E-WAY BILL – SOME ISSUES

[Mr. M. GOVINDARAJAN]

Omission to upload E-way bill

In ‘Kun Motor Co. Private Limited v. Assistant Tax Officer, Kerala State GST Department, Trivandrum’ – 2018 (12) TMI 531 - KERALA HIGH COURT the first appellant is a dealer in motor vehicles and the second appellant purchased a mini-cooper car from the first appellant.  The goods were transported in a specially equipped carriage by road.  The invoice of purchase of car showed collection of IGST, obviously deeming the sale to be an inter-State one.  An invoice is issued for the transporting charges, which too shows collection of IGST, being the tax for service of transportation of the vehicle.  The vehicle in which the car was carried was detained within the Kerala State.

A notice was issued to the appellants.   One among the grounds alleged in the show cause notice is that no e-way bill having been uploaded.    The order of detention was issued only on the failure to upload e-way bill.  The appellants approached the High Court against the detention order.   The appellants contended the following before the Single Judge of High Court-

• The car was purchased by the second appellant from the first appellant, delivery effected and a temporary registration taken out.
• The car then becomes the personal effect of the second appellant, ho transported it to his normal place of residence.
• There was no requirement for uploading e-way bill under Rule 138 for reason of the exemption granted under section 138(14).

The Kerala High Court held that the detention of the car was illegal.  It was the case of intra-State sale.  Section 129 of the Kerala State Goods and Services Tax, 2017 was not attracted.  The supply of new vehicle by dealer was terminated on its purchase and its subsequent movement was not transaction of supply.  The car had come into the possession of purchase and used for some distance which indicated that it was ‘used personal effect’.  There was not taxable transaction for movement of car from Puducherry to Trivandrum.

Non completion of e-way bill

In ‘Daily Express v. Assistant Tax Officer, State GST Department, Kollam’ – 2018 (12) TMI 138 - KERALA HIGH COURT the petitioner is a transporter.  The State Officials intercepted the vehicle and detained them.  He issued order for physical verification/inspection of the conveyance.   He also issued a notice under section 129(3).  The reason assigned for detention is that Part B of the accompanied e-way bill has not completed and therefore not valid for the movement of goods as per section 138 of the GST Act and Rules made there under.

Since the State tax officers refused to release the goods the petitioner approached the High Court by filing a writ petition.  The petitioner put forth the following arguments before the High Court-

• The petitioner is only a transporter and it receives paltry sums never exceeding ₹ 2,000/- as transport charges.
• Section 129 in its entirety does not apply to the transporter.
• It may affect the consignor or the consignee.
• The transaction is genuine and no possibility of tax evasion.
• Section 126 exempts minor discrepancies.
• When the discrepancy does not involve tax evasion, the detention under section 129 is unwarranted.

The Revenue put forth the following arguments before the High Court-

• Section 129 of the Act is a self contained code which lays down the entire mechanism for provisional release of the goods.
• It is settled law that unfilled part B of the e-way bill cannot be treated as a minor omission even as for the Circular dated 14.09.2018.
• It the petitioner wants the provisional release of goods then it must comply withthe statutory mandate.

The High Court found from the detention notice that the petitioner carried an e-way bill, in which Part B remained unfilled.  The High Court held that the petitioner may not insist on the provisional release of the goods, but contest the matter before the State Tax Officer.  If the petitioner desires to have the interim release of the goods, there is no escape from section 129.  Section 129 (1)(b) applies to all other persons interested in the goods than the consigner.  The High Court further held that the notices did not suffer from any legal infirmity.  If the petitioner wants the interim custody of the goods, it may comply with the statutory mandate under section 129(1)(b) and get them released.

Section 129(1)(b) of the Act provides that the detained vehicles with the goods may be released on payment of the applicable tax and penalty equal to the fifty per cent. of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty.

