Plenty of businesses every year transport goods across the country in the course of their business. GST is a relatively new law, and the ordinary businessman is admittedly having difficulty understanding these enactments and the procedures introduced. Several cases are pending in High Courts across the country where goods and vehicles are confined because of incomplete documentation when goods are in transit.
Here are few Frequently Asked Questions that we routinely get from our Clients:
Which documents need to accompany the vehicle when transporting goods?
A person in charge/driver of the vehicle should carry with him:
(i) a physical copy of the e-Way Bill, and a
(ii) delivery challan or invoice or bill of supply
If the Department restrains my goods, what are the measures to be taken by the Department?
If a person in charge/driver of the vehicle fails to produce any directed document mentioned above, the officer shall:
(i) record a statement or declaration of the person in charge of the vehicle in FORM GST MOV-01;
(ii) issuance of an order for physical verification of the conveyance, goods and documents in FORM GST MOV-02;
(iii) within 24 hours of the issuance of FORM GST MOV-02, the officer would produce reports as per; Part A of FORM GST EWB-03 and upload it on the common portal
(iv) Within the date of issue of the order as per FORM GST MOV-02, the officer shall conclude the inspection proceedings within three working days
(v) If the officer thinks there are inconsistencies, he shall circulate a notice in FORM GST MOV-07 and give a possibility to the owner of the goods or the owner of the vehicle to present their case;
(vi) if the officer is not content with the information, he shall issue an order in FORM GST MOV-09 particularising the tax and penalty payable
(vii) Where the proper officer believes that such movement of goods is being effected to escape tax payment, he may issue a notice offering to seize the goods and conveyance in FORM GST MOV-10. After hearing the person, he may pass an order of confiscation of goods in FORM GST MOV-11.
What if there are minor mistakes in the e-way bill or some other document accompanying the vehicle?
Serious action cannot be taken upon the owner or the transporter in the following situations:
a) Spelling inaccuracies in the name of the sender or the receiver but the GSTIN, wherever applicable, is correct;
b) Error in the pin-code but the address of the sender and the receiver considered is accurate, subject to the factor that the error in the PIN code should not have the effect of extending the gravity period of the e-way bill;
c) Error in the address of the receiver to the extent that the locality and other characteristics of the receiver are correct;
d) Error in one or two digits of the document number specified in the e-way bill;
e) Error in 4 or 6 digit level of HSN where the first two digits of HSN are correct, and the rate of tax declared is correct;
f) Error in one or two digits/characters of the vehicle number.
In certain situations, a penalty can be charged up to Rs. 1000/- is to be levied in FORM GST DRC-07 for every consignment—a report of all such consignments where procedures under the section.
What is the outcome of not producing an e-way bill or invoice?
If no waybill or invoice is accompanying the vehicle, the purchaser of the goods would likely have to deposit with the department:
(i) 100% of the tax;
(ii) 100% of the tax as a penalty.
These amounts should be deposited within 14 days from the date of detention. After depositing these amounts, he/she may seek the provisional release of the goods. For example, if the invoice's tax portion is Rs. 100, the buyer would need to deposit Rs. 100/- as tax and Rs. 100/- as a penalty and get the goods provisionally released. Crucially, if these amounts are not deposited within 14 days, then the goods and the vehicle will be put to auction, and the sale proceeds shall be deposited with the Government.
Additionally, if the Department thinks that the goods are transported “with intent to evade payment of tax”, the goods may be confiscated. However, the Department must record their reasons in writing as to why it thinks there is intent to evade tax payment. Before seizing, the owner of the goods is given an opportunity of hearing to present its case. If the goods are confiscated, the Department may levy fine equal to the value of the goods. To seek a provisional release of the goods, the taxpayer must deposit the tax & penalty and the goods' value.
How can one get the money back in case of a bona fide mistake?
The buyer may file a Writ Petition before the High Court or an appeal before the appellate authority.
The Court or the appellate authority conducts the following analysis:
i. The first thing to evaluate is the nature of the contravention of the provisions of the Act or the Rule that arose from the mistake;
ii. the second step in the process for the authorities to examine closely is whether such contravention of the provisions of the Act or the Rules was with an intent to evade the payment of tax
If the taxpayer can produce that it has paid tax on the relevant transaction, it can get away with a minor fine.
For example, goods may be imported from a foreign country and documents, and bank statements may show that IGST has been paid. However, suppose an e-waybill has not been generated. Although the Department may detain the goods and collect money before provisionally releasing the goods, once it is established that the transaction was done in good faith and taxes have been paid transparently, the Department is bound to refund the money even though no waybill was accompanying the vehicle.