The Allahabad High Court set a precedent as it announced its ruling (that is the first) on documents the are required to transport goods under the Goods and Services Tax. The court has categorically stated that tax authorities cannot seize goods if they are not accompanied by a physical copy of the e-way bill. The e-Way bills can be stored in electronic form on a cell phone or other devices.
Before the GST regime came into existence in July 2017, and before the E-Way bill came into existence this year, the Indian logistics sector was regulated by VAT and CST. During that phase, bills had to be filled physically with the relevant government authorities for transporting goods. Both suppliers and transporters had to face a lot of hassles due to the above provision. There used to be unnecessary delay at check-posts as even slight discrepancies in paperwork resulted in goods being seized or the supplier or recipient of the goods being summoned.
The method that was in use for transporting goods previously was that dealers could move the goods first and could then inform the concerned department. Needless to say, this created a lot of problems as malpractices were rampant and the government was losing out on valuable revenues. However, in Karnataka, the concept of e-Delivery Note was introduced that made it compulsory for every transporter of goods to inform the concerned department about any transaction before the actual movement of goods. However, due to the difficulty in obtaining printouts, the e-Delivery Note process was changed to e-Sugam. This made the dealers responsible for generating the WayBills and not the transporters.
However, the e-Way Bill introduced by the government in 2018 has a lot of benefits. The Bill can be generated electronically or by sending a SMS. The transport time for goods is also reduced as there are no requirement for checkposts under the GST system. There are other benefits as well.
The decision of the Allahabad High Court comes in the backdrop of a case where tax authorities had seized the goods of the seller as the goods were being transported without any physical copy of the e-Way Bill and the tax invoice was kept in a sealed envelope. However, the invoice that indicated tax returns had been charged and they the e-Way bill had been downloaded before the goods were seized. The petition against the seizure was filed by Bhumika Enterprises.
Pratik Jain, the indirect tax leader of PwC has said,
“This is perhaps the first decision after the introduction of e-way bills.”
He further stated,
“While businesses need to ensure that an e-way bill is generated before the movement of goods commences, the authorities also need to see all the facts before goods are seized which is really an extreme step.”