Role of E-waybill in Curbing Tax Evasion and Ensuring Compliance

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Published Date:  02-02-2024   Author:   aishwarya-s
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In 2020, Chartered Accountant Chirag Chauhan asserted to The Hindu Business Line that the introduction of e-waybills led to a significant 80% reduction in tax evasion. This statement, backed by the observation of only a marginal 2-5% decline in GST collections amid a notable 15-20% decrease in sales during the first quarter of FY 2020, strongly suggests the efficacy of e-waybills in curbing tax malpractices. 

The e-waybill, generated for the movement of goods, serves as a mandatory digital document, creating a transparent as well as accountable transport and transactional sector. As we progress into a more extended period with e-waybills in place, it can be said that their continued implementation will maintain this positive impact on reducing tax evasion.

E-waybill as a Deterrent Against Tax Evasion and Fraud

The E-waybill system plays a major role in the Goods and Services Tax (GST) framework, serving as a comprehensive deterrent against tax evasion and fraud. Introduced to facilitate the seamless movement of goods, the E-waybill is a digital document mandated for transactions exceeding Rs. 50,000, and its multifaceted functionalities contribute significantly to maintaining tax integrity. 

Even in the absence of traditional check-posts, authorities can intercept and scrutinize consignments at any point, ensuring compliance with e-waybill regulations. Penalties, including fines and tax liabilities, act as deterrents, compelling businesses to adhere to the prescribed procedures. 

Through trend analysis, the e-waybill system identifies patterns indicative of potential fraudulent activities, such as e-waybills generated by deregistered taxpayers, allowing authorities to take swift action. Additionally, the system provides insights into circular trading, aiding officers in recognizing chains of taxpayers involved in such practices, facilitating further investigations for enhanced tax compliance.  

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Using key risk indicators, GSTIN data, and performance reports, the system enables a forward approach, enhancing the overall effectiveness of tax enforcement.  Moreover, the integration of the E-waybill portal with the centralized Vahan portal, housing vehicle details, serves as an extra layer of security against fake E-waybills.

To strengthen tax compliance further, the government has implemented measures such as blocking e-waybill generation for GST-registered taxpayers who have not filed GSTR-3B returns for two consecutive months. The system also restricts the generation of multiple e-waybills for a single invoice, promoting accuracy and reducing the risk of duplication.

The introduction of auto-calculation of distance based on PIN codes simplifies the e-waybill generation process, ensuring accuracy in determining the distance between the source and destination. With real-time reports on vehicle movement for selected e-waybills, offering GST officers valuable insights into the trail of movement by the vehicle. This proactive methodology aligns with the government’s commitment to making the most of technology for effective tax administration and minimizing opportunities for tax leakage.

Real-Time Tracking of Goods Movement for Tax Authorities

The government is actively further developing a real-time reporting system to empower GST officers with instant insights into the movement of vehicles without e-waybills. This initiative aims to streamline the interception of trucks at toll plazas, curb GST evasion, and enhance overall tax compliance. Under the e-waybill system, businesses and transporters are required to furnish e-waybills upon request by a GST inspector. 

The integration of RFID/FasTag with the e-waybill system, which has been effective from January 1, 2021, enhances the monitoring of goods movement. Transporters are now required to have an RFID tag in their vehicles, facilitating the automatic uploading of e-waybill details into the RFID system.

Additionally, initiative of Real-time and Analysis Reports on RFID for GST officers plays a pivotal role in identifying instances indicative of potential tax evasion. Through utilizing RFID technology, the government aims to integrate the e-waybill system with real-time tracking capabilities, providing officers with crucial data to detect and curb fraudulent practices. It also includes the analysis of e-waybills with no actual movement of goods, offering insights into potential cases of bill trading as well as circular trading. Moreover, it addresses concerns related to the misuse of e-waybills for commodities prone to tax evasion.

Also Read: E-waybill for Goods Transported by Government Departments or Agencies

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Verification of E-waybill Details at Checkpoints

The verification of e-waybill details at checkpoints constitutes a crucial aspect of the e-waybill system. E-waybills undergo rigorous scrutiny at various checkpoints to maintain the integrity of the taxation process.

Interception of Conveyances for Verification 

The authority to intercept any conveyance for the purpose of verifying the E-waybill (EWB) or the e-waybill number, in physical form, is vested in the Commissioner or an officer empowered by the Commissioner for both inter-State and intra-State movement of goods. This provision is a crucial component of the regulatory framework, allowing for on-the-spot verification to ensure compliance with E-waybill regulations.

Integration with Vahan 

In a significant advancement, the E-Way bill system has been seamlessly integrated with the Vahan System of the Transport Department. This integration enhances the verification process by cross-referencing the vehicle number entered in the e-waybill with the information available in the Vahan System. If the vehicle number is found in the Vahan System, the verification process proceeds smoothly.

However, a noteworthy feature of this integration is the introduction of an ‘Alert Message’ in cases where the entered vehicle number is not available in the Vahan database. This immediate notification serves as a proactive measure, notifying the user about the non-availability of the vehicle number in the Vahan database.

As part of the enforcement mechanism, subsequent to receiving the alert message, such vehicle numbers that are not available in the Vahan database will be restricted from further participation in the generation of e-waybills. This stringent measure ensures that only vehicles with verified and authenticated details in the Vahan System are permitted for the generation of e-waybills, reinforcing the integrity and reliability of the overall system.

Cross-Verification Mechanisms

Cross-verification mechanisms, such as matching E-waybills with entries in GSTR-1 returns and the auto-population of data in GSTR-2A, form a robust framework. This multi-layered approach minimizes the potential for under-reporting, ensuring that each transaction aligns with the specified regulatory framework.

