E-Permit Obligatory at Inter State Borders After GST

The upcoming GST would be very much contemplating in areas of wide range and now the rising of proposed goods and services tax (GST) promised that it won’t be all that reddish because it would be hindered by the need for an e-permit to be flashed at inter-state borders as the states requested the traditional simple practices continue. The states seem to have taken their direction and will continue with the old ‘permit raj’ system, ruining one the biggest increments of GST. In spite of the way that the paper permit may become an e-permit, those transportation goods inside or outside states will even now have to queue up at border checkpoints where their e-permits will be checked.

State tax authorities wanted this arrangement to keep a tab on the quantum of supply of goods and pushed for its consideration. Experts fear this would not help in making long queues out of trucks at check posts as likewise breed defilement. The center resisted the move as its indirect tax affiliation moved far from the inspector raj era, however, yielded to states’ insistence on consideration of this clause in the last GST law in order to develop consensus and get the reform charge rolling. The GST Council, the apex decision body for GST that has state finance ministers as members and union finance minister as an executive, will take up the GST Law at its next meeting in March.

Various experts joined the conversation and some of them are, Bipin Sapra, partner, EY mentioned that “The law provides for ample monitoring through the credit matching and compliance requirements under GST…. Any document checking at state borders is archaic and defeats the purpose of GST and the free market it purports to be.” As the model draft law says, “The central or a state government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding. 50,000 to carry with him such documents as may be prescribed in this behalf, Where any vehicle referred to in sub-section (1) is intercepted by the proper officer at any place, he may require the person in charge of the said vehicle to produce such documents for verification and the said person shall be liable to produce the documents.”

M.S. Mani, Senior Director, Deloitte Haskins & Sells LLP said that “An e-permit system, if considered under GST, would significantly dilute the fundamental principles of GST relating to the seamless movement of goods across states. It would adversely affect businesses who are preparing for GST on the understanding that trade barriers erected by states under the present VAT laws would be demolished under GST.” Smita Roy, partner – Indirect Tax, BDO India, “One of the stated promises of GST was to reduce associated documentation and related hassles. E-permits for movement of goods is, therefore, a retrograde step in the short term.”