Penalties and Confiscation on non-generation of E-way bills can negatively impact companies in this fast-paced business environment. E-way bills are an essential aspect of the GST (Goods and Services Tax) regime in India serving as proof of the movement of goods in the country. E-way bills are required to be generated for all inter-state and intra-state movements of goods worth more than INR 50,000. The non-generation of e-way bills can lead to various penalties, detention, seizure, and confiscation, as per the provisions of the CGST (Central Goods and Services Tax) Act. In this blog, we will take a closer look at the penalties, confiscation, detention, and seizure on the non-generation of e-way bills and how businesses can avoid them.
Penalties on Non-Generation of E-Way Bills:
As per Section 129(1) of the CGST Act, the GST office can penalize the owner of the conveyance or the taxpayer with a fine of Rs. 10,000 or the amount of the tax being evaded, (whichever is higher) if the person is caught
- Transporting any taxable goods without the cover of prescribed documents;
- Tampering or destroying any material evidence or document;
- Disposing of or tampering with any goods that have been detained, seized, or attached.
In addition, a penalty of INR 100 for every kilometer of the distance for which the goods have been transported without an e-way bill can also be imposed.
2. Detention and Seizure on Non-Generation of E-Way Bills
Section 129(3) of the CGST Act allows for the detention and seizure of goods that are being transported without an e-way bill. The authorized officer, upon the observance of any discrepancy in the E-way bill or the absence of a valid E-way bill, has the right to detain the vehicle and seize the goods. Merely detention and seizure don’t end the matter, further to this, the “Proper Officer” detaining or seizing goods or conveyances issues a notice specifying the tax and penalty payable and thereafter, passes an order for payment of tax and penalty under clause (a) or clause (b) or clause (c).
The officer in charge of the detention or seizure must issue a notice to the person in charge of the conveyance within 24 hours of the detention or seizure. The notice must specify the reasons for detention or seizure and the person to whom the goods will be released. The goods can be released upon the payment of appropriate taxes and penalties, which can be accomplished in the below-given ways:
- Owner Accepts Ownership: If the owner of the goods comes forward, the goods can be released on payment of the applicable tax and penalty.As per the GST Notification 39/2021 dated 21-12-2021, 1st January 2022 was notified as the date on which provisions of Sections 108, 109, and 113 to 122 of the Finance Act, 2021 came into force. o, amendments to section 129 of the CGST Act also came into effect from 1st January 2022 where the concerned person needs to pay the penalty as mentioned in the issued notice which is 200% of the tax payable in the general case (earlier 100%) within seven days from the date of issuance of notice.In the case of exempted goods, on payment of an amount equal to 2% of the value of goods or Rs 25000, whichever is less.
- Owner Unidentified: Where the owner of the good does not come forward, the goods can be released on payment of the applicable tax and penalty equal to 50% of the value of the goods reduced by the tax amount paid thereon. In the case of exempted goods, on payment of an amount equal to 5% of the value of goods or Rs 25000, whichever is less.
The detained person can also provide a security bond in the form of a bank guarantee that equals the total penalized amount to the authorized officer. No matter how stringent the Law & Order is, there is always an “Opportunity of being heard” given to the person concerned. Also, on payment of the amount referred to above, all proceedings in respect of the notice specified are deemed to be concluded.
In case of failure to pay the amount of Tax and Penalty, as stated above, within seven days of such detention or seizure, further proceedings are initiated. However, if such products which are detained or seized are perishable or hazardous or are likely to depreciate with time these 7 days may be reduced by the “Proper Officer”.
Please refer to the image below to understand the flow even better:
Increase in Pre-deposit for Appeal before Appellate Authority
In sec 107 (6) Appellate Authority in that, a new proviso was added in January 2022 that no appeal shall be filed against an order under subsection (3) of sec 129 unless a sum equal to 25% of the penalty has been paid by the appellant.
There is a requirement to deposit 10% of the penalty imposed as pre-deposit in case of the first appeal which is increased to 25% of the penalty amount in case of detention and seizure of conveyance and goods during transit.
3. Confiscation on Non-Generation of E-Way Bills
In case of non-generation of e-way bills, Section 130 of the CGST Act provides for the confiscation of the goods and the conveyance used for their transportation. In addition, a penalty of INR 10,000 or the tax sought to be evaded (whichever is higher) can also be imposed.
Initially, if the registered person or the transporter failed to pay the implied penalty within 7 days, the authorized personnel could seize goods and/or the vehicle, and begin legal proceedings for the same. Upon confiscation of the goods, the ownership of the seized goods is to be transferred to the central government, which within 3 months of confiscation can be auctioned by the authorized personnel and given the proceeds to the Central Government. However, new Rule 144A was added in January 2022 for the recovery of the penalty imposed u/s 129 (E-way bill violations). If the concerned person does not pay the penalty voluntarily within 15 days from the receipt of the order then the recovery is to be made by way of an auction/selling of the goods that are being seized. Similarly, Rule 154 was also substituted to provide for the appropriation of the sale proceeds.
What you can do?
For every Law and Order, there is a savior counter provision, giving a little relief to the concerned person. Accordingly, in the event of confiscation, the officer adjudging the confiscation shall give an option to the owner of the goods to instead of confiscation, such fine as the said officer thinks fit. However, the fine levied shall not exceed the market value of the goods confiscated.
However, the penalty in such cases should not be less than the amount of penalty levied under the provisions of Detention and Seizure.
- Provisions of the Act not only lay the ground for the levy of penalties but also attract Fine. Such a fine will be in addition to the penalty /tax imposed.
- Like any other provisions of the Act, an opportunity of being heard is provided to the concerned person.
- The title of the goods/conveyances shall rest in the hands of the Government.
- After the proper officer is satisfied 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 a fine instead of confiscation, can dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.
Prevention is better than cure!
We recommend the timely generation of E-Way bills under GST to avoid future penalties and confiscation on non-generation of e-way bills.
IRIS E-way Bill Management System
IRIS GST’s smart E-way Management Solution helps you manage your Eway bills, right from generation to its expiry. The system allows for the generation of e-way bills, tracking of their status, and the cancellation of e-way bills, if required. IRIS also offers a bulk E-way bill generation desktop utility. Features:
- Generation and Cancellation of E-way bill,
- Update Part B of the E-way bill,
- Extend validity,
- Assign the E-Way Bill to a transporter.
- Print a single or multiple E- Way Bills in summary or detail.
- Variety of Reports
- Easy Access to Data: Even if you use excel utility, your data is saved on the web portal, hence is always available when required.
- Internal Validations: This saves incorrect data from getting posted.
In conclusion, non-generation of e-way bills can lead to significant penalties, detention, seizure, and confiscation as per the provisions of the CGST Act. Taxpayers and transporters must ensure that they comply with the requirements for the generation of e-way bills to avoid any penalties and legal action. The IRIS e-way bill management system provides a convenient and efficient means of generating and managing e-way bills.
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