GST evasion: Traders deploy horse-carts to transport produce across states to skirt e-way bill system

In what could be described as the abuse of a loophole in the Goods and Services Tax (GST) regime, some traders are reportedly sidestepping the regime's e-way bill system, or a permit required to transport goods, by moving produce, water and some goods across state borders via horse-drawn carts or manual carts, according to a media report.Traders, who don't generate an electronic-way bill in order to evade GST, have resorted to this medieval method of transporting goods, according to the Financial Express, because the rules say that e-way bills are applicable only for motorised vehicles.The e-way bill for moving goods within a state became mandatory from 3 June, with the country-wide roll out of the mechanism. The union government rolled out the e-way bill system for moving goods worth over Rs 50,000 from one state to another from 1 April .

Touted as an anti-tax evasion measure, transporters of goods worth over Rs 50,000 are required to present an e-way bill to a GST inspector, if asked. The e-way bill rules allow for random verification by a tax officer. The measure was expected to help boost tax collections by clamping down on trade that happens on a cash basis. However, traders are transporting goods beyond the exemption limit, reported the Financial Express.The finance ministry had asked the GST Network (GSTN) to develop a foolproof system before the re-launch of the e-way bill. In March, Finance Secretary Hasmukh Adhia said the company handling the backbone of the new indirect tax regime was much better prepared to roll out the new system."No E-way Bill is required for movement of goods in non-motorised conveyance and also for certain class of goods like fruits, vegetables, fish and water," the GSTN said in a statement in January.With inputs from PTI