GST Inspection and Confiscation of Goods in Transit

GST E-way bill regulations are being rolled out and streamlined across India. Currently, e-way bill is mandatory for inter-state transfer of goods and e-way bill is being made mandatory for intra-state transfer of goods in phases. Under GST, an Officer would have to follow certain rules and regulations while intercepting and inspecting goods in transit. In this article, we look at such rules pertaining to the inspection of goods in transit under GST.

Interception of Goods

An officer authorised by the jurisdictional Commissioner is empowered to intercept and inspect a conveyance. On being intercepted, the person in charge of the conveyance or transporter must produce the documents related to the goods and the conveyance like e-way bill and invoice or delivery challan.

The officer could verify the documents produced and the e-way bill number electronically,either by logging on to http://mis.ewaybillgst.gov.in or the Mobile App or through SMS by sending EWBVER to the mobile number 77382 99899 (For e.g. EWBVER 120100231897). In case all the documents are in order, the goods must be allowed to move further.

Inspection of Goods

In case the transporter fails to produce the documents requested by the officer or there is a discrepancy, the officer can record a statement of the person in charge of the conveyance in FORM GST MOV01 to begin the process of inspection of goods.

In addition, the proper officer will 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 vehicle at the place mentioned in the order and allow the inspection of the goods.

On issuing GST MOV-02, the officer must perform the following steps within the timeline mentioned below:

1. Prepare a report in Part A of FORM GST EWB-03 and upload the same on the common portal. – Within 24 hours.
2. Conclude the inspection proceedings and prepare a report in Form GST MOV04 and complete Part B of GST EWB-03 on E-way Bill Portal – Within 3 working days.
3. In case time of more than 3 days is required, the officer must obtain approval in Form GST MOV03.

Release of Goods

After inspection and completion of the above steps, if there is no discrepancy, then the officer can issue a release order in Form GST MOV05. In case, the officer is of the opinion that the goods need to be detained after inspection, he/she can issue a detention order in Form GST MOV06 and a notice in Form GST MOV07 along with the tax and penalty payable. Form GST MOV06 and GST MOV07 will be served to the person in charge of the conveyance.

Payment of Penalty

On being served notice in Form GST MOV07, the owner of the goods or any person authorized by can make the payment of tax and penalty. In case the payment of tax and penalty is made, the Officer would issue an order in Form GST MOV05 to release the goods.

Demand of any tax, penalty, fine or other charges will be added in the electronic liability ledger of the person concerned. If no electronic liability ledger is available in case of an unregistered person, a temporary ID will be created by the proper officer on the common portal and the liability will be created. The concerned person can then credit the payments made towards such demands of tax, penalty or fine and other charges by debiting the electronic cash ledger of the concerned person.

Accrual of Penalty

In case the owner of the goods does not come forward to make the payment of tax and penalty, then the amount of tax and penalty would be accrued and the order in FORM GST MOV-09 will be uploaded on the common portal and the tax demand and penalty will be added in the electronic liability register.

Security

In case the owner of the goods, or the person authorized by him, comes forward to get the goods and the conveyance released by furnishing a security, the goods and the conveyance will be released, by an order in FORM GST MOV-05, after obtaining a bond in FORM GST MOV-08 along with a security in the form of bank guarantee equal to the amount payable.

Objecting the Penalty

In case any objections are filed against the proposed amount of tax and penalty payable, the proper officer must provide an opportunity for the taxpayer to be heard and consider such objections. Finally, the Officer can pass an order in FORM GST MOV-09, quantifying the tax and penalty payable.

Non Payment of Penalty

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, the officer can issue a notice in Form GST MOV10 and propose confiscation of the goods and conveyance and imposition of penalty.

Further, if the officer believes that the movement of goods is being effected to evade payment of tax, he can directly invoke section 130 of the CGST Act and issue a notice proposing to confiscate the goods and conveyance in FORM GST MOV-10.

In GST MOV10, the quantum of tax and penalty leviable along with the fine in lieu of confiscation leviable will be specified.

Know more about GST penalties.

Confiscation of Goods

In case of non-payment of penalty or if the goods were moved for evading taxes, an order of confiscation of goods can be passed in FORM GST MOV-11 and uploaded on the common portal, after giving an opportunity for the taxpayer to be hear. While confiscating the goods, the Officer must take into consideration the objections filed by the person in charge of the goods (owner or his representative). Once the order of confiscation is passed, the title of such goods will stand transferred to the Central Government. Further, in the confiscation order a suitable time not exceeding three months will be offered to make the payment of tax, penalty and fine imposed in lieu of confiscation and get the goods released.

Auction of Goods

After confiscation of goods, if 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, the goods can be auctioned in a public auction and the sale proceeds would be credited to the account of the Central Government.

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