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25 June 2021

Mere non mentioning of the tax payment details separately in e-way bill does not results in detention of goods.

As we know in the erstwhile Value Added Tax regime, there was a requirement to issue a road permit in the prescribed form for smooth transportation of goods from one place to another place. Similarly, under the Goods and Service Tax regime there is also a requirement of issuing E Way bill in the prescribed format for the smooth transportation of goods from one place to another place.

In case the goods are transported without the road permit, the goods are liable for detention and are released only after making the payment of the prescribed penalty. Therefore, it is of utmost importance that a supplier or recipient needs to be alert while transporting goods whether relevant documents in the prescribed format are available or not to avoid detention or penalty.

In the light of aforesaid provisions, we have come across the situation wherein goods are detained by the concerned authorities on the ground of some procedural lapses while generating E Way Bills by invoking the provisions under Section 129 of the CGST Act, 2017 as read with Rule 138A of the CGST Rules, 2017.

Excerpts of Section 129 of the CGST Act, 2017 read with Rule 138A of the CGST Rules, 2017;

According to the provisions of Section 129 of the CGST Act, 2017,  “Notwithstanding anything contained in this Act, 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 made thereunder, 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 and after detention or seizure, shall be released” on payment of prescribed penalty.

Further as per the provisions of the Rule 138A, while transportation of goods a person shall carry:-

  • the invoice or bill of supply or delivery challan, as the case may be; and
  • a copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped to a Radio Frequency Identification Device embedded on to the conveyance in such manner as may be notified by the Commissioner.

Now, the question arises whether goods can be detailed merely on the ground of discrepancy of not showing separately the amount of tax payable on the face of E Way Bill?

The similar issues was placed before the Hon’ble High Court of Kerala in case of M.S. Steel and Pipes v Assistant State Tax Officer [2020] 119 taxmann.com 211 (Kerala) wherein it was held that goods can be detained only in case of contravention of the provisions of Section 129 of the CGST Act, 2017 and Rules thereunder. The goods cannot be detained merely on the ground that document relevant for assessment does not contain the details of tax payment.

The relevant extract of the case has been reproduced as follows:

Facts of the case:-

  • Goods of the petitioner were detained on the grounds that the e-way bill does not separately despite of the fact that invoice separately contains such details. Hence there is no correct e way bill supporting the transportation in question.

Contention of the petitioner:-

  • Petitioner counsel contended that there is no requirement under the Act and Rules for mentioning the tax amount separately in the e-way bill in FORM GST EWB-01 that the petitioner was obliged to use to cover the transportation in question.
  • Further since the transportation was covered both by the invoice and the e-way bill, it becomes amply clear the proof of tax paid.
  • E- Way bill also does not contain any field where detail of tax payable can be entered.

Contention by the respondents:-

  • It is an obligation of every person making supply should prominently and completely prepare all the documents.
  • Further owing to the provisions of Section 129, petitioner has submitted incomplete documents since e way bill is a document akin to supply.

Decision held by the court:-

  • When there is transport in the contravention of the Acts and Rules then only can Section 129 be invoked.
  • Goods cannot be detained merely on the ground that document relevant for assessment does not contain the amount of tax payment separately.
  • The person transporting goods is obliged to carry documents required under Rule 138A of the CGST Rules, 2017 i.e. (i) the invoice or bill of supply or delivery challan, as the case may be; and a copy of the e-way bill in physical form or the e-way bill number in electronic form etc…
  • There is no such filed in the format of E Way bill to report tax payment details, if there is no such statutory requirement in the format itself, it cannot be considered as contravention of the Section 129 of the Act and rules thereunder.
  • Writ was allowed and respondent was directed to release the detailed goods.