Gold was initially left out from e-way bill compliance because the Goods and Services Tax (GST) Council felt that it would be difficult to track the movement of gold due to its high value and portability.
Gold is a high-value commodity that is easily transportable. This makes it a target for smuggling and tax evasion. The GST Council was concerned that requiring e-way bills for gold would make it more difficult to track the movement of gold and to prevent smuggling.
The GST Council also felt that requiring e-way bills for gold would be a burden on small businesses that deal in gold. Small businesses often transport gold in small quantities and over short distances. Requiring them to generate e-way bills would be a paperwork burden and would add to their costs.
However, in July 2023, the GST Council decided to make e-way bill mandatory for intra-state movement of gold, gold jewellery and precious stones, with a threshold value of Rs 2 lakh. The decision was taken in order to curb the smuggling of gold and to ensure that the correct GST is paid on the sale of gold.
The GST Council felt that the concerns about the difficulty of tracking gold and the burden on small businesses could be addressed by making some modifications to the e-way bill system for gold. For example, the e-way bill for gold will not have Part-B details, which will reduce the paperwork burden. The validity of the e-way bill for gold will also be calculated based on the pin to pin distance of origin and destination, which will make it easier to track the movement of gold.
The decision to make e-way bill mandatory for gold is a significant step in the fight against smuggling and tax evasion. It will help to ensure that the correct GST is paid on the sale of gold and that gold is not being smuggled into the country.
To bring into effect the provisions for generation of e-way bill on movement of gold rule 138F Has been inserted with effect from 04.08.2023 vide Central Goods and Services Tax (Second Amendment) Rules, 2023.
“138F. Information to be furnished in case of intra-State movement of gold, precious stones, etc. and generation of e-way bills thereof.-
(a) a Commissioner of State tax or Union territory tax mandates furnishing of information regarding intra-State movement of goods specified against serial numbers 4 and 5 in the Annexure appended to sub-rule (14) of rule 138, in accordance with sub-rule (1) of rule 138F of the State or Union territory Goods and Services Tax Rules, and
(b) the consignment value of such goods exceeds such amount, not below rupees two lakhs, as may be notified by the Commissioner of State tax or Union territory tax, in consultation with the jurisdictional Principal Chief Commissioner or Chief Commissioner of Central Tax, or any Commissioner of Central Tax authorised by him,
notwithstanding anything contained in Rule 138, every Registered person who causes intra-State movement of such goods, -
(i) in relation to a supply; or
(ii) for reasons other than supply; or
(iii) due to Inward supply from an un-Registered person,
shall, before the commencement of such movement within that State or Union territory, furnish information relating to such goods electronically, as specified in Part A of FORM GST EWB-01, against which a unique number shall be generated:
Provided that where the goods to be transported are supplied through an e-commerce operator or a Courier agency, the information in Part A of FORM GST EWB-01 may be furnished by such e-commerce operator or Courier agency.
(2) The information as specified in PART B of FORM GST EWB-01 shall not be required to be furnished in respect of movement of goods referred to in the sub-rule (1) and after furnishing information in Part-A of FORM GST EWB-01 as specified in sub-rule (1), the e-way bill shall be generated in FORM GST EWB-01, electronically on the common portal.
(3) The information furnished in Part A of FORM GST EWB-01 shall be made available to the registered supplier on the Common portal who may utilize the same for furnishing the details in FORM GSTR-1.
(4) Where an e-way bill has been generated under this rule, but goods are either not transported or are not transported as per the details furnished in the e-waybill, the e-way bill may be cancelled, electronically on the common portal, within twenty-four hours of generation of the e-way bill:
Provided that an e-way bill cannot be cancelled if it has been verified in transit in accordance with the provisions of rule 138B.
(5) Notwithstanding anything contained in this rule, no e-way bill is required to be generated-
(a) where the goods are being transported from the customs port, airport, air cargo complex and land Customs station to an inland container depot or a container freight station for clearance by Customs;
(b) where the goods are being transported-
(i) under customs bond from an inland container depot or a container freight station to a customs port, airport, air cargo complex and land Customs station, or from one Customs station or customs port to another Customs station or customs port, or
(ii) under customs supervision or under customs seal.
(6) The provisions of sub-rule (10), sub-rule (11) and sub-rule (12) of rule 138, rule 138A, rule 138B, rule 138C, rule 138D and rule 138E shall, mutatis mutandis, apply to an e-way bill generated under this rule.
Explanation.- For the purposes of this rule, the consignment value of goods shall be the value, determined in accordance with the provisions of section 15, declared in an invoice, a bill of supply or a delivery challan, as the case may be, issued in respect of the said consignment and also includes the central tax, State tax or Union territory tax charged in the document and shall exclude the value of exempt supply of goods where the invoice is issued in respect of both exempt and Taxable supply of goods.”.
The taxpayers in a state may create an e-way bill for gold as per the notification published by their respective states. One can generate an e-way bill for gold through a different window on the main menu.
One can navigate from their dashboard to the tab ‘e-way bill’ on the left-hand side of the dashboard → click on ‘EWB for Gold’ to enter the Part-A details. It opens up the ‘e-way bill for gold entry form’ where the user needs to enter the invoice details, sender and receiver address.
The parameters to create an e-way bill for gold are the same as any regular e-way bill. However, taxpayers need not update e-way bills with the Part-B vehicle/transporter details. Such exemption is given on account of safety reasons.
Further, the validity of the e-way bill for gold is computed based on the pin-to-pin distance. The system considers the distance between the origin and the destination picked up from the PIN code entered in each address.
The taxpayer generating an e-way bill for gold must ensure that all the items listed in the invoice fall under HSN Chapter 71 mandatorily. Suppose items fall under any other HSN chapter together with HSN chapter 71. In that case, such an e-way bill will be treated as a regular e-way bill and can be generated together with the Part-B details.
The facilities regarding cancellation and rejection of the e-way bill continue to be available for the movement of gold. Accordingly, the following are some changes in functionalities for e-way bills generated for the movement of gold-
Part-B details cannot be updated by default
No update on the transporter is allowed
There is no option to generate a consolidated e-way bill
Extension of validity of e-way bill is permitted without the need to revise the Part-B
There is no option of multi-vehicle
State governments are allowed to set different threshold limit for interstate movement of gold and precious stones but such limit cannot be lower than Rs. 2,00,000. By setting a higher limit of Rs. 2,00,000 the government has spared small businesses from the unnecessary hassle and paperwork.
It is also to be noted that since part B of e-way bill is not required to be updated there can be instances where single invoice is broken into multiple invoices to bring the consignment value of individual invoices below Rs. 2,00,000 to escape the liability of issuing of e-way. In such a situation it would be difficult for the tax authorities to catch hold of such practices as they won’t be having the details of Vehicle in which such goods were transported.
CA Pranay Jain is a young and aspiring Chartered accountant. He qualified Chartered Accountancy Course in 2021 and has a well-established practice in various fields of taxation and auditing, with his core area of practice being in the field of litigation i.e., handling assessment and appeal-related matters and representing assesses before various tax departments.
He is also socially active on LinkedIn at linkedin.com/in/capranayjain
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