UP breaks ranks, introduces e-way bill ahead of October date

Even as businessmen and traders are grappling with complying with the newly introduced indirect tax – goods and service tax (GST) – the Uttar Pradesh (UP) government has gone ahead and added one more compliance burden of the e-way bill.

This is worrying businesses in the state and outside as they were not expecting it before October as proposed by the GST Council, a decision-making body on GST consisting of finance ministers and government officials from all states and Centre.

They also believe the e-way bill, which is a document for movement of goods between states, was against the tenets of GST's one-nation-one-tax and could add to the complications of the new indirect tax instead of easing it.

M S Mani, senior director, Deloitte India, feared if UP's move could be emulated by other states it would further increase "compliance burden".

"The introduction of e-way bills in UP signifies that states are determined to keep track of movement of goods entering the state from other states and also within the state for high-value goods and specified goods. This could lead to other states considering similar steps, which would increase the compliance burden and could also lead to increased transit time due to checking of goods at check-posts, which was expected to ease with GST," he said.

The e-way bill was notified by the northern state government on Wednesday and could be enforced soon.

Unable to arrive at a consensus, the GST Council had put the e-way bill on hold for four months but the states have power under the Constitution to introduce it.

On Wednesday, UP become the first state to exercise this power by making it mandatory to carry e-way bill while moving "taxable goods" worth Rs 5,000 or more into or outside the state.

"In the case of transportation of taxable goods valuing Rs 5,000 or more from a place outside UP into the state, enclosed form e-way bill shall be carried with goods during the transportation or transit of the goods," says the directive of issued by the state government.

Personal goods with a value less than Rs50,000 carried in the personal or public vehicle would be exempt from furnishing this document on the production of personal identification.

Further, even goods moving from within the state to other states would require e-way documents, as per the UP government's order.

An indirect tax consultant with a leading consultancy firm, who did not want to be named, said e-way bill violated the principle of GST; "if it is one-country-one-tax, why should there be an e-way bill at all because there is already an invoice with the transport vehicle".

He said; "If 10-20 states start having e-way bill then what was the purpose in government announcing a month back where they said GST Council will decide on the e-way bill after four months. Then that (announcement) becomes irrelevant".

According to him, none of the countries that have adopted GST has e-way bill.

Meanwhile, industry lobby body Indian Industries Association (IIA) felt that the UP government had taken the decision to implement e-way bill "in haste".

It also called the bill in variance with GST rules and guidelines of the Central Board of Excise and Customs (CBEC) as far as the threshold of Rs 5,000 for the e-way bill was concerned.

"The UP government has ordered implementation of the e-way bill for movement of goods valuing Rs 5,000 and more which is ten times less than provided in the rules," said the industry association in its letter to the government.

KEEPING TRACK

• The development shows that states are determined to keep track goods from other states
   
• The e-way bill was notified by the Uttar Pradesh government on Wednesday and may be enforced soon