Also Read: E-Waybill For Part-B Supply: Reporting Requirements And Documentation

Penalties for Non-Compliance with E-waybill Regulations

Penalties for non-compliance with e-waybill regulations are stringent measures imposed on individuals or businesses failing to adhere to the prescribed guidelines governing the electronic waybill system. The e-waybill, a crucial document under the Goods and Services Tax (GST) regime in India, mandates the electronic tracking of the movement of goods exceeding a certain value. Failure to comply with these regulations can result in severe consequences, including financial penalties and legal actions.

  • Confiscation, Seizure, and Detention: One of the primary penalties for non-compliance is the authority to confiscate, seize, and detain the goods in transit. If the concerned parties fail to produce a valid e-waybill or if the e-waybill has expired, authorized officers can take possession of the goods, leading to a disruption in the transportation process.
  • Penalties and Fines: Individuals transporting goods without a valid e-waybill or with an expired one may face financial penalties. The penalty amount is often a percentage of the tax value associated with the goods, and it varies based on the circumstances and the duration of non-compliance. It also varies on whether the owner is present or not.
  • Fines Related to Confiscation: The fines associated with the confiscation of goods are determined by the market value of the confiscated goods before taxes. If vehicles are confiscated, owners are required to pay fines equivalent to the taxation payable on the captured goods.
  • Additional Charges and Taxes: Apart from fines, individuals involved in non-compliance may be subject to additional charges, taxes, and penalties, further increasing the financial burden for failing to adhere to e-waybill regulations.
  • Legal Action: Non-compliance may also lead to legal actions initiated by the authorities. This could involve court proceedings and may result in more severe consequences depending on the nature and extent of the non-compliance.
  • Restrictions on Movement: Perhaps one of the most immediate impacts of non-compliance is the restriction on the movement of goods. If a valid e-waybill is not available, goods are not permitted to be transported, causing disruptions to supply chains and business operations.

Also Read: What are the Penalties for Not Generating an e-way Bill?

Endnotes: E-waybill’s Contribution to a Fair and Transparent Tax System

The e-waybill system goes beyond its logistical role, playing a pivotal part in reshaping compliance standards and tax administration for goods transportation. Mandating a standardized digital process for transactions over a set value, it enhances compliance, minimizes errors, and acts as a robust deterrent against tax evasion. Integrated into the GST framework, the e-waybill ensures precise tax assessment and collection, fostering accountable tax practices. 

With real-time visibility, integration with FasTag and RFID, and strategic data utilization, it empowers tax authorities for effective monitoring, enforcement, and fraud detection. This digitized approach aligns with the government’s broader digitization efforts, contributing to a fair and transparent tax system.

Lastly, the contents of this article should not be interpreted as a legal opinion or representation of the author’s views. The information provided is intended solely for informational and educational purposes. Although care has been taken in preparing this article, there may be inadvertent mistakes and omissions. The author disclaims any liability for losses or damages of any nature resulting from inaccurate or incomplete information in this document or any actions taken based on it. It is recommended to seek expert or professional consultation.

FAQs

Here are some frequently asked questions.

  1. How to get seized goods released?

To regain possession of seized goods, the owner must settle the due taxes and penalties associated with the overdue or non-existent e-waybill. The release is contingent upon the payment of these financial obligations.

  1. What is the role of the E-waybill in the taxation system?

The E-waybill plays a crucial role in facilitating the movement of goods by ensuring that relevant information, including product details, consignor, recipient, and transporter, is documented for transactions exceeding Rs. 50,000.

The E-waybill system acts as a deterrent against tax evasion by mandating the generation of a digital document for each high-value transaction. This enhances transparency and enables authorities to track the movement of goods in real-time.

  1. If an e-waybill expires, what should be done?

In exceptional cases, within 8 hours after expiry, the transporter can extend it by updating details in PART-B of FORM GST EWB-01.

  1. What information is included in the E-waybill that aids in ensuring tax compliance?

The E-waybill contains essential information, such as product descriptions, consignment values, and tax details, providing a comprehensive overview of transactions. This information aids in verifying tax compliance and preventing under-reporting.

  1. Can the E-waybill be generated for all types of goods transactions?

Yes, the E-waybill is required for the movement of all goods valued at over Rs. 50,000, irrespective of whether the transaction involves inter-state or intra-state movement.

  1. How does the real-time validation of E-waybill details contribute to tax enforcement?

Real-time validation ensures that the information on the E-waybill matches the data stored in the GST database. This helps tax authorities promptly identify discrepancies, reducing the likelihood of tax evasion.

  1. What is the common portal for e-waybill generation and tracking?

The common portal for generating e-waybills is https://ewaybillgst.gov.in](https://ewaybillgst.gov.in.

  1. In what ways does the E-waybill system deter fraudulent practices in the movement of goods?

The E-waybill system acts as a deterrent by creating a digital trail of goods movement, making it challenging for individuals or businesses to engage in fraudulent practices such as under-reporting or using fake invoices.

  1. How does the E-waybill contribute to the overall efficiency of the taxation process?

The E-waybill system streamlines the taxation process by automating the documentation of goods movement. This not only ensures compliance but also facilitates smoother transit of goods, reducing delays and inefficiencies.

  1. Can multiple invoices be covered by a single e-waybill?

No, a single e-waybill should not encompass multiple invoices. Nevertheless, consolidated e-waybills can consolidate various individual e-waybills.

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Aishwarya Lakshmi

Aishwarya Lakshmi is a Finance and SaaS Copywriter for 5+ years now, she has created SEO copies for B2B and B2C companies all around the globe. Aishwarya is a finance graduate and a university rank holder with exceptional academic excellence in finance core. Besides writing, Aishwarya, fosters her community Quillspire - a space for budding freelancers. In short, She maps contents to win pitches with words and concepts.

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