Irregularities in the detention of goods - Logitax

Irregularities in the detention of goods

Irregularities in the detention of goods in transit under the GST

(Based on: Section 68 of the CGST Act, in conjunction with Rule 138 of the CGST)

Before the goods can be moved, an e-way bill must be generated. In the case of an interstate transaction, the prescribed limit for issuing an e-way bill is if the consignment value of goods exceeds Rs. 50,000. The time limit for issuing an E-way bill for goods movement within a state or union territory varies. It could be the amount specified by the state.

Generally, we observe that the officer passed the orders with maximum penalty even if all documents, invoices, and e-way bills were available with the transporter and goods as being consigned were matching with details as stated in the invoice or other document e-way bill.

What is the nuisance value of clerical errors in E-Way bill generation?

What is the nuisance?
  1. Goods are intercepted in transit resulting in delay to reach the customer-

    Based on the foregoing findings, it is unavoidably concluded that in the event of a genuine dispute over the classification of goods between a transistor of the goods and the squad officer. The squad officer may intercept the goods and detain them to prepare the relevant papers for effective transmission to the judicial assessing officers and nothing else. In this case, there was a genuine miscalculation as to whether the goods would be subject to a 12 percent or a 28 percent tax.

  2. Risk of shop floor downtime due to this delay –

    A detention under Section 129 of the CGST Act cannot be justified solely based on suspicion of misclassification of goods. Section 129 is part of the Act’s machinery provisions to combat tax evasion. Detention can be justified only if there is a violation of the Act’s provisions relating to the transportation of goods or their storage while in transit – the alleged misclassification

  1. Heavy penalties to be paid upfront subject to fight for refund –

    The invoice number in the E-Way Bill and the original Invoice is incorrect by one digit. When one or two digits of the document number mentioned in the e-way bill are incorrect. The Respondents made an error in collecting the tax and penalty from the petitioner. The Respondents are directed to refund the tax and penalty to the petitioner – the writ petition is allowed.

  2. Transporter clashes-

    The reason for the goods’ detention is that they were not unloaded first to the location that came first. The transporter argued that a smaller quantity of goods should be uploaded first. Followed by a larger quantity of goods being offloaded for operational convenience.

  3. Goodwill risk-

    Goodwill is difficult to value, and negative goodwill can occur when an acquirer pays less than the company’s fair market value. There is also the possibility that a previously successful company will go bankrupt. When this occurs, investors deduct goodwill from their residual equity calculations.

Clerical errors

The distance from the point of origin to the point of destination was shown as less due to a clerical error in the e-way bill. CBIC clarified how such clerical errors would be dealt with in a circular dated 14th September 2018. In the present case, the respondent had no power to demand GST with a penalty. It is not a fit as a case where the petitioner is to be relegated to the appeal remedy when the omission was due to a clerical error

Even after the circular authorities are still pushing large penalties-

In many cases, the Department overlooked the transporter’s operational convenience. Is there any rule that consignments destined for a party located closer should be offloaded first? The respondent had acted mechanically, without regard for the transporter’s operational convenience. Demanding GST and penalty payment is arbitrary, illegal, and in violation of the law. Articles 14 and 300A of the Indian Constitution.

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