GST administration: Remaining issues

Last month, I listed and elaborated on the guidance the Chairman, Central Board of Indirect Taxes and Customs (CBIC), issued weekly during GST’s first year, altogether 50 in my count. I indicated that the communique were helpful and direct in their instructions to officers keeping customer focus in mind. Nevertheless, I commented that success would, of course, depend on the implementation by department officers.  This month I point towards select remaining challenges, including evasion, e-way bills and litigation.

GST evasion: The Chairman reminded officers to keep track of revenue collection and that a concerted effort must be made to arrest any fall in revenue collection. Any negative deviation must be analysed and the reason(s) must be brought to the notice of superiors. It was pointed out that wrong availment of transitional credit — as the system passed from the old to the new tax — would have serious adverse implications on revenue collection and its continual monitoring and verification by field formations would remain a major area of focus of the GST administration policy. 

The Chairman highlighted the large number of pendency of Returns marked for review and correction in the Automation of Central Excise and Services Tax (ACES) system. And zonal members were asked to monitor it on a daily basis and reduce pendency to nil. Certain rules, however, need to be corrected. The cut-off period for migration should be removed. If a potential taxpayer is delayed in migrating, why should he be stopped from voluntarily entering, however late? Rather, keeping migration continually open, and steadily scaling up the penalty with the degree of lateness, makes the transition more palatable especially to MSMEs who face challenges in migration.  

E-way bill (EWB) system: No doubt this is a forward step to minimise evasion and the Chairman’s repeated directives have been to rapidly install the system from February 2018 for both inter- and intra-state transport. But trade and transporters experienced immediate technical glitches in generating EWBs. Accordingly, the Chairman indicated that the trial phase for generation and carrying of EWBs would be extended for both inter- state (up to April 1) and intra-state (up to June 1). 
The Chairman requested that all Chief Commissioners (CCs), in consultation with their State Commissioners, may decide the date of implementation of the EWB system for intra-state movement of goods in their state. It requires no emphasis that effective co-ordination between Central and State tax administrations would help smooth implementation of this challenging assignment. Another helpful measure from the Chairman was the assurance that officers could approach the Board in case any clarification in law was required or any pressing issue came up of a particular sector that needed to be addressed through an amendment.

The EWB system, however, has to be examined with a fine-tooth comb. EWB is an electronic bill requiring detailed inputting of data. It is to be carried by the transporter for intra- and inter-state transportation of goods, and is to be maintained also by supplier and recipient, both registered and unregistered. Reflecting the steps and components involved, the prevailing ceiling of Rs 50,000 for each invoice is low. Hopefully, this will be jacked up meaningfully in the next round. 

Electronic portals do not work perfectly; they are often overloaded. It is not rare that the towers also do not work, often jumping back with a start. MSMEs, often with a low number of employees, should not have to suffer increased compliance burdens with the GST; indeed, that burden should decrease significantly. 

The validity period for an EWB is also shorter than it needs to be. From the time of its creation, it expires after just one day for a transportation distance of less than 100 km and an additional day for each extra 100 km. Given the uncertainty and unpredictability of road travel and not just occasional inspection queues along national highways, the validity period for an EWB is unnecessarily low.