Inspection, detention and penal provisions of goods in transit

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Inspection, detention and penal provisions of goods in transit

Industries have witnessed the faster and seamless movement of goods with the implementation of the E-waybill system. Mandatory use of FasTAG at toll plazas and abolition of check posts has resulted in quicker turnaround times for the movement of goods.

An E-way bill is generated online for the movement of goods where the value of goods being transported in a vehicle exceeds Rs 50,000/-. E-way bill provides the requisite information to the Government which can help the Government to track the movement of goods and check tax evasion if any. 

Which documents are required along with vehicles for transportation of goods by road?

Section 68(1) of CGST Act 2017 states that the person in charge of the conveyance should carry the following prescribed documents:- 

  • Copy of e waybill (Physical form or Electronic form)
  • Copy of invoice or bill of supply or delivery challan

Can a conveyance be intercepted?

Section 68(3) of CGST Act 2017 empowers proper officers to intercept any conveyance at any place,

  • For verification of documents specified u/s 68(1)

and

  • For inspection of goods. 

Note: Proper officers will have to upload a summary report of the inspection of goods, conveyance, and documents in transit within 24 hours of the inspection in Form GST  MOV – 02. The final report for the same shall be uploaded online within 3 working days of inspection in Form GST  MOV – 04. [The above process of recording summary or final reports or issuing notice to the taxpayer is not being followed online (as on Jan 2022)]

Can the goods and conveyance carrying such goods be detained or seized?

Section 129(1) of CGST Act 2017 empowers the Proper officer to detain or seize while goods are in transit,

  • If the goods are being transported in contravention of provisions of Act or Rules 

OR

  • If the goods are being stored in contravention of provisions of Act or Rules.

Then 

  • The above goods & the conveyance/vehicle carrying the above goods 

AND 

  • The documents relating to the above goods (i.e. invoice/bill of supply/ delivery challan and e way bill)

are liable to be detained or seized by the proper officer.

Note: The statement of the person in charge of conveyance will be recorded in FORM GST MOV-01.

How the detained/seized goods & conveyance be released? 

As per section 129(1)(a) – If the owner comes forward to pay & release the goods & conveyance

Nature of Goods

Provisions up to 31.12.2021 Provisions from 01.01.2022
Taxable Goods

100% of tax payable on such goods
AND
100% penalty of tax payable on such goods

200% penalty of tax payable on such goods

Exempted Goods

Rs 25,000/-
OR
2% of the value of goods
whichever is lower

Rs 25,000/-
OR
2% of the value of goods
whichever is lower

Note: As per section 129(1)(c) – The owner can also get the detained goods and conveyance released upon furnishing a SECURITY equivalent to the amount specified in sub-section 129(1)(a).

As per section 129(1)(b) – If the owner doesn’t come forward to pay & release the goods & conveyance

Nature of Goods

Provisions up to 31.12.2021 Provisions from 01.01.2022

Taxable Goods

100% of tax payable on such goods
AND
50% penalty of the value of such goods

200% of tax payable on such goods
OR
50% penalty of the value of such goods 
whichever is higher

Exempted Goods Rs 25,000/-
OR
5% of the value of goods
whichever is lower

Rs 25,000/-
OR
5% of the value of goods
whichever is lower

Note: As per section 129(1)(c) – The taxpayer can also get the detained goods and conveyance released upon furnishing a SECURITY equivalent to the amount specified in sub-section 129(1)(b).

Does a taxpayer gets notice for the detention of goods and/or conveyance?

The proper officer who detains/seizes goods and/or conveyance will issue a notice specifying the penalty payable within 7 days.

Thereafter, after giving an opportunity of being heard the aggrieved party pass an order specifying the penalty payable within 7 days from the date of service of notice.

How many days are given to pay the penalty u/s 129(1)?

The amount of penalty shall be paid within 14 days from the date of receipt of the copy of the order which is passed after giving the taxpayer an opportunity of being heard.

When detention proceedings will be deemed to be over/ concluded?

As per section 129(5), when goods are released upon payment of tax and or penalty as specified u/s 129(1).

What happens if the penalty is not paid?

As per section 129(6), If the taxpayer fails to pay the penalty within the prescribed time limit then the detained goods or conveyance can be disposed off/sold off to recover the penalty payable after the period of 14 days for payment of tax and penalty lapses.

Note: If the detained goods are perishable or hazardous in nature then the goods can be disposed of even before the period of 14 days after obtaining prior permission from the proper officer.

Note: Transporter can come forward and get the detained conveyance released  by paying lower of the following

  • Penalty as per order u/s 129(3)

OR

  • Rs 1 lakh


 


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About CA Ankita Khetan 188 Articles
Ankita is a Chartered Accountant in practice and holds a Diploma in IFRS (from ACCA, UK). She is also a Commerce PG and Certified Independent Director (from IICA). She holds a certification in Forex and Treasury Management. Her area of expertise is GST and Income tax. She is passionate about reading, writing, and sharing knowledge on areas related to finance and taxation.

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