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You all are aware that E-Way bill has been made effective across the country for interstate movement of goods since 1st day of April 2018 and the system is now streamlined and working properly on day to day basis, across country the businessmen are generating E-way bill to dispatch goods from one station to another. Daily a large number of E-way bills are generated by the businessmen providing information in Part-A and transporter is adding vehicle number in Part-B and then finally E-way bill is being generated.
Generating E-way bill is a normal system oriented procedure but the department is penalising huge tax and penalty on daily basis towards small errors committed by the businessmen.
The cases which are coming presently are not really the cases where the default that is made was made with the mala fide intention, in majority of cases the mala fide intention is not present still the assessee ends up in paying huge tax and penalty. There are few sections which are draconian in nature, they create terror and sometime are very harsh when the assessee is not being guided properly.
The two main sections under which the entire proceedings of E-way Bill is going on i.e. section 129 of CGST Act 2017 and section 130 of CGST Act 2017 we will take both the sections one by one and will discuss how the penalty can be imposed in case if default is committed under E-way Bill as under:
Detention, seizure and release of goods and conveyances in transit:
( 1) Notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure, shall be released,—
- on payment of the applicable tax and penalty equal to one hundred per cent. of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;
- on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;
- upon furnishing a security equivalent to the amount payable under clause ( a ) or clause (b) in such form and manner as may be prescribed:
Provided that no such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.
(2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances.
(3) The proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).
(4) No tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.
(5) On payment of amount referred in sub-section (1), all proceedings in respect of the notice specified in sub-section (3) shall be deemed to be concluded.
(6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within seven days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130:
Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer.
Confiscation of goods or conveyances and levy of penalty
- Notwithstanding anything contained in this Act, if any person—
- supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or
- does not account for any goods on which he is liable to pay tax under this Act; or
- supplies any goods liable to tax under this Act without having applied for registration; or
- contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or
- uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance,
then, all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122.
- Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit:
Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon:
Provided further that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub-section (1) of section 129.
Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon.
- Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance.
- No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard.
- Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government.
- The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession.
- The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.
There are 11 MOV’s in E-way Bill starting from GST MOV 01 to GST MOV 11. The proceedings of E-way Bill are to be completed in a time bound manner hence we should be aware about the time limitation and the powers department had. I am listing the E-way Bill MOV’s as under and providing the details of time limit for its issuance and the powers of the adjudicating authority as under:
||Situation and Time Limit
|GST MOV 01
||Recording of statement of the person in charge of the conveyance.
||When any officer intends to undertake inspection of conveyance
|GST MOV 02
|Order for physical/inspection of the conveyance, goods and documents.
||Within 3 working days from issue of GST MOV-02, conclude the inspection proceedings.
|Twenty four hours from issuance of FORM GST MOV-02 officer has to prepare a report in Part A of FORM GST EWB-03 and upload the same on the common portal.
|GST MOV 03
|Extension of time from the commissioner or an officer authorized beyond 3 working days.
||Copy of the order of extension shall be served on the person in charge of the conveyance.
|GST MOV 04
|Report of such physical verification
||Within 3 days of such physical verification/inspection.
||Copy to the person in charge. Officer has to record final report in Part B of FORM GST EWB-03 on the common portal
|GST MOV 05
|Order for release of conveyance to move further.
|Where no discrepancies are found after the inspection of the goods and conveyance
||Copy to the person in charge.
|Where the owner of the goods or any other person comes forward and make payment of tax and penalty or furnish bond
|GST MOV 06
|Order of detention of goods.
||Where the proper officer is of the opinion that the goods and conveyance need to be detained under section 129 of the CGST Act
||If tax and penalty is not paid within Seven day of the date of MOV-06 action u/s 130 of CGST Act
|GST MOV 07
|Detention Notice of goods and conveyance under section 129.
||Specifying the tax and penalty payable. The said notice shall be served on the person in charge of the conveyance.
|GST MOV 08
||Format of Bond
||Release of Goods on Security Bond/ Bank Guarantee
|GST MOV 09
||Final speaking order after considering objections if any raised
||Up load on common portal, demand to be added in electronic liability register
|GST MOV 10
||Notice for confiscating of goods and conveyance
To Person incharge of conveyance.
To the owner of the conveyance
|If tax and penalty not paid within 7 days from the issue of GST MOV 06
||Specifying the tax and penalty payable u/s 130 of CGST Act r.w. section 122 of CGST Act and fine in lieu of confiscation 130(2)
|If officer is of the opinion that movement of goods is effected to evade tax
|GST MOV 11
||Order of confiscation of goods.
||If payment not made within 3 months of GST MOV 10
||Goods and conveyance stand transferred to Central Government
|1. If no person comes forward within the time specified in GST MOV-11 the proper officer shall auction goods and/or conveyance by public auction.
2. In case of unregistered person or person registered under other state than a temporary ID shall be created by the proper officer.
Small Relief Provided by GST Council
Department had issued a circular No. 64/38/2018-GST specifying that small errors should be ignored and a nominal penalty may be imposed. Relevant text of the circular is as under:
Following will be regarded as small errors:
- Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct;
- Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN code should not have the effect of increasing the validity period of the e-way bill;
- Error in the address of the consignee to the extent that the locality and other details of the consignee are correct;
- Error in one or two digits of the document number mentioned in the e-way bill;
- Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct;
- Error in one or two digits/characters of the vehicle number
Penalty that may be imposed
In case of the above situations, penalty to the tune of Rs. 500/- each under section 125 of the CGST Act and the respective State GST Act should be imposed (Rs.1000/- under the IGST Act) in FORM GST DRC-07 for every consignment.
To conclude with I would request that the moment you get a call from your client that his vehicle is being detained immediately ask him for MOV-01 and MOV-02 than start your stop watch and proceed further.
CA Neeraj Agrawal