MAY 18, 2018

By Atul Gupta, Adv.

THE GST Council in its 24th Meeting held on 16th December, 2017 recommended implementation of Nationwide e-way bill system for inter-state movement of goods on compulsory basis w.e.f. 01.02.2018. It may be noted that CGST Rules initially comprised Rule 138, which empowered the Government (the Central Government as per section 2(53)) to specify the documents that the person in charge of a conveyance carrying any consignment of goods shall carry, while the goods are in movement or in transit storage. This authority was given to the Government till such time an e-way bill system is developed and approved by the GST Council. Subsequently, the Central Government issued the following Notifications upto 02.02.2018, which are relevant for present discussion:

a. Notification No. 27/2017-Central Tax dated 30.08.2017 proposed substitution of Rule 138 with a new Rule 138 from a future date [sub-para (2) and para 2].

b. Notification No. 74/2017-Central Tax dated 29.12.2017 gave effect to Notification No. 27/2017-Central Tax dated 30.08.2017 and the proposed new Rule 128 was notified to come into effect from 01.02.2018

c. Notification No. 3/2018-Central Tax dated 23.01.2018 which once again proposed substitution of Rule 138 w.e.f. 01.02.2018

d. Notification No. 11/2018-Central Tax dated 02.02.2018 which rescinded Notification No. 74/2017-Central Tax dated 29.12.2017

It appears from the above Notifications that the Government with effect from 01.02.2018 implemented two Rule(s) 138 [one by Notification No. 27/2017 read with Notification No. 74/2017 dated 29.12.2017 and another by Notification No. 3/2018 dated 23.01.2018 by substituting Rule 138]. However, as Notification No. 3/2018 dated 23.01.2018 was issued,when Notification No. 27/2017 read with Notification No. 74/2017 were still alive, therefore, it is axiomatic that Notification No. 3/2018 was only implemented. The legal effect of such substitution of Rule 138 was that Notification No. 27/2017 read with Notification No. 74/2017 never saw the light of the day.

Consequently, on 01.02.2018, Notification No. 3/2018 dated 23.01.2018 which substituted Rule 138 was in operation and the same made issuance of E way Bill mandatory.

However, the interesting part is that on 02.02.2018, the Government rescinded Notification No. 74/2017 dated 29.12.2017, which never came into force. Thus, the Notification No. 3/2018 dated 23.01.2018, which came into force from 01.02.2018 continued to be in force till it was substituted w.e.f. 01.04.2018 by new Rule 138 as envisaged by Notification No. 12/2018 dated 07.03.2018 made effective by Notification No. 15/2018 dated 23.03.2018.

It is also worth noting that the recommendations of the GST Council are mandatory in nature and as per the minutes of meeting publicly available, the GST Council never changed the date fixed as 01.02.2018 for implementation of e-way bill for nationwide inter-state supply.

From this examination, it seems it is only a myth created that the e-way bill system for Nationwide inter-state supply of goods was not in force up to 01.04.2018. Thus, the deferment of E way bill as advertised by the Government was not supported by any legal provision. Incidentally, it is not clear as to under which provision of the CGST Act did the Government defer the applicability of E-way bill from 01.02.2018 to 31.03.2018.

(The author is Joint Partner, Lakshmikumaran & Sridharan, Allahabad and the views expressed are strictly personal.)