Talking to ET Now, Sachin Menon, Head of Indirect Tax, KPMG, says even in cases where the system is working, officers are sitting on the refunds raising silly objections.
Edited excerpts:
What do you think about the staggered rollout of the E-Way Bill from the 15th of April? Both the centre and the state have lost some sleep over the evasions about the leakages which have happened. What do you believe this staggered rollout of the E-Way Bill will do?
The mechanism of the E-Way Bill is not very complicated. What went wrong was when all the industries started using the portal to generate E-Way Bill, the portal could not take the traffic and collapsed and that created a lot of problem because the dispatches were held up and officers stopped the vehicles and asking for E-Way Bill even when they knew that there was an issue with the technology. So, it is appropriate for the government to be cautious this time to stage it in four different tranches. That way they can test the capacity of the system slowly and steadily and can confidently roll it out so that there is no mayhem across the country.
Even if something goes wrong, that would be known initially itself and that seems to be the idea behind having a staggered rollout. Having said that, there are various areas where perhaps the answer is not very clear. For example, what happens when a truck breaks down and the 24 hours has expired. They have extended that period now.
There are so many issues with the respect to offsite cargos and return of goods and the cases where the person is not registered and we have to return the goods. The transporter is now not liable to raise a E-Way Bill. He is off the hook unless he is authorised by the consignee or the consigner. There is a question mark over how the situation is getting addressed but otherwise the idea to roll-out in staggered manner makes sense.
Coming to the point about extension of sops for exporters for another six months, I am presuming that given the very shaky grounds that Indian exports are on, there has been some uptick. We are now hearing all kinds of voices on trade tariffs and trade barriers going up. How much of a relief do you believe that is?
I was a little perplexed about this announcement about exemption for exporters. Otherwise also, the exports are zero rated. There is no tax on exports for that matter. Now, the only thing which was given an exemption was that if a merchant exporter procured the goods from a local manufacturer or a supplier, whether the GST is applicable or not. It had been addressed earlier saying that the supplier would charge a nominal 0.1% tax– 0.5% tax which is about 1% tax on the said supply to the exporter.
Therefore, the blocking of capital will be minimal but this was already there. Now that they are talking about exemption to the exporters till October, if I am not mistaken, whether this 1% which is chargeable now is getting exempted or what they mean by exemption, is a matter of detail and there is no clarity about it.
The idea of creating an e-wallet and then giving them an advance refund based on their past performance, DGGT data of exports etc would be a good move. Provisionally, if even 80% of the eligible refund is credited to an e-wallet as an advance payment, that can be used by the exporters for paying the GST on the local manufacturing or even withdrawing the money. But that I understand, is a work in progress. That software is not ready.
So essentially, I am not very sure whether there is an immediate relief which is given but that is one part of the system which is not working and cases where the system is working, the officers are sitting on the refunds raising silly objection. For example, I was in Bangalore yesterday. The Bangalore Commissionaire officers are rejecting the refunds on very silly grounds like for not producing the bank remittance certificate, FIRC which has been discontinued by the RBI!
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