What Are the Consequences of Not Having an E-Way Bill?

Failing to generate one attracts penalties under various sections of the CGST Act. This article offers a detailed look at the consequences of not having an e-way bill.

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What Are the Consequences of Not Having an E-Way Bill
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According to the CGST Act of 2017, e-way bills are mandatory for transportation of goods valued over Rs. 50,000. Under the provisions of the Act, the Commissioner can empower officers to intercept conveyance in order to verify e-way bill or the e-way bill number during all inter and intra state movement of goods. In certain cases, physical verification of a particular vehicle can also be carried out by the officer, if they suspect tax evasion.

Therefore, if you are a supplier or transporter moving goods that are not exempted from e-way bill requirements, you must have a valid e-way bill for the consignment. Failing to generate one attracts penalties under various sections of the CGST Act. This article offers a detailed look at the consequences of not having an e-way bill.

Consequences for failing to carry e-way bill

If your consignment qualifies for e-way bill under the CGST Act 2017, it must be accompanied by a valid e-way bill while being transported. Taxpayers who fail to generate and carry an e-way bill can face both monetary and non-monetary losses. Broadly, consequences for not carrying an e-way bill can be classified into the following categories:

Monetary penalty

Under Section 122, moving qualifying consignments without an invoice and e-way bill cover is constituted as an offence. The offender is subject to pay a penalty of Rs. 10,000 or the tax that’s being evaded - whichever value is higher. In other words, the minimum monetary penalty applicable on non-compliance with e-way bill requirements is Rs. 10,000.

Detention and seizure

Under Section 129 of the CGST Act of 2017, the vehicle transporting goods without generating an e-way bill can be detained or seized. The confiscation of such detained or seized goods and their disposal is covered under Section 130 of CGST Act of 2017. In such cases, the vehicle would only be released after payment of the penalty or tax applicable (as specified by the officer). Confiscation of goods can be problematic in general, but also increase your worries if you have obtained financing for goods transportation through a bank or NBFC since it can delay your payments. 

In such cases, the person has to make payment for penalty as per Section 129(1) clause a and b of the CGST Act. Here’s what clause a and b highlight:

  • Clause (a): Transporting goods without paying tax and valid documents

If the transporter or supplier failed to pay taxes and is transporting the goods without documents, the concerned individual will have to pay a 100% of the total tax payable on the value of the goods transported. 

  • Clause (b): Transporting goods only without valid documents

If the transporter or supplier is transporting the goods without documents, but has paid the relevant tax, the individual shall make a penalty payment amounting to 50% of the total value of the goods being carried. 

Penalties for mistakes in e-way bill

In case the e-way bill has been generated, but there are minor mistakes in the bill, the enforcement officer will impose a penalty of Rs. 1,000 on the registered business and/or transporter. However, this is only applicable if the supplier or transporter of the goods is registered on the e-way bill portal. Additionally, the person must have also paid the taxes associated with the total value of goods in transit. 

  • In case of the following mistakes on an e-way bill, penalty is capped at Rs. 500 under Section 125 of the CGST Act:

  • If there are spelling mistakes in the consignor or consignee names on the e-way bill, but the document has the relevant GSTIN mentioned. 

  • If there are errors in the pin code but the address of the consignor/consignee is correct subject to the clause that such a pin code error does not result in increasing the validity period of an e-way bill. 

  • If there is an error in the address of the consignee in the e-way bill to the extent that the locality and other details of the consignee are correct. 

  • If one or two digits of the document number mentioned in the e-way bill are incorrect. 

  • If there is an error in a 4/6-digit HSN, but the first 2 digits of the HSN are correct and the tax rate mentioned is also correct.

  • If there is an error in the vehicle number where 1 or 2 digits or characters are incorrect in the e-way bill.

Apart from the CGST penalty, the respective state GST Act can also impose a penalty of Rs. 1,000 in Form GST DRC-07 for every consignment. 

Conclusion 

In a nutshell, failing to generate and carry an e-way bill for an eligible consignment will result in monetary penalties to the tune of Rs. 10,000 under Section 122 of the CGST Act. Transporting goods without tax payment or e-way bills can also result in the detention and seizure of the vehicle. Such unnecessary delays in your supply chain can disrupt prompt deliveries expected from suppliers of online marketplaces, wholesale markets, and others.

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