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Why are expired e-way bills such a big deal?

  • Aug 6, 2020 | Divita S Gupta

When the Centre implemented a nationwide lockdown two months ago, close to 20% of the 75 lakh commercial vehicles that ply across the country were stranded on national highways with consignments worth thousands of crores. These trucks are carrying consignments that range from motor vehicles and consumer durables like air conditioners and refrigerators to raw materials cement and steel.

While the Centre is doing what it can to support the stranded truckers and unclogging traffic, the problems for these consignment vehicles are only just beginning. Even if the lockdown is lifted, consignment trucks are not going to be able to cross State borders as the e-way bill generated for the consignment vehicle is likely to have crossed its date of validity.

So even if a vehicle will attempt to cross a state border, the transporters will be heavily penalised and will have to deal with increased burden of compliance. This will further delay the movement of goods that are well past their delivery deadline.

To safeguard the interests of the trucks, the All India Motor Transport Corporation as well as the All India Transporters Welfare Association requested extensions on validity of e-way bills. A week after implementing the lockdown, the Finance Ministry announced an extension on the validity of e-way bills which were set to expire between March 20th and April 15th 2020. These e-way bills would now be valid up to April30th. But since the lockdown was extended beyond May and a number of States including Uttar Pradesh, New Delhi, Madhya Pradesh and Maharashtra sealed their borders, the movement of these consignments is indefinitely delayed. Since then, the Centre has announced a second extension of validity of e-way bills up to May 31st. However, if the lock down continues into June, the Centre might have to announce a third extension. AITWA has already submitted a request to the Central Board of Indirect Taxes and Customs to further extend the validity to June 30th.

Why are expired e-way bills a challenge?
To understand why expired e-way bills are a challenge, we must understand what is an e-way bill and what is the meaning of validity of an e-way bill. In a nutshell, an e-way bill is an electronic document that is generated online on the GST portal evidencing the movement of goods from one place to another. It is a mechanism for compliance wherein there is a provision for the supplier/person in charge of moving the goods to upload all the relevant information before the shipment is transported to generate an e-way bill through the GST portal.

The validity of the e-way bill is dependent upon the distance of the consignment journey. This is usually one day per 100 kilometres. So if a truck is indefinitely stranded on a national highway or at a warehouse, its e-way bill validity is obviously beyond the relevant date of issue. When a consignment vehicle attempts to cross a state border without a valid e-way bill, it will be stopped at the checkpoint and will face either a monetary penalty or detention and seizure or both.

Moving goods without a valid e-way bill constitutes an offence and can attract a minimum penalty of ₹10,000 or the tax that is sought to be evaded, whichever is higher in value. Authorities can even detain the vehicle that is being used to transport the consignments and seize the entire consignment, adversely affecting the business providing the transport services as well as the businesses that ordered and supplied the consignment. Under such a situation, the consignment owner will be required to pay the 100% of the tax payable or 50% of the value of goods. Imagine the amount payable if a consignment carrying motor vehicles was seized and detained.

Obviously, because the Coronavirus outbreak and subsequent lockdown is an unexpected phenomenon, the Centre is unlikely to impose harsh measures or heavy penalties on vehicles carrying expired e-way bills, so consignment owners can breathe easy. 

Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Divita S Gupta
Avalara Author Divita S Gupta
Divita has served as a writer and editor for top financial services organizations in India. She has written on topics like mutual funds, insurance, taxes, SME financing for globally recognized banking and financial organizations including ICICI, Aditya Birla Group, News Corp. With a Masters in Business Administration from Symbiosis International University, she currently owns a small business in Mumbai.

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