In ‘Preethi Kitchen Appliances Private Limited v. State Tax Officer, Chennai’ – 2019 (1) TMI 679 - MADRAS HIGH COURT ’ the impugned detention order was passed on the reason that Part B of the E-way Bill has not been updated.  According to the petitioner the Part B of the E-way Bill was properly filled up and updated and therefore, the consignment could not be intercepted.  The petitioner made representation to the Department seeking for the release of the consignment.  The said representation has not been considered.  Therefore the petitioner filed the present petition before the High Court.  The petitioner submitted before the Court that without prejudice to the contention of the petitioner, they will pay onetime tax for the purpose of releasing the goods and agitate the matter before appropriate authority by way of filing revision.  The Department is not having any objection, if the petitioner is willing to pay onetime tax liability.  The High Court directed that the petitioner shall pay the onetime tax liability of ₹ 1,61,032.78 under the CGST Act and ₹ 1,61,032.78 under SGST Act before the second respondent within four days of the order and on receipt of such payment, the detailed goods shall be released forthwith.

Bill to Ship to concept

Section 10(1)(b) of the Integrated Goods and Services Tax Act, 2017 explains the ‘Bill to Ship to’ concept.  The said section provides that the place of supply of goods, other than supply of goods imported into, or exported from India, shall be  where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person.

In re ‘Sanjog Steels Private Limited’ – 2018 (12) TMI 1156 - AUTHORITY FOR ADVANCE RULING, RAJASTHAN the applicant is manufacturing of TMT steel bars in its own brand name ‘Sanjog Sona TMT and is directly supplying it directly to the customers which are registered.  Apart from it the applicant is also manufacturing TMT bars under the brand name of ‘RathiPowertech’.  The applicant would be selling the manufactured goods under the brand name Rathipowertech to RSE.  RSE would be selling the said goods after adding its margin of about ₹ 50 per metric ton to Goyal Alloys Private Limited.  Goyal will be selling the said goods to various customers.  The manufactured goods would be directly dispatched from the applicant to the customer and the e-way bill would be prepared on ‘Bill to ship to’ model as per the provisions of section 10(1)(b) of IGST Act, 2017.  The applicant sought for a ruling before the Authority for advance ruling as to whether the supply from the applicant to the ultimate consumer on a ‘Bill to Ship to’ mode as per provisions of section 10(1)(b) of IGST Act, 2017 is permissible.

The Authority observed that the cycle of supply of goods from the applicant to the final customer, involves four persons i.e., the applicant, RSE, Goyal and the final customer.  The Authority is of the opinion that section 10(1)(b) of IGST Act, 2017 does nowhere limit the transaction to only three parties/persons.  The said section only contemplates about role of third party and declaration of ‘principal place of business’.  Therefore the supply from the applicant to the final customer on a ‘Bill to Ship to’ mode as per the provisions of section 10(1)(b) of IGST Act, 2017 is permissible.

The press note of Ministry of Finance on ‘Issues regarding Bill to Ship to for e-way bill under CGST Rules, 2017, dated 23.04.2018 clearly emphasize that only a single e-way bill is to be used either from the supplier of the goods or by third party.  The Authority ruled that the applicant can issue an e-way bill in which the ‘bill to’ will be mentioned in the name of RSE where ‘ship to’ would be in the name of final customer.

Minor discrepancy

In ‘Diamond Metal v. State of UP’ – 2 2018 (11) TMI 56 - ALLAHABAD HIGH COURT  the Aluminium scrap of the petitioner transported from Kanpur to Jaunpur has been intercepted and detailed under section 129(1) of UP GST Act, only for the reason that the vehicle number do not tally with the vehicle number mentioned on the E-way bill.  The detention of goods on account of some minor discrepancy the circular of the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policies Wing, dated 14.09.2018  which modifies the earlier circular dated 13.04.2018 clearly stipulates that in case of minor discrepancies in the details mentioned in the e-way bill, specially errors of one or two digits/character of the vehicle number would not be sufficient for initiation of any proceedings under the Act.  The High Court directed the respondents to release the goods and the vehicle of the petitioner forthwith on the petitioner’s furnishing indemnity bond of the amount equivalent to the liability of tax and penalty as mentioned in the notice under section 129(3) of the Act.

Discussions to this article

[Ganeshan Kalyani]

Useful compilation case law on e-way.