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Karnataka's E-Way Bill System: Implementation and Key Provisions under GST

Karnataka was an early adopter of the E-Way Bill system under GST, mandating its use for goods movements exceeding Rs. 50,000 since late 2017. This system, which draws parallels to the previous e-SUGAM in the VAT era, streamlines transit documentation and enhances tax compliance. While certain goods and transactions are exempt, registration on the official portal is essential for businesses and transporters to comply with generation requirements for both intrastate and interstate movements.

📖 3 min read read🏷️ E-Way Bill

Karnataka became one of the initial states to adopt the Central Government's E-Way Bill system under GST, effective from September 25, 2017. Businesses and transporters moving goods both within and across Karnataka's borders must generate E-Way Bills if the consignment value exceeds Rs. 50,000, with some specific exceptions.

Recent Updates Regarding E-Way Bills

  • August 29, 2021: From May 1, 2021, to August 18, 2021, taxpayers were temporarily exempted from e-way bill blocking due to non-filing of GSTR-1 or GSTR-3B for March 2021 to May 2021.
  • August 4, 2021: The blocking of e-way bills for non-filing of GSTR-3B resumed starting August 15, 2021.
  • June 1, 2021: The e-way bill portal clarified that a suspended GSTIN cannot generate an e-way bill, but can be a recipient or transporter on a generated e-way bill. Additionally, the 'Ship' mode of transport was updated to 'Ship/Road cum Ship', allowing users to enter vehicle numbers for initial road movement and bill of lading details for subsequent ship transport. This update supports ODC benefits for ship-based movement and enables vehicle detail updates for road legs.
  • May 18, 2021: CBIC Notification 15/2021-Central Tax clarified that e-Way Bill generation blocking only applies to the defaulting supplier's GSTIN, not the defaulting recipient's or transporter's.

Overview of 'e-SUGAM' from the VAT Era

Before GST, a transit document called e-SUGAM was required for goods valued over Rs. 20,000 moving within or into/out of Karnataka. Sellers or dealers had to generate this document online by registering on the http://sugam.kar.nic.in/ portal using a unique username and password issued by the Department. This system also supported generation via SMS through ‘m-Governance Mobile based Sugam’ using a registered mobile number.

Each e-SUGAM was assigned a unique number, acting as a pass for transport vehicles at check-posts. Check-post officers (CPOs) would verify this number against the actual goods and system details, recording their findings. Any discrepancies led to remarks and actions as per law. This system was praised for enhancing sales accountability and tax compliance through 'Self-declaration over Departmental policing'. The current E-Way Bill system under GST operates on a similar principle, extending its reach nationwide and incorporating participation from recipients and transporters. This continuity in model was a positive point for Karnataka residents.

Are C-Forms Still Necessary for Interstate Goods Movement?

Alongside e-SUGAM, the C-form system was also prevalent. While the Central Sales Tax (CST) Act of 1956 was largely subsumed by GST, it remains applicable to certain non-GST goods. The Taxation Laws (Amendment) Act, 2017, revised Section 2(d) to limit the definition of "goods" to:

  • Petroleum crude
  • High-speed diesel
  • Motor spirit (petrol)
  • Natural gas
  • Aviation turbine fuel
  • Alcoholic liquor for human consumption

Since July 1, 2017, C-forms can still be issued for these specific goods for transactions involving resale, use in manufacturing or processing, or use in telecommunication networks, mining, or electricity generation/distribution.

Current E-Way Bill Requirements for Goods Movement in Karnataka

E-Way Bills have been mandatory for interstate goods movement since April 1, 2018. For intrastate movement within Karnataka, E-Way Bills became necessary earlier, on September 6, 2017, following a state notification. There have been no postponements regarding this implementation. Karnataka was proactive in promoting the E-Way Bill system, even during a trial period for most states until April 15, 2018.

Although amendments were recently made to the E-Way Bill rules, Karnataka's government has yet to issue a new notification to align with these changes, as the previous notification was issued some time ago. Further communication on this is anticipated. The official platform for generating and managing E-Way Bills is https://ewaybillgst.gov.in.

