same had to be postponed on 2nd February, 2018. States were given directions to introduce the same for inter-state movement, on their own Electronic Way Bills in staggered manner up to 30th June, 2018. Many States like Uttrakhand, Uttar Pradesh and Rajasthan even started the same before 1st February, 2018.  States like Andhra Pradesh have for the time being postponed their E-way Bill in tune with the Central Government. However, authorities are quite serious about implementing the Electronic Way Bill at the earliest possible and that too, without truncating the legal provisions too much.  The challenge of introducing Electronic Way Bill is huge in a country like India where the transport and movement of goods through Rail is enormous. And determined evaders are ever ready to exploit any loophole to their advantage.  Therefore to make the measure effective, a lot of thinking is taking place and introduction of Part-A of Electronic Way Bill for movement of less than 10 KM, as also the requirement of generation of Electronic Way Bill by the registered dealer on procurement from unregistered dealer have been introduced. However, such procedures if do not achieve the desired results can be counter -productive and a major irritant for those assessees who like to be on right side of law and are generally compliant.  Enforcement agencies, therefore, will have to constantly monitor and learn from evolutionary experiences.  The advantage on the Customs side can be palpable for the enforcement agencies, as they will always have a trail on Custom side on bogus or mis-declared imports, as an importer can always be asked to indicate as to whom the next sale was made and of how much quantity. Through his system transaction and like wise his purchaser can also be hauled up.  The routine checks in transit by multiple State and Central agencies will have to be intelligence based, otherwise removal of State entry barriers may have no meaning. And it may become a case of ease on one hand and create a bigger nuisance by other.

(Author is Advocate and Former Commissioner of Customs, Excise and Service Tax. He can be contacted for further queries at www.amicusrarus.com or email: amicusrarus@yahoo.com )

Compiled by GSTstreet for #GSTManthan

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