Introduction
Import and export are the foundation of international trade relations between countries. India is a big exporter in multiple sectors, but its import industry is equally large. Since the passing of the GST Act, all organizations and individual importers of India must follow the e-way bill guidelines of the act. When goods from other countries are brought to India for domestic use, it is called an import. To transport the imported goods inside the country the importer must generate an e-way bill from the government website. They require the invoice for the goods, the transport vehicle details, and personal documents to generate the e-way bill. However, people often ask, what happens if they make a mistake while filling out the e-way form? And most importantly, are there consequences of not following e-way bill regulations? Well, there are only a few situations where creating an e-way bill for import is not necessary, and situations where not generating an e-way bill can have severe consequences. Keep reading to find out the answers to all these questions. We have especially covered the penalties, risks, and impact of non-compliance to give you a detailed idea about the consequences of not generating an e-way bill.Consequences of Missing E-way Bill in Imports
Since the passing of the GST act, an e-way bill is required for transporting items valued at more than Rs. 50,000. This act is not only applicable to exports but to imports as well. For every consignment, a distinct e-way bill number (EBN) is produced. At specific checkpoints, authorized officers can stop any vehicle carrying goods to verify the required paperwork, including the e-way bill is in order. The consequences of not abiding by the CGST law can be severe. There are the punishments for refusing to carry e-way bills:- You can be fined for not carrying e-way bills.
- The vehicle or the goods can be seized by the enforcers.
- GST authorities can increase their attention on offenders.
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Fines
- The minimum fine for failing to carry an e-way bill is Rs. 10,000.
- The authorities have the right to impose a fine equal to the tax owed on the specific consignment.
- If the owed tax value is higher than Rs. 10,000, the offender will pay the tax value. Otherwise, they will have to pay the fixed Rs. 10,000.
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Seizure of Vehicle and Cargo
- Sometimes the seizing of the vehicle and the cargo is ordered, generally in circumstances involving repeat offenders.
- After seizure, the items can only be returned to the owner upon payment of the owed tax within seven days.
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Increased Interference from the GST Regulators
- An individual or a company might be ordered to submit an accurate list of all the products and commodities they have imported and the related e-way bills to the GST authorities.
- They could also be ordered to hand over the entire tax details of all the goods they have imported and the vehicles they used to transport them.
Penalties for Not Using E-Way Bills in Imports
We have already mentioned that transporting any taxable goods without an e-way bill is subject to a penalty of Rs. 10,000 or the amount of tax applicable. These fines are charged based on Section 122 of the CGST Act, 2017. Section 129 of the CGST Act of 2017 clarifies that any goods or vehicles that get confiscated due to noncompliance with e-way bill regulations may only be released upon the payment of applicable taxes. These are the amount of penalties for not using e-way bills in imports:- The e-way bill violator must pay 100% of the tax due if the goods were taxable products.
- For exempt products, the penalty amount is 2% of the goods’ worth, or Rs. 25,000, whichever is lower.
- If no payment is made within seven days from the date the notice was sent, Section 130 of the Act can be used to start further proceedings for the seizure of goods, as well as the imposition of more penalties.
Import Compliance and E-Way Bill Repercussions
To understand the import compliance process, we need to know how an import process and the tax regulations work. This picture shows how an import procedure works:
When the goods imported from other countries reach India, the below process follows:
- The products are taken into the custody of the customs department upon arrival and sent to either an Inland Container Depot (ICD) or a Container Freight Station (CFS) for final clearance. According to Regulation 138, it is not required to create an e-way bill for this transportation.
- When the goods are in the ICD or CFS, the bill of entry is submitted, and the importer pays the customs duty. If the items are approved for domestic use, generating an e-way bill is necessary.
- Until they get approved for domestic use, the goods may be stored in a warehouse. Generating an e-way bill to transport the goods from the ICD to the bonded warehouse is not necessary. However, an e-way bill must be generated when the products are eventually cleared from the warehouse.