Situations Where E-Way Bills Are Not Required

The amended E-Way Bill rules, effective March 7, 2018, specify certain goods and transactions exempt from E-Way Bill generation. Exempted items include:

  1. Jewellery, goldsmiths', and silversmiths' wares and other articles.
  2. Natural or cultured pearls and precious or semi-precious stones; precious metals and metals clad with precious metal.
  3. Currency.
  4. Used personal and household effects.
  5. Postal baggage transported by the Department of Posts.
  6. Kerosene oil sold under the Public Distribution System (PDS).
  7. LPG supplied to household and non-domestic exempted customer categories.
  8. Coral, unworked (0508) and worked coral (9601).

Transactions not requiring E-Way Bills include:

  1. Goods transported by non-motorized conveyances (e.g., animal-pulled carts, pushcarts).
  2. Movement of empty cargo containers.
  3. Goods transported as transit cargo to or from Nepal or Bhutan.
  4. Transport of alcoholic liquor for human consumption, petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, or aviation turbine fuel.
  5. Transactions classified as "no supply" under Schedule III of the Act. For a comprehensive list, refer to the blog on E-Way Bill rules and compliance.

How to Register for E-Way Bill Generation

Any individual or entity needing to generate E-Way Bills must complete a one-time registration on the common E-Way Bill portal.

  • For GST taxpayers/registered transporters: Navigate to the E-Way Bill portal, click 'Registration' on the homepage, then 'e-Way Registration', and follow the steps. A unique user ID will be provided for portal access.
  • For transporters unregistered under GST: The logistics sector often includes many small and medium businesses with turnovers below the GST registration threshold. These transporters must enroll on the E-Way Bill portal as per Section 35(2) of the CGST Act.
  • For goods received from an unregistered supplier: The recipient is responsible for generating the E-Way Bill. The process is similar: go to the E-Way Bill portal, click 'Registration', then 'e-Way Registration', and complete the formalities to receive a unique user ID. Detailed steps for registration on the E-Way Bill portal are available.

When and By Whom Should E-Way Bills Be Generated?

E-Way Bills are mandatory for the person-in-charge of a conveyance transporting goods where the consignment value surpasses Rs. 50,000.

Determining Consignment Value:

  • It includes IGST or CGST & SGST, as applicable.
  • It excludes the value of exempt goods carried in the same conveyance if the bill covers both taxable and exempt supplies.

Sellers must generate E-Way Bills before goods movement. The person-in-charge of the consignment must carry a physical or electronic copy to deliver to the buyer's location.

Other Scenarios Requiring E-Way Bill Generation:

  • The recipient/buyer/consignee must generate an E-Way Bill if they purchase goods from an unregistered seller.
  • Transporters are required to generate a consolidated E-Way Bill (EWB-02) when transporting multiple orders by road in a single vehicle, and the aggregate consignment value exceeds Rs. 50,000, even if individual invoices are below this threshold. In such cases, individual E-Way Bills (EWB-01) are first generated for each invoice.

Methods for E-Way Bill Generation

E-Way Bills can be generated online via the common E-Way Bill portal. A step-by-step guide is available for generating E-Way Bills online. Additionally, E-Way Bills can be managed through SMS. Users in Karnataka can send SMS codes to 97319 79899. Instructions on using this SMS facility for E-Way Bill management are provided. An Android application for E-Way Bills has also been developed, and API integration with Enterprise Resource Planning (ERP) systems is offered to help businesses seamlessly comply with E-Way Bill regulations.

Further Reading

Frequently Asked Questions

What is the primary purpose of an E-Way Bill under GST?
The main purpose of an E-Way Bill is to track the movement of goods and ensure that they are transported in compliance with GST regulations, thereby preventing tax evasion.
When is an E-Way Bill typically required for the movement of goods?
An E-Way Bill is generally required when the value of a consignment of goods being transported exceeds Rs. 50,000, for both interstate and intrastate movements, though specific state rules and exemptions may apply.
Who is responsible for generating an E-Way Bill?
An E-Way Bill can be generated by the consignor, consignee, or the transporter, depending on the circumstances of the goods movement and whether they are registered under GST.
Are there any specific goods or transactions exempted from E-Way Bill requirements?
Yes, certain goods like precious stones, currency, used personal effects, and specific petroleum products are often exempted. Additionally, transactions involving non-motorized transport or goods moving as transit cargo to/from Nepal or Bhutan may also be exempt.
What are the consequences of not generating an E-Way Bill when required?
Failure to generate a mandatory E-Way Bill can result in penalties, detention of goods or vehicles, and potentially the seizure of the consignment by tax authorities, leading to financial losses and legal issues.

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