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December 19, 2020

Can the goods be unloaded after expiry of e-way bill?

by CA Shivam Jaiswal in Income Tax

Can the goods be unloaded after expiry of e-way bill?

What do you mean by an invoice?

An invoice is basically a bill of the list of goods sent or services provided, along with the amount due for payment. It is a commercial instrument issued by the supplier to the recipient.

What is the importance of an invoice?

  • Evidences of supply of goods or services
  • A registered person cannot avail input tax credit unless he is in possession of a tax invoice or a debit note.
  • Invoice is an important indicator of the time of supply.

What do you mean by an e-way bill?

An E-Way bill is basically short for Electronic Way Bill. It is a document which is generated electronically for movement of goods from one place to another. This movement may be inter-state or intra-state. E-Way bill is mandatory to be issued where the consignment value exceeds Rs 50,000 every registered person who causes movement of goods.

Can there be any detention under GST?

Section 129 of CGST Act, 2017 explains Detention, seizure and release of goods and conveyances in transit.

  • According to Section 129, 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, 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
  • These goods or documents shall be released:
    • on payment of the applicable tax and penalty equal to 100% of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to 2% of the value of goods or Rs 25,000, 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 50% 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 5% of the value of goods or Rs 25,000, 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 points (a) & (b) as above
  • No such goods or conveyance shall be detained or seized without serving an order of detention or seizure on the person transporting the goods.
  • The provisions of section 67(6) shall apply for detention and seizure of goods and conveyances.
  • 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
  • No tax, interest or penalty shall be determined without giving the person concerned an opportunity of being heard.
  • Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided within 7 days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130
  • If the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the period of 7 days may be reduced by the proper officer.

Let us refer to the case Hemanth Motors Vs State of Karnataka (Karnataka High Court) where the issue under consideration was whether could goods be unloaded after expiry of e-way bill

Facts of the Case:

  • The petitioner was a dealer in TVS motor vehicles and an assessee registered under GST.
  • Petitioner purchased two-wheeler vehicles from a wholesale dealer under the tax invoice and the motor vehicles purchased were dispatched from Tamil Nadu to the place of destination (Bengaluru) after generating the corresponding e-way bills.
  • The e-way bills were valid from 31.12.2018 10.37 pm to 1.1.2019.
  • For some reason, the goods were unloaded on the following day of the expiry of the e-way bill. 
  • The third respondent visited the petitioner’s premises and issued an order for physical verification culminating in notice under the provisions of Section 129[3] and the other relevant provisions.
  • The petitioner is also served with demand notice. The appeal filed by the petitioner under Section 107[11] of the KGST Act was dismissed.
  • Therefore, the petitioner was before the High Court

Observations of High Court (HC)

  • It was undisputed that the petitioner ensured transportation of the vehicles under appropriate e-way bills that were valid from 31.12.2018 at 10.37 pm to 1.1.2019.
  • The petitioner contended that the conveyance carrying the vehicles reached the place of destination on 1.1.2019 before the expiry of the validity of the e-way bills but the vehicles could not be unloaded on the same day and were being unloaded on 2.1.2019.
  • The authorities while not disputing these assertions contended that the e-way bills had to be valid even as at the time of the inspection as the vehicles were being unloaded from the conveyance.
  • In the facts and circumstances of the case where there is no dispute that the conveyance had reached the place of destination well within the expiry of e-way bills, and the conveyance was being unloaded without any further transit, HC was of the considered view that the appellate authority should have considered the merits of the proceedings against the petitioners in the light of the provisions of Rule 138[10] of the Central Goods and Services Tax Rules, 2017 which prescribed the validity of an e-way bill with the extension of further period by eight hours after the expiry.
  • The failure to consider the petitioner’s case in the light of the provisions of Rule 138[10] of the Central Goods and Services Tax Rules, 2017 has resulted in an improper and untenable order.

Thus, the validity of Unloading of the goods after the expiry of E-way bill may be extended for 8 hours which reached destination before expiry of E-way Bill.

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