There is no provision to disclose the route of transportation of goods under the GST Law

[CA Bimal Jain]

The Hon’ble Allahabad High Court in the case of M/S VISHAL STEEL SUPPLIER VERSUS STATE OF U.P. AND 3 OTHERS - 2024 (7) TMI 1037 - ALLAHABAD HIGH COURT found the detention of goods unjustified and that, unlike the Value Added Tax Act, 2008 (“the VAT Act”), there is no specific provision in the Goods and Services Tax Act, 2017 (“the CGST Act”) which requires Assessee to disclose the route of transportation. Consequently, the Court quashed the detention orders and mandated the refund of any amount deposited.

Facts:

Mr. Vishal Steel Supplier (“the Petitioner”) was transporting goods from Muzaffarnagar to Ghaziabad, accompanied by a tax invoice, e-way bill and etc. However, the goods were intercepted at Hapur, where the officer intercepted the goods on the pretext that the route taken was not normal and the truck driver was having mobile number of a dealer of Hapur district. Therefore, inference was drawn that the goods will be unloaded at District Hapur without having any proper document.

No discrepancies in the documentation were found during the interception and that there was no evidence of intent to evade tax. Additionally, it was asserted that under GST framework, there is no requirement to disclose a specific transportation route.

Since, it was crushing season and on the way at Moti Nagar, various sugar mills are situated, hence, there was heavy traffic jam and in order to avoid the same, the driver of the goods, had taken another route for Ghaziabad via Hapur.

The Petitioner was served Orders dated July 30, 2020, and December 10/11, 2019 (“the Impugned Orders”), regarding the detention of goods.

Hence, aggrieved by the Impugned Orders, the Petitioner filed the present writ petition.

Issue:

Whether it is necessary to disclose the route of transportation of goods under the GST Law?

Held:

The Hon’ble Allahabad High Court in M/S VISHAL STEEL SUPPLIER VERSUS STATE OF U.P. AND 3 OTHERS - 2024 (7) TMI 1037 - ALLAHABAD HIGH COURT held as under:

• Relied on, the judgement of the Hon’ble Allahabad High Court in the case of M/S OM PRAKASH KULDEEP KUMAR VERSUS ADDITIONAL COMMISSIONER GRADE-2 AND ANOTHER - 2023 (10) TMI 103 - ALLAHABAD HIGH COURT, wherein it was held that under the CGST Act, there is no specific provision which bounds the selling dealer to disclose the route to be taken during transportation of goods or while goods are in transit. However, there was a provision under VAT Act to disclose the route during transportation of goods to reach its final destination. The power of detention as well as seizure can be exercised only when the goods were not accompanying with the genuine documents provided under the CGST Act. The genuineness of the documents has not been disputed at any stage.
• Held that, under the CGST Act, there is no specific provision that bounds the selling dealer to disclose the route to be taken during the transportation of goods or while goods are in transit however, there was a provision under the VAT Act to disclose the route during transportation of goods to reach its destination. Hence, the Court allowed the writ petition by quashing the Impugned Orders and mandated the refund of any amount deposited by the Petitioner.

Our Comments:

Rule 138A of the CGST Rules was substituted vide Notification No. 12/2018-dated March 07, 2018. Rule 138A of the CGST Rules, states the “Documents and devices to be carried by a person-in-charge of a conveyance”.

Rule 138A(1) of the CGST Rules states that the person in charge of conveyance shall carry:

1. the invoice or bill of supply or delivery challan, as the case may be; and
2. a copy of the e-way bill in physical form or the e-way bill number in electronic form or mapped to a Radio Frequency Identification Device embedded on to the conveyance in such manner as may be notified by the Commissioner. However, this will not apply in case of movement of goods by rail or air or vessel. Also, in case of imported goods, the person in charge of a conveyance shall also carry a copy of the bill of entry filed by the importer of such goods and shall indicate the number and date of the bill of entry in Part A of FORM GST EWB-01. However, anything contained under Rule 138A(1)(b) of the CGST Rules, the Commissioner by notification require the person in-charge of the conveyance to carry the tax invoice or bill of supply or bill of entry or a delivery challan, where the goods are transported for reasons other than by way of supply. 

Further, as per Rule 138A (2) of the CGST Rules, in case, invoice is issued in the manner prescribed under Rule 48(4) of the CGST Rules, the Quick Reference (QR) code having an embedded Invoice Reference Number (IRN) in it, may be produced electronically, for verification by the proper officer in lieu of the physical copy of such tax invoice.

Furthermore, where the registered person uploads the invoice under sub-rule (2), the information in Part A of FORM GST EWB-01 shall be auto-populated by the common portal on the basis of the information furnished in FORM GST INV-1.

Lastly, the Commissioner may, by notification, require a class of transporters to obtain a unique Radio Frequency Identification Device and get the said device embedded on to the conveyance and map the e-way bill to the Radio Frequency Identification Device prior to the movement of goods.

Hence, it’s important to note that the Rule does not mandate sellers to disclose a specific route before moving their goods. Furthermore, the FORM GST EWB - 01 (E-Way Bill), itself does not include any requirement to specify the route. Instead, it focuses on the details such as the type of goods, the seller, the buyer, place of delivery and the type of vehicle used for transportation. This reinforces the principle that Authorities should not penalize for taking an alternate route, especially when all necessary documentation is in order and there is no indication of any wrongdoing.

 (Author can be reached at [email protected])