What are the Penalties for Not Generating an e-way Bill?

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Published Date:  22-01-2024   Author:   shraddha-vaviya
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An e-way bill is an electronically generated document required for the movement of goods throughout India. With rare exclusions, moving items worth more than Rs. 50,000 is necessary. For each such consignment to be transported, a unique e-way bill number (EBN) would be generated.

The distance of goods transportation determines the validity of this EBN. To execute this provision, authorized officers may be directed to stop any vehicle at specific checkpoints to verify relevant documentation. Additionally, upon receipt of particular inputs regarding tax evasion, a physical inspection of the vehicle may be performed.

Consequences of failing to carry an e-way bill

Failure to generate and carry the e-way bill might result in monetary and non-monetary damages to taxpayers. Goods transferred in violation of the law are responsible for:

Monetary Penalty

Moving goods without the cover of an invoice and e-way bill is an offense punishable by a fine of Rs.10,000 or the amount of tax sought to be evaded (whichever is greater). As a result, the most basic level penalty for failing to comply with the rules is Rs. 10,000.

Detention and Seizure

Suppose a vehicle is discovered moving goods without an e-way bill. In that case, it may be detained or seized and released only upon payment of the applicable tax and penalty as indicated by the officer. There are two possibilities in this case:

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  • If the owner desires to pay the penalty, he must pay the total tax due.
  • If not, the penalty will be 50% of the value of the products.

Aside from the legal implications described above, it is also crucial to know that the vehicle and the taxpayer’s goods may be impounded. This would imply that the taxpayer’s supply chain would be hampered due to the lengthy waits at the checkpoints. As a result, embarrassing and ineffective situations like these can be avoided simply by following the guidelines.

Begin by using the e-way bill online portal, SMS service, and readily available software to streamline the entire procedure. It is recommended that taxpayers follow the legislation to ensure the smooth movement of commodities from one state to another.

Also Read: Understanding The E-Way Bill System In GST: Compliance And Consequences

E-Way Bill Enforcement

The GST implemented the e-way bill method to close tax evasion gaps on April 1, 2018. The administration highlighted tax evasion as one of the reasons for the drop in revenue collection in October 2017.

As a result, the GST Council has given GST Officers the authority to implement and enforce all legislation relating to e-way bills for moving products and intercept any conveyance to verify the e-way bill. The following are some points to keep in mind when enforcing the e-way bill:

  • Physical verification of conveyances may be performed by any officer approved by the Commissioner or empowered by himself.
  • Physical verification of a specific conveyance should be performed only based on reliable evidence of tax avoidance.
  • Physical verification of the conveyance should only be performed with the Commissioner’s consent.
  • Within 24 hours of the inspection, the proper officer must record a summary report of each inspection of goods in transit in Part A of Form GST EWB (e-Way Bill) – 03 online.
  • Within three days of the inspection, the final report shall be recorded in Part B of Form GST EWB-03.
  • No further verification check shall be carried out anywhere unless specific information relating to tax evasion is made available later after physical verification of the products is carried out either within or outside the state.

Penalty for Mistakes in E-Way Bills

Following repeated requests from truck drivers and owners of goods, the Government of India (GoI) informed that if the supplier of goods or the transporter carrying goods with registered GST and GST e-way bill but the e-way bill contains minor mistakes, the enforcement officer shall impose a penalty of Rs.1000 on the written business and/or the transporter. On September 14, 2018, the GoI announced this step via Circular No. 64/ 38/ 2018-GST. As a result, if the e-way bill has minor errors during transit, the supplier or transporter is only liable for a Rs.1000 penalty.

It will, however, apply only if the owner or carrier registers the items on the e-way bill portal or through other ways. The individual must also have paid all applicable taxes on the entire worth of the commodities included in the transfer. During the transit of the products, the supplier or transporter shall carry the tax invoice or delivery challan and the e-way bill.

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According to the Circular, the following errors shall apply, and the penalty of Section 129 of the CGST Act shall not apply if the e-way bill, tax invoice, or other relevant documents contain the following errors for the items above as carried by the owner of the goods or the transporter:

  • If an e-way bill, tax invoice, or other associated document contains spelling errors in the name of the consignor or consignee, but the document includes the relevant GSTIN, the document is acceptable.
  • If an e-way bill, tax invoice, or other connected document contains an error in the Pin-code to the indicated place deliverable, but the address of the consignor or consignee fits relevant information, the error in the pin-code shall apply. However, the inaccuracy in the pin code should have no influence on the e-way bill’s validity term.
  • If the address of the consignor or consignee on an e-way bill, tax invoice, or other associated document is incorrect, but the address given in the paperwork is close to the location of the recipient of the abovementioned goods. This shall apply, however, only if the appropriate documents contain a mistake in the address and all other facts linked to the aforementioned items that are required.
  • Suppose the e-way bill, tax invoice, or other related papers contain an error in the first or second digits of the document number for the goods listed on the e-way bill. If the relevant documents have many mistakes in the document number, the Circular’s benefits become ineffective.
  • If an e-way bill, tax invoice, or other related document contains an error in the fourth or sixth digits of the HSN, but the first two digits of the HSN Codes appear relevant to the goods transported by the supplier or transporter, and the concerned individual paid the tax and mentioned it appropriately in the e-way bill, the penalty under Section 129 of the CGST Act becomes ineffective.
  • The penalty does not apply if an e-way bill, tax invoice, or other connected document contains an error in specifying the vehicle number that only extends up to two digits or characters of the allotted vehicle number.

