E-Way Bill Expiry: Challenging Arbitrary & Illegal Detention by Proper Officers

A smooth flow of goods is most important for any business. However, introducing electronic mechanisms like the E-way bill, designed to regulate the movement of goods, has brought challenges. Authorities unlawfully hold goods once the E-way bill expires, posing a significant challenge.

Understanding E-way bills

India’s Goods and Services Tax (GST) framework mandates the E-way bill system, a digital document for transporting goods exceeding a specified value threshold. It encompasses vital details such as the transported goods, the involved parties (sender, recipient, transporter), and the transportation route.

What is e-way bill expiry?

The validity of an e-way bill differs for specific durations determined by the distance covered during the transportation of goods. The expiry of the e-way bill is calculated from the date and time of generating the e-way bill. Here’s the breakdown based on the type of conveyance:

For conveyances other than over-dimensional cargo:

• Less than 200 kilometers: Valid for 1 day.
• For every additional 200 kilometers or part thereof, An extra day of validity is added.

For over-dimensional cargo:

• Less than 20 kilometers: Valid for 1 day.
• For every additional 20 kilometers or part thereof, An additional day of validity is added.

What is the meaning of Detention or Seizure of goods?

Preventing the owner of goods from accessing them due to a legal order or notice is termed detention. However, the ownership of the goods remains with the owner. Authorities impose detention when they suspect that the goods are subject to confiscation. There are also cases of Illegal detention.

Seizure involves the department taking physical possession of the goods. A seizure can only occur following an inquiry or investigation confirming that the goods are liable to confiscation.

What is arbitrary detention?

Arbitrary detention occurs when authorities hold someone in custody without legitimate legal justification. This implies that authorities imprison or confine individuals without sufficient reasons, legal procedures, or evidence to justify their detention. Instead of being based on valid grounds, arbitrary detention often results from the arbitrary or unjust exercise of power by those in authority. This practice violates human rights and undermines principles of fairness and the rule of law.

Inspection of goods by the proper Officer

A proper officer can stop or examine any vehicle transporting goods while the goods are being transported. The interception may occur for document verification or goods inspection purposes. The Officer must check all the transporter’s documents, including the E-way bill and invoice. He checks the expiry of the e-way bill. Once the proper officer holds a physical inspection in a state or union territory, he out another physical verification of the same goods.

The transporter must submit specific documents, and failure to do so results in consequences. must submit the invoice and e-way bill to the proper Officer in case of illegal or arbitrary detention. The transporter should take care of all the GST compliance matters.

If the transporter is unable to furnish the requested documents for verification, the designated

Officer must adhere to the following procedure:

Step 1: Document the transporter’s statement using Form GST MOV-01.

Step 2: Issue an order to inspect the goods using Form GST MOV-02.

Step 3: Once the proceedings are finalized, update a report using Form GST MOV-04.

Which documents will the Proper Officer file for illegal or arbitrary detention?

The Officer must submit the following paperwork upon interception:

• The Proper Officer recorded a brief overview report in Form GST EWB-03 Part A within 24 hours of the inspection.
• A comprehensive final report, documented in Form GST EWB-03 Part B, within 3 days of the inspection.

What is the penalty for detention?

When an individual transports goods without GST compliance, the goods, related documents, and the transporting vehicle will be confiscated. Release of the goods will only occur upon paying tax and penalty. Two scenarios are possible:

• If the owner of the goods takes responsibility:
  
  In this case, a penalty equal to 100% of the tax amount will be imposed.

• If the owner does not come forward:
  
  A penalty of 50% of the value of goods before tax is applicable.

For exempted goods:

If the owner comes forward, a penalty of 2% of the value of goods or 5% of the value of goods (if the owner doesn’t come forward) will be charged, whichever is less, with a minimum of Rs. 25,000.

Read in-Depth:- E-Way Bill Penalty – Guide on How to Avoid E-Way Bill Mistakes

What is the procedure for the detention of goods?

Authorities will only hold or confiscate goods and their transport after issuing an official detention order to the individual transporting them. Upon detention, a tax officer will serve a notice specifying the taxes owed and issue an order demanding payment of tax and penalty.

The transporter will get a chance to present their case and hear it.

Upon payment of the required tax and penalty, all obligations related to the detained goods will be settled. However, if the owner fails to pay within 7 days, the goods will be confiscated. For perishable or hazardous goods, this can be less than 7 days.

Possibilities after Detention

If inspection and verification uncover no discrepancies, the Proper Officer will issue an order in Form GST MOV-05, releasing both the vehicle and goods and permitting the car to return. This process must occur concurrently and conclude within 3 days of the inspection order.

Nevertheless, if the proper officer finds discrepancies during inspection and verification, he may choose to take the following steps:

• Issue a detention order using Form GST MOV-06.
• Serve a notice imposing taxes and penalties via Form MOV-07.

What action should the transporter take?

Upon receipt of the tax and penalty notice, the owner of the goods has the following options:

Acknowledge and agree to pay the tax and penalty.

• He can pay the tax and penalty or submit a bank guarantee equal to the penalty amount.
• You must submit the penalty within 7 days.
• The proper Officer then passes an order releasing the goods in form GST MOV-05.

Contest and dispute the tax and penalty charges.

• In this case, the proper Officer should consider the objections and pass an order in form GST MOV – 09.

Legal Lens – Perception of the High Court in Recent Cases

For a case held at The Allahabad High Court a bench of Justice concluded that the transporter and consignor cannot be held responsible, if the conditions of renewing an e-way bill cannot be followed due to conditions that are beyond the control of the consignor or the transporter. The goods and vehicles confiscated would be considered arbitrary in nature.

Here the transporter started from the original place with proper documentation requirements. It was during transit that some new conditions were added by the Nepal government, the final destination place. So, this led to transshipment with new vehicle and new e-way bill. But the proper officer held the goods and a penalty was imposed on the assessee. The court held that penalty is invalid and the confiscation is illegal.

Conclusion

In summary, the detention of goods due to the expiry of e-way bills presents significant hurdles to the smooth trade operation. Despite efforts to regulate the transportation of goods, issues like unlawful detentions by authorities have arisen, leading to disputes and legal challenges concerning GST compliance.

Adhering to proper procedures and documentation is essential to prevent such detentions, ensuring a fair and lawful movement of goods. When confronted with detention, transporters and authorities must diligently follow prescribed protocols. Transporters should promptly address discrepancies and respond to notices by accepting and paying the taxes and penalties or disputing them through appropriate channels.

By maintaining transparency and compliance with regulations, stakeholders can minimize the risks associated with E-way bill expiry and detention, promoting a more efficient and compliant logistics environment.