- How vehicle tracking could curb tax evasion?
- Deflating India’s COVID black market boom
In a move that is expected to help curb tax evasion, Goods and Services Tax (GST) authorities will now be able to track real-time data of commercial vehicle (CV) movement on highways by integration of the e-way bill (EWB) system with FASTag and RFID.
GS-II: Polity and Governance (Transparency & Accountability Measures, Government Policies & Interventions), GS-III: Indian Economy
Dimensions of the Article:
- What are e-way bills?
- About FASTag
- About RFID Technology
- What is the new system involving GST, EWB, FASTag and RFID?
What are e-way bills?
- Under the indirect tax regime, e-way bills have been made mandatory for inter-state transportation of goods valued over Rs 50,000 from April 2018, with exemption to precious item such as gold. On an average, 25 lakh goods vehicle movements from more than 800 tolls are reported on a daily basis to the e-way bill system.
- About 180 crore e-way bills were generated in three years from 2018 to 2021. Of this, only 7 crore bills were verified by tax officers. In the 2020-21 fiscal, 61.68 crore e-way bills were generated, of which 2.27 crore were picked up for verification.
- The top five states which generated the maximum number of e-way bills for inter-state movement of goods are Gujarat, Maharashtra, Haryana, Tamil Nadu and Karnataka.
- FASTag is an electronic toll collection system in India, operated by the National Highway Authority of India (NHAI).
- It employs Radio Frequency Identification (RFID) technology for making toll payments directly from the prepaid or savings account linked to it or directly toll owner.
- As per NHAI, FASTag has unlimited validity. 7.5% cashback offers were also provided to promote the use of FASTag.
- Dedicated Lanes at some Toll plazas have been built for FASTag.
Advantages of Using FASTag
- Digital transaction makes it easier to collect toll fees.
- Congestion in Toll plazas will reduce.
- Non-stop movement at the highways will reduce Fuel consumption and even pollution.
- The Effort in Managing toll gates is reduced as the system is more automated.
- There will also be reduced paper wastage (in the form of tokens/receipts)
- This will be a unifying system as FASTags are not specific to the state or region and work all over India.
Problems with FASTag
- Technical issues and glitches are possible which makes the system susceptible to false charges or other such issues.
- All the toll booths are yet to be made FASTag compatible and this has not necessarily reduced the congestion issue yet.
- The RFID technology is not failproof and can be misused by duplication or other “hacks”.
- The FASTags sold by banks have to be recharged from the same bank, as they are not Bank Neutral (unless you buy it directly from NHAI).
About RFID Technology
- Radio Frequency Identification (RFID) uses radio waves to communicate between two objects: a reader and a tag. RFID communication is the same as two-way radio communication in the sense that information is transmitted or received via a radio wave at a specific frequency.
- Passive tags collect energy from a nearby RFID reader’s interrogating radio waves. Active tags have a local power source such as a battery and may operate at hundreds of meters from the RFID reader.
RFID applications apart from usage in Toll collection:
- Self-checkins at Libraries / rental services as well as retail premises.
- Livestock Management and pet identification.
- Building Security – secure access controls, documentation and passports.
- Airports – for baggage tracking and tracing/locating.
- SMART home controls – systems to manage home/business energy consumption/production.
- Seismic Sensing – such as locating gas lines and temperature sensing (geophysical).
- Environmental – Energy, Ozone & Pollution measuring equipment.
What is the new system involving GST, EWB, FASTag and RFID?
- The integration of e-way bill, RFID and FASTag will enable tax officers to undertake live vigilance in respect of EWB compliances by businesses and will aid in preventing revenue leakage by real-time identification of cases of recycling and/or non-generation of EWBs.
- Tax officers can now access reports about vehicles that have passed the selected tolls without e-way bills in the past few minutes. They can also view details of vehicles carrying critical commodities specific to the state that have passed the selected toll.
- Further, tax authorities can view details of any suspicious vehicles and vehicles of e-way bills generated by suspicious taxpayer GST identification numbers (GSTINs) that have passed the selected toll on a near real-time basis.
