• By ADMIN
• Posted 06 Jun, 2023
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Understanding Vehicle Interception: Key Considerations and Implications under GST Laws

Transportation of any goods or storing of any goods in contravention of GST provisions (without invoice, e-way bill, delivery challan, etc) results in paying penalty of 200% of tax in the goods in transit. It is clear that no officer has power to reduce the penalty or waive it. Once the offence found to be committed the penalty u/s 129 of CGST is to be paid. The only recourse available is writ before jurisdictional High Courts. 

Section 68 of CGST Act empowers GST officers to intercept vehicles to check as to whether the goods in transit are as per the provisions section 129. There are set of procedures laid down in this regard. One must understand the prescribed procedure to be followed by the Taxpayer and the tax authorities while intercepting vehicle. Failure to follow the procedure as set out leads to the proceedings could be invalidated by courts.

When vehicle intercepted u/s 68 of CGST Act, the following procedures to be followed by the GST Officers:-

1. The Officer may require the person in charge for the conveyance to produce any prescribed document (invoice, e-way bill, delivery challan etc), where the person in charge of the conveyance fails to produce any prescribed document or where the proper officer intends to undertake an inspection, he shall record a statement of the person in charge of the conveyance in FORM GST MOV-01

2. In addition, the proper officer shall issue an order for physical verification / inspection of the conveyance, goods, and documents in FORM GST MOV-02, requiring the person in charge of the conveyance to station the conveyance at the place mentioned in such order and allow the inspection of the goods.

3. The proper officer shall, within 24 hours of the issuance of FORM GST MOV-02, prepare a report in Part A of FORM GST EWB-03 and upload the same on the common portal.

4. Within 3 days from the date of issue of the order in FORM GST MOV-02, the proper officer shall conclude the inspection proceedings, either by himself or through any other proper officer authorized in this behalf. Where circumstances warrant such time to be extended, he shall obtain a written permission in FORM GST MOV-03 from the commissioner or an officer authorized by him, for extension of time beyond 3 days and a copy of the order of extension shall be served on the person in charge of the conveyance.

5. On completion of the physical verification/inspection of the conveyance and the goods in movement, the proper officer shall prepare a report of such physical verification in FORM GST MOV-04 and serve a copy of the said report to the person in charge of the goods and conveyance. The proper officer shall also record, on the common portal, the final report of the inspection in Part B of FORM GST EWB-03 within 3 days of such physical verification / inspection.

6. Where no discrepancies are found after the inspection of the goods and conveyance, the proper officer shall issue forthwith a release order in FORM GST MOV-05 and allow the conveyance to move further. Where the proper officer is of the opinion that the goods and conveyance need to be detained under section 129 of the CGST Act, he shall issue an order of detention in FORM GST MOV-06 and a notice in FORM GST MOV-07 in accordance with the provisions of Sec 129(3) of CGST Act, specifying the tax and penalty payable. The said notice shall be served on the person in charge of the conveyance.

7. Where the owner of the goods or any person authorized by him comes forward to make payment of tax and penalty as applicable under Sec 129(1)(a) or where the owner of the goods does not come forward to make the payment of tax and penalty as applicable under Sec 129(1)(b), the proper officer shall after the amount of tax and penalty has been paid in accordance with the provisions of the CGST Act, release the goods and conveyance by an order in FORM GST MOV-05. Further, the order in FORM GST MOV-09 shall be uploaded on the common portal and the demand accruing from the proceedings shall be added to the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act.

8. In case the proposed tax and penalty are not paid within seven days from the date of the issue of the order of detention in FORM GST MOV-06, action under section 130 of the CGST Act shall be initiated by serving a notice in FORM GST MOV10, proposing confiscation of the goods and conveyance and imposition of penalty.

