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Inspection, Verification and Detention of goods in transit

Updated on:  

08 min read

One of the main purposes of E-way bill is to ensure smooth movement of goods at the check post. Let us examine the various process involved in the process of transporting the goods from one place to another. Once the goods are ready for transportation, the transporter has to ensure that two things are in place:

  1. E-way Bill or E-way bill number
  2. Invoice

Latest Update

29th August 2021
From 1st May 2021 to 18th August 2021, the taxpayers will not face blocking of e-way bills for non-filing of GSTR-1 or GSTR-3B (two months or more for monthly filer and one quarter or more for QRMP taxpayers) for March 2021 to May 2021.

4th August 2021
Blocking of e-way bills due to non-filing of GSTR-3B resumes from 15th August 2021.

1st June 2021
1. The e-way bill portal, in its release notes, has clarified that a suspended GSTIN cannot generate an e-way bill. However, a suspended GSTIN as a recipient or as a transporter can get a generated e-way bill.
2. the mode of transport ‘Ship’ has now been updated to ‘Ship/Road cum Ship’ so that the user can enter a vehicle number where goods are initially moved by road and a bill of lading number and date for movement by ship. This will help in availing the ODC benefits for movement using ships and facilitate the updating of vehicle details as and when moved on road.

18th May 2021
The CBIC in Notification 15/2021-Central Tax has notified that the blocking of GSTINs for e-Way Bill generation is now considered only for the defaulting supplier’s GSTIN and not for the defaulting recipient or the transporter’s GSTIN.

17th March 2021
1. The e-way bills portal has released an update stating that e-way bills cannot be generated with only SAC codes (99) for services. There should be a minimum of one HSN code belonging to goods mentioned mandatorily.
2. Vehicle type ODC is provisioned for transport mode ‘Ship’.
3. Transporters are provided with a report of e-way bills based on the assigned date.

22nd December 2020
1. The CBIC increased the distance per day in case of goods transported through vehicles, other than the over-dimensional cargo, for determining the validity, as follows:
(a) It is one day – For a distance of up to 200 km as against earlier 100 km
(b) An additional day is taken- For every additional 200 km or part thereof, as against previously notified additional 100 km or part thereof
2. Regarding blocking of the e-way bill where a taxpayer fails to file GSTR-3B, the provision has been amended to replace two or more months with two or more tax periods. The same has been changed to include the quarterly return filers.

16th November 2020
1. According to Rule 138E (a) and (b) of the CGST Rules, 2017, the e-way bill generation facility of a taxpayer will be restricted, if the taxpayer fails to file their Form GSTR-3B returns or statement in Form GST CMP-08, for tax periods of two or more.
2. On 1st December 2020, the system will check the status of returns filed in Form GSTR-3B or the statements filed in Form GST CMP-08, for the class of taxpayers to whom it applies, and restrict the generation of e-way bill in case of:
(a) Non-filing of two or more returns in Form GSTR-3B for the months up to October 2020; and
(b) Non-filing of two or more statements in Form GST CMP-08 for the quarters up to July to September 2020
3. From 1st December 2020 onwards, blocking of e-way bill generation facilities would be made applicable to all taxpayers, irrespective of their Aggregate Annual Turnover (AATO), according to the terms of Rule 138E (a) and (b) of the CGST Rules, 2017.
4. The blocking will take place periodically from 1st December 2020 onwards.
5. To continue generating e-way bill on the e-way bill portal, taxpayers are advised to file their pending GSTR-3B returns/GST CMP-08 statements immediately.

Interception or Inspection by the Proper Officer

When the goods are in movement, a proper officer may intercept or inspect any vehicle that is carrying goods. A vehicle may be intercepted either for verification of documents or inspection of goods. He shall verify all the documents that the transporter is carrying including an E-way bill, invoice etc   However, the officer cannot conduct another physical verification of the same goods when a physical verification has already been conducted in any state or union territory. As an exception, the vehicle may be stopped if the officer has specific information about tax evasion

Documents to be filed on an interception/ inspection

The officer shall file the following documents on interception:

  1. A summary report in Form GST EWB- 03 Part A within 24 hours of inspection
  2. A final report in Form GST EWB- 03 Part B within 3 days of inspection

Transporter failure to provide documents

If the transporter fails to provide the documents asked for verification, the proper officer shall follow these steps: Step1: Record statement of the transporter in Form GST MOV- 01 Step2: Issue an order for inspection of goods in Form GST MOV- 02 Step3: On completion of proceedings, a report in Form GST MOV- 04 shall be updated

Consequences of discrepancy not found/ found

No discrepancy found on inspection

If no discrepancies are found during the inspection and verification process an order in Form GST MOV-05 shall be passed releasing the vehicle and goods and the vehicle can move on. The entire process mentioned above should happen simultaneously and the process should be completed within 3 days from the order of inspection.

Discrepancy found on inspection

If during the inspection and verification process the officer feels that the goods have to be detained, the officer may take the following actions:

  1. Pass a detention through Form GST MOV- 06
  2. A notice levying the tax and penalty throughForm MOV- 07

Action to be taken by owner w.r.t. the order

On receiving the notice to pay tax and penalty, the owner of goods may take the following actions:

  1. Accept the tax and penalty
  2. Dispute the tax and penalty
Action to be taken by owner w.r.t. the order

Impact of failure to pay tax and penalty

If there is a failure to pay the said amount or the officer feels that there is an evasion of tax, he shall serve a notice proposing to confiscate the goods and vehicle.

  1. The notice shall specify the amount of tax, penalty, and fine in lieu of confiscation to be paid. This amount has to be paid within 3 months.
  2. Before a final order is passed, the officer has to provide an opportunity of being heard to the taxpayer.

Passing of Final Order

The final order shall be passed in Form GST MOV-11 and Form GST MOV-09 shall be withdrawn. Summary of the orders shall also be uploaded on the common portal. When the vehicle is confiscated, the title of the vehicle with goods is transferred to the Central Government and upon payment of fine the title gets released. For the above cases, when the taxpayer is unregistered, a temporary id shall be created for making the payments. A tabular summary of the various forms involved in provided below

Form NamePurpose
GST MOV-01Statement of owner, driver or person in charge of the vehicle
GST MOV-02Order for physical verification and inspection of goods, conveyance or documents
GST MOV-03ORder for extension of time beyond 3 days for inspection
GST MOV-04Physical verification report
GST MOV-05Release order
GST MOV-06Order of detention
GST MOV-07Notice specifying tax and penalty amount
GST MOV-08Bond for provisional release of goods/ conveyance
GST MOV-09Order of demand of tax and penalty
GST MOV-10Notice for the confiscation of goods
GST MOV-11Order of confiscation of goods and conveyance and demand of tax, fine and penalty

Since these procedures are still in a nascent stage, the benefits of it are yet to be reaped. It is to be seen how the above procedures are going to reduce waiting time, compliance time and also reduce the paperwork of the officers to a great extent. To know more, click here

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