Changes in E-way bill from 1st January 2022

I have compiled this article to discuss a critical radical change that is happening in the E-waybill GST Regulatory Framework.

I have used these two words "Critical" and "Radical" together because of the nature of this change and how a small change can have a huge impact on every business sector.

What is the norm as of now?

Before I talk about the upcoming change, it is important to understand the current provisions and the legal process that takes place whenever a truck is stopped by a GST official.

Whenever an official finds out a lapse in the documents produced by the truck driver like the Tax Invoice or E-Way Bill or if there is a mismatch in quantity or description at the time of interception, the goods and the truck are seized at the spot.

The officer then asks for the amount of due tax and the same amount as the penalty to release the goods. The case although is different if someone other than the owner comes to get the seized goods. In that case, the penalty amount is equal to the value of goods minus the amount of tax chargeable on the goods.

The concerned business also gets an option for the provisional release of goods by paying the due amount using bonds and securities. The explanation given by the business at the time of interception and after that plays a big role.

What usually happens in these cases is that the businessman files an appeal after getting the goods released against the order to get the tax and penalty paid released by the Department.

The usual argument is that tax cannot be paid twice for the same transaction. This helps them get the amount of tax refunded, however, the refund for the amount of penalty depends on the reply given to the show cause notice, quality of appeal drafting, and explanation given during the personal hearing. The appeal will be filed against a 10% pre-deposit for the stay of demand in case liability is discharged through bond and security.

In the cases of non-payment or furnishing security, the process of Confiscation is initiated by the Department and in some cases, the Department might also collect the due amount by auctioning the goods and the truck/s.

Let's talk about the changes coming in from January 1, 2022

Instead of paying the tax and penalty like the present rules, the accused will have to pay a fine of twice the amount of the tax. The whole amount will come under the category of penalty and nothing will come under the name of the tax amount.

This means that after applying for the refund, you will either get back the entire amount or nothing at all, compared to at least getting the tax amount as per the current scenarios.

The provision for giving bonds for the release of goods will also be removed as section 129 has been delinked from section 67. In cases where anybody other than the owner comes to get the seized goods and the truck, the amount of penalty shall be equal to the value of the goods.

If someone does not come forward and does not pay a fine for the goods, the truck driver will have to pay a tax applicable on goods subject to the maximum fine of Rs 1 lakh for getting his/her truck released. The process of interception-verification-detention has to be completed normally within the time frame of 22 days. Pre-deposit for the stay of penalty has also been increased to 25% from 10% before Commissioner (Appeal).

What does this mean for the business community?

The one thing that we may learn from this is that we must take the e-way bill very seriously and take extra care to ensure your company is following all the rules. We should also be aware that the department has also started demanding e-way bill matching these days.

We can prevent loads of tensions and lakhs in fines by taking due care and following all the GST rules and regulations.

From The Authors Desk

E-way bill has been turned out to be a great tool to curb malpractices carried out to evade taxes and helps a lot to keep a check on the goods that are actually being transported and mentioned in the invoice and Eway bill.

Every effort has been taken to make this article short and precise so that one can get an idea of recent changes to be implemented with effect from 01.01.2022 only having a glance through it , any suggestions and improvements will be welcomed and highly appreciated.