According to the Circular, if the aforesaid scenarios are noted by the authorized officer, a penalty of Rs.500 as per Section 125 of the CGST Act and Rs.500 as per the respective state GST Act will apply. In all, the person must pay Rs.1000 for any minor errors in the preceding paragraph.

The penalty must be paid on Form GST DRC-07 by the owner of the goods or the carrier for each applicable consignment. On a monthly basis, the enforcing officer shall keep a record of all penalties levied under Section 125 of the CGST Act and explain to the controlling officer why Section 129 of the CGST Act was not implemented.

Also Read: Common Issues and Solutions for E-way Bill Errors

Penalty for Transporting Goods in E-Way Bills Without Valid Documents

If a transporter or a supplier transports or stores goods without any valid documents related to the goods during transit in violation of the GST Act or any rules made thereunder, and the supplier uses the same goods or the goods stored in transit, the concerned officers may detain or seize the goods.

Officers must release taken or detained commodities or goods that have been held if the supplier or transporter meets the following conditions. The person must pay the penalty in accordance with Section 129(1) clauses (a) and (b) of the CGST Act. The following are the conditions:

Transporting goods without paying taxes or providing appropriate documentation

If the supplier or transporter fails to pay taxes and transports goods without proper documentation, the individual in question must pay the applicable tax and a penalty equal to 100% of the entire tax payable on the value of the products moved.

If the person transported exempted items, the person must pay a penalty equivalent to 2% of the value of the products or pay a penalty of Rs.25,000, whichever is less.

Only transporting goods without valid documents.

If the supplier or transporter paid the tax for the products but transported them without appropriate paperwork, the individual must pay 50% of the total worth of the commodities carried.

If the concerned individual transported exempted items, the individual must pay a penalty of Rs.25,000 or provide a payment equal to 5% of the value of the products, whichever is less.

Time Limit for Generating E-Way Bills

Before items may be transported, businesses must generate E-Way Bills. The E-Way Bill’s validity is determined by the distance traveled by the items. An E-Way Bill for products transported up to 100 kilometers, for example, is valid for one day, whereas an E-Way Bill for goods transported between 100 and 300 kilometers is valid for three days. Similarly, the validity of the E-Way Bill grows in proportion to the distance traveled. As a result, enterprises must ensure that they generate E-Way Bills within the time frame specified.

Also Read: Time Limits And Procedures For E-Waybill Extension: A Step-By-Step Guide

Wrapping It Up

It is critical to understand the penalty provisions of the E-Way Bill. When a taxpayer is detected violating the e-way bill restrictions, GST officials trace his or her consignment movement.

As a result, before moving goods, each taxpayer should ensure that the relevant e-way bill is generated and handed over to the vehicle, along with invoices and delivery challans, and that the transaction is completed correctly. The taxpayer must also keep correct records and reconcile the E-way charge with the GSTR-1 return.

FAQs

  • What is the penalty for violating the e-way bill?

The minimum fine for failing to generate any part of the e-way bill is ten thousand dollars. Either that or the transporter/owner will be required to pay the complete amount of tax evaded. The fined person must pay the greater of the two amounts.

  • What is the penalty for failing to submit a GST bill?

While the monetary penalty under GST is 10% of the underpaid tax amount, jail time is also available in cases of high-value fraud.

  • What happens if I refuse to pay an e-way bill?

Acceptance or rejection of such consignment described in the e-Way bill can be communicated to a second party. If he does not convey his acceptance or rejection within 72 hours following the generation of the e-Way bill, it is assumed that he has accepted the information.

  • Can we produce an e-way charge after the package has been delivered?

Before items can be transported by road, an e-way bill must be issued. That is, the moment the E-Way charge is generated is unrelated to the invoice date. As a result, the E-way bill can be created after the invoice date.

  • What is the highest GST penalty?

For each return, the maximum penalty is Rs. 10,000 (Rs. 5,000 for CGST and Rs. 5,000 for SGST).

  • How long is an e-way bill good for?

In the case of average vehicles or modes of transportation, one-day validity has been supplied for every 100 km or portion of its travel.

  • In what circumstances is an e-way bill not required?

When the value of the products transported is less than $50000, you do not need to generate an E-Way Bill.

  • Who has the authority, and why, to reject the E-way bill?

A taxpayer has the option to reject e-way bills created by third parties using the former’s GSTIN.

  • Is it possible to cancel my GST without filing returns?

No, GST registrations cannot be revoked unless returns are filed.

  • What happens if I don’t file my GST return?

Late fines are imposed if the GST return is not filed on time.

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Shraddha Vaviya

With several years of experience, I am deeply passionate about writing and enjoy creating content on topics such as GST, tax and various finance-related subjects. My goal is to make complex financial matters understandable for readers by simplifying them.

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