Understanding the E-Way Bill System in GST: Compliance and Consequences

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Published Date:  16-10-2023   Author:   vidya-sagar
captainbiz understanding the e way bill system in gst compliance and consequences

The e-way bill system was introduced in GST by the Government to check tax evasion. In this system the supplier or transporter has to register in the e-way bill portal of GST to generate an electronic document required for the transportation goods worth more than a specified value. As per this law, the GST officers are empowered to intercept any conveyance to verify the e-way bill and the transporter must produce the same to them. These officers are the enforcement authority for the rules of e-way bill system to charge e-way bill penalty. Enforcement is a crucial part of the e-way bill system as it helps in identifying the defaulters and penalizing them. The system aims at a proper documentation of the goods being transported across the country, Thus the generation of e-way bill is crucial for the supplier and the transporter as non-compliance can lead to monetary and non-monetary losses.

As per rule 138 of CGST Act, it is mandatory for any person registered under GST, transporting goods either interstate or intrastate with a value exceeding fifty thousand rupees to register in the e-way bill portal of GST and generate an e-way bill. The person registered in GST must separately register in the e-way bill portal before generation of the e-way bill. The transporter must hold this bill at the time of transportation of the goods. Non-generation of waybill can result in penalties like fines and seizure of goods by the authorities.

What is an E-Way Bill?

The e-way bill contains vital information about the consignment, including about the consignor, consignee, point of origin, and destination. It is an important document in which all relevant shipment information is uploaded in the GST portal before shipping. It is part of the compliance mechanism and helps curb tax evasion.

Format of E-Way Bill

The e-way bill consists of vital information like-way bill number, bill generation date, and the suppliers GST number. It consists of two main parts:

Part A

Part A includes GST details of the recipient, consignee’s GST details, invoice/challan number and date, pin code of the place of delivery, value of goods, reason for transportation, HSN code, transport document number like goods receipt number, railway receipt number, airway bill number or bill of lading number.

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Part B

Part B comprises of the vehicle number.

Who Generates the E-Way Bill?

The person responsible for sending or receiving the shipment, though they use their own vehicle, hired conveyance, railway, air, or water transportation, is required to generate the e-way bill. When the transportation is outsourced, the transportation company generates the e-way bill and updates Part B. the consignor must provide the details for Part A. if the distance is less than 50 kilometers, the transporter does not need to furnish the conveyance details in Part A and both the consignor and consignee are in the same state.

Important Rules Pertaining to E-Way Bills

  • Consignment Value: E-way bills are mandatory for consignments whose value exceeds rupees fifty thousand. They are also mandatory. For certain goods specified in the law, the e-way bill is mandatory even though the value of the goods transported does not exceed fifty thousand rupees.
  • In Case of Multiple Consignments: If multiple consignments are sent simultaneously, e-way bills need to be generated only for those whose value exceeds fifty thousand rupees. E-way bills can be generated for individual bills and consolidate the bills indicating the serial numbers before transportation.
  • In case of Multiple Vehicles: When multiple vehicles are used in the transportation, the details of all the vehicles need to be updated in the GST portal.

Time Limit for Generation of E-Way bills

The suppliers of goods must generate the e-way bills before the transportation of the goods. The e-way bill’s validity for goods transported up to 100 KMs is one day, while for goods transported between 100 to 300 KMs it is three days. In the same way the validity period of the e-way bill increases based on the distance travelled.

Consequences of Non-Compliance of E-Way Bills

It is mandatory for businesses to generate the e-way bill before the transportation of the goods and failure to do so can result in severe consequences like detention of the goods and the vehicle carrying the goods apart from monetary losses like fines. Detention of goods causes delay in delivery resulting in additional cost and loss for the businesses. The consequences are as follows:

  • As per section 122 of CGST Act 2017, failure to generate e-way bills may result in penalty of Rs.10000/-rupees or the amount of tax evaded, whichever is higher.
  • In case of generation of incorrect e-way bills, the taxpayer is liable to pay a penalty equal to 50% of the tax amount or the value of the goods whichever is higher, with a minimum of Rs.10000/-
  • In case of transportation of goods not specified in the e-way gill, they can be seized or detained as per section 129 of the CGST Act, 2017.
  • If the goods are transported with an expired e-way bill, the goods will be seized or detained and will be released only after the payment of the penalties specified under section 129(1) of the CGST CT.
  • When the goods are transported without the payment of applicable tax and without valid documents, the penalty is equal to 100% of taxable amount plus the applicable tax.. For exempted goods, the penalty is 2% of the total cargo value or Rs.25000/- whichever is less.
  • If the goods are transported after payment of tax but without the valid documents, the penalty will be 50% of the total value of goods carried and for exempted goods the penalty is either 5% of the total value of goods or Rs.25000/- whichever is less.
  • For minor mistakes in the e-way bill, the penalty is Rs.1000/-.but the taxpayer must have paid the applicable tax. Such penalty shall be paid in form GST DRC-07 for every applicable consignment.

Exemptions

Specific goods mentioned in annexure to Rule 138(14) of CGST Act and goods transported through non-motorized conveyance and also goods whose value is less than fifty thousand rupees are exempted from generation of e-way bill. Moreover, the movement of certain goods like fruits, vegetables and flowers and also for goods transported within a radius of 10 kms from the place of business of the consignor or consignee are also exempted.

Corrections to E-Way Bills

The provision for correction of the errors made in the e-way bills is available for the businesses, if it is made within the stipulated time, otherwise they will be liable to pay penalties due to incorrect generation of e-way bills.

Frequently Asked Questions

  1. What is the role of transporter in e-way bill system?

Answer: The transporter must carry valid documents including the e-way bill. When the vehicle is intercepted and detained for more than 30 minutes, he has to upload the details in form GST EWB-04 in the e-way bill portal to reduce the risks due to late transportation of the consignment.

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  1. What is the difference between invoice and e-way bill?

Answer: E-way bill is an electronic document required for transporting the goods of value exceeding fifty thousand rupees, mandated by the GST act, while an invoice is a document that maintains a record of the transaction between a buyer and seller like a paper invoice from a store or an online record of an online purchase.

Conclusion

The implementation of the e-way bill system has made it easier for the government to track the movement of goods and ensure that businesses comply with the tax laws of the country. It is a crucial part of compliance for the businesses and they have to ensure timely registration and accurate generation of e-way bill, as non-generation, inaccurate e-way bill generation can lead to severe consequences and losses to the businesses. Therefore it is important for businesses to understand the e-way bill registration and generation process and the penalty provisions to stay compliant and have a good reputation in the industry.

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Vidya Sagar

Vidya Sagar has post graduate and Law graduate qualifications. She has worked in the finance industry for many years. She is passionate about writing and keen on writing articles related to tax, accounting, audit and other finance related topics. She likes to simplify complex financial matters to help her readers understand easily. She reads a lot in her spare time and keeps herself updated with the latest financial news. She likes helping people in all their financial and compliance requirements

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