- Officers can use these reports while conducting vigilance and make the vigilance activity more effective. Moreover, officers of the audit and enforcement wing can use these reports to identify fraudulent transactions like bill trading, recycling of e-way bills.
- From 2021, RFID/FASTag has been integrated with the e-way bill system and a transporter is required to have a radio-frequency identification (RFID) tag in his vehicle and details of the e-way bill generated for goods being carried by the vehicles are uploaded into the RFID system.
- When a vehicle passes the RFID tag reader on the highway, the details fed into the device get uploaded on the government portal. The information is later used by revenue authorities to validate the supplies made by a GST registered person.
-Source: Indian Express
With the second wave of infections and the rise in COVID-19 positive cases in India, the necessity for integral medicines, hospital beds and oxygen supplies has gone up incrementally. In such a situation, the boom in black-market sale of essential needs such as medicines and oxygen tanks has emerged as most reprehensible is the brazen attempt by profiteers in filling the supply gap following the desperation of many patients and families.
GS-III: Indian Economy (Mobilization of Resources), GS-II: Polity and Governance (Important aspects of governance, Issues with transparency and accountability)
In the context of flourishing black markets during the Covid-19 pandemic, what are the existing provisions related to the control of such black-market networks? Suggest measures to handle black-market issues during such circumstances. (15 marks)
Dimensions of the Article:
- What is a Black Market?
- Flourishing black market during the Covid-19 pandemic
- Reason: The Pressure
- Legal regime in India to tackle Black Market (especially in wake of Covid-19)
- Administrative Shortfall or Exceptional Circumstances?
- Way Forward
What is a Black Market?
- A black market is an economic activity that takes place outside government-sanctioned channels. Black market transactions usually occur “under the table” to let participants avoid government price controls or taxes.
- The goods and services offered in a black market can be illegal, meaning their purchase and sale are prohibited by law, or they can be legal but transacted to avoid taxes.
- Traditionally, black market activity was conducted in cash, one of its defining aspects. This was done in order to avoid creating any paper trail. With the rise of the Internet, many black market transactions are now done online, such as on the dark web, and often conducted with digital currencies.
- Black markets can have a negative impact on the economy because the activity is not reported and taxes are not collected on the transactions.
- The black market’s many drawbacks include the risk of fraud, the possibility of violence, and being saddled with counterfeit goods or adulterated products, which is especially dangerous in the case of medications.
- Black markets do provide some benefits, such as creating jobs for those who may not be able to find employment in traditional markets and allowing access to medicine and healthcare to those individuals that might not have had access otherwise.
- Sometimes, a black market is the only choice for procuring goods in certain situations for certain people.
Flourishing black market during the Covid-19 pandemic
- The desperate need for vital medical supplies has forced many hapless citizens to pay more than the market price to procure these medicines.
- There are reports of many having been tricked into believing fire extinguishers to be oxygen cylinders and saline water bottles to be remdesivir vials after parting with huge sums of money.
- However, clamping down on these cases and the culprits is dependent on having an efficient multi-dimensional preventive model rather than a control mechanism that functions much after the damage has been already done.
- In India, the distribution of remdesivir in the States is mostly controlled by the local governments, while decisions about oxygen supplies to the States are predominantly decided by Union bodies. Yet, citizens have been approaching alien sources to procure medical supplies.
- In 2020 a racket of selling fake and spurious tocilizumab injections in Surat and Ahmedabad was unearthed by the Gujarat Food and Drugs Control Administration. Things do not seem to have improved even after a year in 2021.
- Recently, the police in Ahmedabad arrested a few people for preparing fake remdesivir vials for sale using a mixture of glucose and salt and affixing them with fake brand labels.
- In Mumbai’s drug black market, citizens have had to pay huge amounts ranging from 35,000 and 50,000 rupees for remdesivir vials.
- In Kanpur, Uttar Pradesh, a racket to market oxygen cylinders in the black market was uncovered after raids on a godown.
