A man sleeps in the rear of a truck parked at the Sanjay Gandhi Transport Nagar depot in New Delhi, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

GST E-Way Bill: A Glitch, A Penalty, And The Truckers’ Strike

BloombergQuintOpinion

Recently, a leading transport and courier company had failed to upload mandatory information (Part B) in the Goods and Services Tax e-way bills at the time of inter-state movement of goods, on account of an alleged technical error on the e-way bill portal.

Due to this, the authorities in Madhya Pradesh initiated penalty proceedings of approximately Rs 1.32 crore against the company – Gati Kintetsu Express Pvt. Ltd., alleging non-compliance with requirements of the e-way bill legislation. Desiring relief against the penalty, the company filed a writ petition with the Madhya Pradesh High Court.

The company pleaded that there was no ill-intention on its part to defy the law and placed reliance on the Division Bench decision of the Allahabad High Court in the case of VSL Alloys (India) Pvt. Ltd. vs. State of U.P. & others. In that case, the petitioner was provided relief from a penalty on the non-filing of Part B of the e-way bill. The Madhya Pradesh High Court dismissed Gati Kintetsu’s writ petition of the company stating that the facts of both cases differ extensively since the distance was within 50 kilometres (which would not require the filing of Part B) for VSL as against 1,200 kilometres in the Gati Kintetsu case.

As a result of the dismissal of the writ petition by the Madhya Pradesh High Court, the All India Motor Transport Congress has initiated an indefinite pan-India transportation strike from July 20, 2018.

Also read: Truckers To Go On Nationwide Indefinite Strike From Friday

Based on the ruling, it appears that heavy penalties could be imposed by GST e-way bill authorities on account of non-compliance, even if it is on account of technical errors faced on the e-way bill online portal.

That said, in the Allahabad High Court ruling, the assesse was provided relief from the penalty as the distance of goods transport was within 50 kilometres, and there was no ill intention.

While the intent of introduction of the e-way bill system to curb tax evasion is understandable, and a controlled environment is required, a few things should be considered before levying a heavy penalty.

  • Whether there was any ill intention of fraud or misstatement by the assesse due to which there could be probable tax evasion.
  • Whether the assesse has enough reasons for not being able to complete the compliances, such as a technical error of filing the e-way bill on the portal.
  • Whether non-filing of part B of the e-way bill can be considered merely as a procedural lapse (as part A was filled) and a reduced penalty can be levied.

In a nutshell, where the assessee fails to be compliant with the e-way bill procedure due to technical issues faced on the online portal, the authorities could handle the matter with kid gloves and not impose hefty penal implications on the assessee, irrespective of the distance or value of goods under transportation. What began as technical difficulties on a portal is now a nation-wide strike. It is worth seeing whether the upcoming GST Council meeting addresses this, to stop it from happening again.

Jigar Doshi is an indirect tax partner at SKP Business Consulting LLP.

The views expressed here are those of the author’s and do not necessarily represent the views of BloombergQuint or its editorial team.