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March 9, 2021

Is E-way bill required for Watches of Rs. 4,49,550 discounted to Rs. 8.99?

by CA Jessica Nagaonkar in GST

Is E-way bill required for Watches of Rs. 4,49,550 discounted to Rs. 8.99?

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 of M/s Best Sellers (Cochin) Private Limited vs The Assistant State Tax Officer where the issue under consideration was whether e-way bill was applicable on goods which were of Rs.4,49,550 and a discount was given of almost the entire amount save to the extent of Rs.8.99 or not.

Facts of the Case:

  • The petitioner has approached the Hight Court (HC) aggrieved by the detention notice issued to him in Form GST MOV-7.
  • In the Writ Petition, it was the case of the petitioner that the transportation was of a consignment of watches that had been supplied to him by the seller in Delhi at a discounted rate of Rs.8.99.
  • It was seen that the transportation of the goods was accompanied by the tax invoice, where the supplier in Delhi had shown the actual price of the consignment of watches, which was Rs.4,49,550 and had given a discount of almost the entire amount save to the extent of Rs.8.99, and had paid IGST at the rate of 18% on the actual value of the watches.
  • The consignment was detained by the respondent, on the ground that, although the consignment was covered by a valid invoice, it was not accompanied by a valid e-way bill.
  • The petitioner pointed that as the discounted value of the goods was less than Rs.50,000, there was no requirement for the consignment to be accompanied by an e-way bill.

Observations of the High Court (HC)

  • HC found force in the contention of the petitioner that as the effective value of the goods that was transported was only Rs.8.99 as evident from the invoice, and the provisions of the Act and Rules mandated that an e-way bill was required only for consignments whose value exceeds Rs.50,000, the detention at the instance of the respondent could not be said to be justified.
  • Under such circumstances, HC allowed the Writ Petition by quashing the order and directing the respondent to forthwith release the goods and the vehicle to the petitioner on the petitioner producing a copy of this judgment before the said authorities.
  • The Government Pleader was directed to also communicate the gist of this judgment to the respondent for enabling the petitioner to obtain an immediate release of the goods and the vehicle

In simple words E-way bill is not required for Watches of Rs. 4,49,550 discounted to Rs. 8.99 as the discounted value of consignment does not exceed Rs 50,000

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