Reason: The Pressure
- A major reason behind why many are in the situation they are facing is because administrative organisations are being overwhelmed and helpline numbers inundated with calls and difficult to connect to.
- Even if citizens are fortunate enough to have their requests entered in records, they may not be able to procure the products they need due to the inadequacy of resources or probably not receiving a closure communication from helplines, which keeps them at a loose end without knowing where else to go and what else to do.
- This inaccessibility, a redundant and long communication process flow, and a delay in rendering responses are what have affected the reliability of these helplines as far as people are concerned.
- Any market, black or otherwise, is a dynamic hemisphere which is consumer-driven. There is public demand for what the products these black markets or rackets have to offer and which is why they thrive.
- Alleged hospital bed-booking scams, the unnecessary hoarding of COVID-19 essentials by the elite, and possible VIP culture practices have contributed to the erosion of trust.
- These elements have all combined to force the public to look elsewhere for sources beyond the probability of the government rendering them assistance.
Legal regime in India to tackle Black Market (especially in wake of Covid-19)
- The Essential Commodities Act of 1955, is for the control of production, supply, and distribution of certain commodities. The Act does not deal with the term “black marketing” but section 7 prescribes for penalty on violation of government notification issued under section 3. Schedule to the Act includes “drugs” as essential commodity.
- Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980, was enacted but did not provide for definition of black marketing. Section 3(1) provides that authorities have power to detain a person “with a view to preventing him from acting in any manner prejudicial to the maintenance of supplies of commodities essential to the community it is necessary so to do, make an order directing that such person be detained”.
- The National Security Act of 1980 under Section 3(2) gives similar power to the Central Government or the State Government, if the act is in any manner prejudicial to the security of the State, apart from being prejudicial to the maintenance of Public order or to the maintenance of supplies and services essential to the community. The phrase “acting in any manner prejudicial to the maintenance of supplies of commodities essential to the community” has been addressed by the Supreme Court in several cases while deciding on the validity of detention orders passed under the Act.
- In order to more effectively deal with persons indulging in hoarding and black-marketing and profiteering in essential commodities, the Central Government enacted the Essential Commodities (Special Provisions) Act, 1981. Special provisions by way of amendment to the principal Act were made for a temporary period providing summary trial of offences under the Essential Commodities Act, constitution of special courts, enhancement of sentence and making the offences as cognizable and non bailable and providing for stricter provisions for grant of bail.
Administrative Shortfall or Exceptional Circumstances?
- Despite a robust legal regime on paper, the Indian administration has struggled with the issue of “Hoarding” and “Black Marketing” since the pandemic has started, be it manufacture and sale of fake sanitizers and masks or scarce Medicines and Oxygen supplies.
- According to reports, over 300 FIRs have been registered alleging hoarding and black-marketing.
- While some gain traction in public discourse, other instances get lost in the myriad. However, it is a folly to think such instances are limited to India.
- As reported on Interpol’s website, under Operation Pangea XIII in March of 2020, counterfeit facemasks, substandard hand sanitizers and unauthorized antiviral medication were all seized, by the police, customs, and health regulatory authorities from 90 countries in a collective action against the illicit online sale of medicines and medical products. This exercise has resulted in over 120 arrests worldwide.
- Court directions such as the ones regarding the supply of Oxygen and more stringent laws and proactive approach at the central level towards curbing such unethical and illegal activities, is need of the hour.
- Appropriate orders/directions should be issued limiting MRP of all necessary medicines and equipment at the earliest possible.
- What is required is, for the government to deal with each of the issues at an individual level by issuing orders, circulars or notifications, even if time bound, to ensure that the prevalent law is appropriately enforced and wherever there exists a void in the price control mechanism, the same should be taken care of at the earliest.
- Apart from increasing the gulf between have and have nots, black marketing and hoarding are directly proportional to social loss and at a time of global pandemic it indirectly adds to emotional loss too.
-Source: The Hindu