9. Where the proper officer is of the opinion that such movement of goods is being effected to evade payment of tax, he may directly invoke section 130 of the CGST Act by issuing a notice proposing to confiscate the goods and conveyance in FORM GST MOV-10. In the said notice, the quantum of tax and penalty leviable under section 130 of the CGST Act read with section 122 of the CGST Act, and the fine in lieu of confiscation leviable under sub-section (2) of section 130 of the CGST Act shall be specified. Where the conveyance is used for the carriage of goods or passengers for hire, the owner of the conveyance shall also be issued a notice under the third proviso to sub-section (2) of section 130 of the CGST Act, proposing to impose a fine equal to the tax payable on the goods being transported in lieu of confiscation of the conveyance.

10. No order for confiscation of goods or conveyance, or for imposition of penalty, shall be issued without giving the person an opportunity of being heard.

11. An order of confiscation of goods shall be passed in FORM GST MOV-11, after taking into consideration the objections filed by the person in charge of the goods (owner or his representative), and the same shall be served on the person concerned. Once the order of confiscation is passed, the title of such goods shall stand transferred to the Central Government. In the said order, a suitable time not exceeding three months shall be offered to make the payment of tax, penalty and fine imposed in lieu of confiscation and get the goods released. The order in FORM GST MOV-11 shall be uploaded on the common portal and the demand accruing from the order shall be added in the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act. Once an order of confiscation of goods is passed in FORM GST MOV-11, the order in FORM GST MOV-09 passed earlier with respect to the said goods shall be withdrawn.

12. An order of confiscation of conveyance shall be passed in FORM GST MOV-11, after taking into consideration the objections filed by the person in charge of the conveyance and the same shall be served on the person concerned. Once the order of confiscation is passed, the title of such conveyance shall stand transferred to the Central Government. In the order passed above, a suitable time not exceeding three months shall be offered to make the payment of penalty and fines imposed in lieu of confiscation and get the conveyance released. The order in FORM GST MOV-11 shall be uploaded on the common portal and the demand accruing from the order shall be added in the electronic liability register and, upon payment of the demand, such register shall be credited by either debiting the electronic cash ledger or the electronic credit ledger of the concerned person in accordance with the provisions of section 49 of the CGST Act.

13. The order referred to in point (11) and (12) above may be passed as a common order in the said FORM GST MOV-11.

14. In case neither the owner of the goods nor any person other than the owner of the goods comes forward to make the payment of tax, penalty and fine imposed and get the goods or conveyance released within the time specified in FORM GST MOV11, the proper officer shall auction the goods and/or conveyance by a public auction and remit the sale proceeds to the account of the Central Government.

Further, as per the provisions of section 126 of CGST Act, the following are the prescribed reduced penalties which are less than 200% as explained above.

A. In the following situation where no penalty shall be levied

1. Where the amount involved in the offence is less than Rs.5000.

2. Where a mistake or omission in documentation is easily rectifiable and has been committed without fraudulent intent or gross negligence or is not backed up with any sort of malicious intent to evade taxes.

3. Where the issue relates to rate of tax, classification of goods, place of supply disputes, valuation of goods etc: Instead of levying tax and penalty on the spot, these types of cases shall be referred to the assessment circle concerned for further action, without detaining the goods and conveyance. However, in respect of newly registered taxpayers where the roving squad officers are able to establish that the taxpayer had failed to file returns for two or more tax periods this instruction would not apply and the vehicles of such taxpayers may be detained for further action, wherever appropriate.

B. Circumstances in which penalty up to Rs.5,000 per act shall be levied.

Where the movement of goods is accompanies by any one of the basic documents such as invoice or bill of supply or delivery challan or E-Way bill as prescribed in Rule 55A and 138A of the CGST rules and in such cases where at least one of the basic documents, manifestly showing sufferance of tax in the particular transaction is available, a penalty of upto Rs.5000 per act shall be levied so as to deter the recurrence of offence.

C. Circumstances where penalty of Rs.25,000 shall be levied.

In the circumstances described in B above if any person repeatedly indulges in the same violation, a penalty of Rs.25,000 per act shall be levied to deter the recurrence of such offence.

Conclusion :

It is understood from the above procedure that it is safe to keep all the prescribed documents while goods in movement and follow the procedure laid out as explained above even if the officer deviates from it. This is to protect the interest of both revenue and taxpayer at least before court of law.