No E-way Bill Required for Exempt Products
Regulation 138(14) of the CGST Regulations, 2017 provides a list of exempt products. This list ensures that individuals/companies don’t have legal obligations to create e-way bills for specific goods or under particular transportation scenarios. This method streamlines the transportation process, and domestic consumption can begin immediately.Risks of Not Generating E-Way Bill for Imports
To maintain tax transparency and authorize legal transportation of imported goods, all importers and carriers need to generate e-way bills for imported products. If not, they are required to pay the penalty following CGST Act Section 129(1) Clauses (a) and (b). Consider these risks if you do not generate e-way bills for imports:Penalties for transporting goods without valid documents
- The importer must pay 50% of the entire value of the products moved if the supplier or transporter paid the tax on the mentioned goods but transported them without proper documentation.
- If the individual/company transported goods exempt from customs duty, they would have to pay a penalty of Rs. 25,000, or five percent of the products’ worth, whichever is less.
Penalties for transporting goods without paying tax and carrying valid documents
- The person in question must pay the necessary tax and penalty equivalent to 100% of the entire tax due on the value of the items transported.
- If the individual transported goods exempt from customs duty, they would have to pay a fine of Rs. 25,000.
Impact of Non-compliance in Import E-way Bill
Importing products for domestic market consumption comes with various regulations, and once the products arrive in India, they must go through customs. After paying the customs taxes, the importer generates e-way bills to deliver the goods to their intended location inside India.- If the vehicle is caught at a checkpoint carrying goods with no valid e-way bill, the GST authorities can set the penalty amount for the importer or seize the goods.
- When the vehicle or the goods get seized, that affects the supply chain of the importer and causes damage to the business.
- The monetary harm caused by the fine and supply chain damage can be significant.
Legal Consequences of Omitting E-way Bill in Imports
The CGST Act introduced the e-way bill generation process and created guidelines for the importers. Later, in 2022, the Indian government made a few modifications to the bill. The legal consequences of not maintaining the e-way bill regulations for imports are explained in the tables below: Existing provision [Before 01.01.2022]| When the owner comes forward [Sec 129(1)(a)] | When the owner does not come forward [Sec 129(1)(b)] |
| Taxable goods- Tax + penalty equal to 100% of tax payable | Taxable goods – Tax + penalty equal to 50% of the value of goods reduced by tax paid |
| Exempted goods – Lowest of 2% of the value of goods or ₹ 25,000/- | Exempted goods – Lowest of 5% of the value of goods or ₹ 25,000/- |
| When the owner comes forward [Sec 129(1)(a)] | When the owner does not come forward [Sec 129(1)(b)] |
| Taxable goods – Penalty equal to 200% of tax payable | Taxable goods – Penalty equal to the higher of 50% of value of the goods or 200% of the tax payable on such goods |
| Exempted goods – Lowest of 2% of the value of goods or ₹ 25,000/- | Exempted goods – Lowest of 5% of the value of goods or ₹ 25,000/- |
Conclusion
Now that we have discussed everything about an import e-way bill’s significance, we strongly suggest that you never ignore generating one. Since the passing of the CGST Act, the e-way bill has become an integral part of the transportation of goods across the nation, and with valid reasons. The bill is used to stop illegal imports, end import tax evasion, and make the import process easier for legal businesses. Most states follow the exact regulations, while others, like Maharashtra, have maintained an intrastate movement barrier of Rs. 100,000 rather than Rs. 50,000. The consequences of not generating a correct e-way bill can be extreme, especially for repeat offenders. However, you don’t need to worry if you have made a simple mistake in the form. All you need to do is to cancel it and re-generate the e-way bill. Transporting goods with an incorrect e-way bill or not generating it at all will result in steep fines. It is crucial to remember that, in such cases, the transport vehicle and the goods can also be seized if the GST authority decides that way. Thus, by strictly following the e-way bill generation guidelines, situations like those can be avoided.Frequently Asked Questions
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Why do I need an e-way bill for import?
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How do I generate an e-way bill for imports?
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Can the goods or the vehicle get seized because of the vagueness of the classification rules of Goods and Tax Tariffs?
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What is the validity period of an e-way bill for import?
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What is the penalty for minor e-way bill mistakes?
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Can I edit the e-way bill if I made a mistake?
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What to do if the e-way bill’s validity expires before the goods reach their destination?
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Do I need an e-way bill for high sea sales?
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What are the requirements to generate an e-way bill for imports?
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What documents should the driver carry while transporting imported goods?
Skipping e-way bill for imports? Expect detention, fines, and GST non-compliance consequences.
