With the introduction of the Goods and Services Tax (GST) on July 1, 2017, the landscape of indirect taxation in India transformed. Among the many compliance mechanisms introduced under GST, the e-way bill system stands out as a crucial tool to monitor and regulate the movement of goods. One of the notable shifts that occurred after the GST rollout was the dismantling of physical checkpoints or barriers at state borders, especially for goods transported by road. This change aimed to facilitate faster and smoother interstate transportation. However, the absence of physical verification posed risks such as the possibility of tax evasion, illegal transport of goods, and loss of revenue to the government. To address this concern, the e-way bill mechanism was introduced as a digital tool for tracking the movement of goods, ensuring transparency, and improving compliance under GST.
Statutory Provisions Related to the E-Way Bill
The e-way bill framework is embedded within the Central Goods and Services Tax (CGST) Rules, 2017. Specifically, the legal basis for the e-way bill lies in the rules 138, 138A, 138B, 138C, 138D, and 138E. These rules have been amended over time to strengthen the system, resolve ambiguities, and ensure ease of operation for taxpayers, transporters, and enforcement officials.
Supporting Documents and Guidance
To ensure clarity in the implementation of the e-way bill provisions, various support materials have been made available by the authorities. These include Frequently Asked Questions (FAQs) issued by the Central Board of Indirect Taxes and Customs (CBIC), which clarify common queries faced by stakeholders such as suppliers, recipients, and transporters. In addition, the e-way bill system offers a user manual that provides detailed procedural guidance for taxpayers, including step-by-step instructions on using the digital portal for generating and managing e-way bills. These documents serve as essential tools to understand the nuances of e-way bill generation and compliance.
Inspection and Enforcement Mechanism
In support of monitoring goods in transit, CBIC issued Circular No. 41/15/2018-GST dated April 13, 2018, later amended on June 21, 2018. This circular outlines the procedure for interception of conveyances, inspection of goods in movement, detention, release, and confiscation in case of contraventions. This procedure plays a pivotal role in ensuring that non-compliant goods are flagged during transportation and that necessary legal actions are taken against offenders.
Restriction on E-Way Bill Generation Due to Non-Filing of Returns
Rule 138E of the CGST Rules, amended on May 18, 2021, introduced a critical compliance requirement. It restricts the ability to generate e-way bills if the registered person has defaulted in filing essential GST returns. Specifically, an e-way bill cannot be generated in respect of any outward movement of goods by a registered person if the person has not filed the quarterly statement in Form CMP-08 under the composition scheme for two consecutive quarters or has not furnished the GSTR-3B return for two consecutive tax periods. Additionally, if the GSTR-1 form, which contains details of outward supplies, is not furnished for two tax periods or quarters, the e-way bill generation will be blocked. Furthermore, if a person’s GST registration has been suspended under Rule 21A(1), 21A(2), or 21(2A), the restriction on e-way bill generation will apply.
Exceptions to the Blocking Rule and Commissioner’s Discretion
There are provisions for lifting the restriction on e-way bill generation in genuine cases. A registered person facing the block may apply Form GST EWB-05 to the jurisdictional commissioner. If the commissioner is satisfied with the explanation and supporting documents, an order in Form GST EWB-06 may be issued to permit the furnishing of details in Part A of the e-way bill form, subject to conditions. No rejection of such an application can be made without providing the applicant with a reasonable opportunity of being heard. In essence, this provision balances enforcement with fairness by allowing genuine taxpayers an avenue to restore their compliance status.
Temporary Relaxation During the COVID-19 Period
During the critical period between March 20, 2020, and October 15, 2020, the requirement to block e-way bill generation for non-filers was relaxed. This temporary exemption acknowledged the practical challenges faced by businesses due to the COVID-19 pandemic, which disrupted normal operations and compliance schedules.
Process for Unblocking the E-Way Bill Generation Facility
As per guidelines issued on November 28, 2020, a taxpayer whose e-way bill generation facility has been blocked can submit an application online through the GST portal. After logging in, the taxpayer must navigate to the ‘My Applications’ section under ‘User Services’ and select the appropriate application type. The application must be submitted in Form EWB-05 along with up to four supporting documents. Once submitted, the application appears on the dashboard of the jurisdictional tax officer, who may issue a notice for a personal hearing. The taxpayer can then file a reply online along with any additional documents. Based on the proceedings, the officer may issue an order in Form EWB-06 approving the request. If the request is approved, the e-way bill generation facility will be restored for the duration specified. If rejected, the facility remains blocked until the taxpayer files the pending returns.
Consequences of Non-Compliance and Penalties
Transporting goods without a valid e-way bill can attract heavy penalties. Goods found in transit without an e-way bill are liable to be seized. The taxpayer must pay tax and a penalty equal to the tax amount to release the goods. If tax and penalty are not paid, the goods may be confiscated under section 67(2) of the CGST Act. The release of goods can be secured by executing a bond with security. Courts have supported strict adherence to these provisions. In one landmark case, the Supreme Court held that seized goods should only be released according to the statutory provisions. Similarly, in another instance, a typographical error in entering the distance in the e-way bill led to a discrepancy in the bill’s validity period. The error was found to be minor and not sufficient to attract a penalty. In yet another case, a transporter failed to update the truck number due to poor network connectivity. The correction was made within two hours. Recognizing this as a procedural lapse, the authorities imposed a nominal penalty of Rs 10,000 instead of the initially proposed penalty of over Rs 16 crore.
Integration with the Vaahan System
The e-way bill system has been integrated with the Vaahan system maintained by the Transport Department. This integration allows automatic verification of vehicle registration numbers. If the number entered in the e-way bill does not match the records in the Vaahan database, the system prompts the user to correct the number. If the user believes the number is correct, they may proceed but are advised to update the details in the Vaahan database to avoid issues in future e-way bill generations.
Use of Temporary Vehicle Numbers
For vehicles with temporary registrations, the system allows entry of temporary registration numbers prefixed with ‘TR’. These entries are not verified against the Vaahan database but should be corrected once permanent registration is obtained.
Verification of Vehicle Details in the Vaahan System
The Vaahan system provides a national-level search interface for checking the status of registered vehicles. Users can confirm whether their vehicle registration number is valid and accurate, which helps avoid complications while generating e-way bills.
Real-Time Vehicle Tracking Through Fastag and Vaahan Integration
The e-way bill system has further been integrated with the Fastag system used at toll plazas. Fastag captures data about vehicle movement at toll booths. When combined with vehicle registration data from Vaahan, authorities get real-time insights into vehicle movement patterns. This enables effective enforcement, detection of fraud, and better monitoring of goods in transit using automated tools and mobile apps. These upgrades, introduced in May 2021, reflect the government’s move toward data-driven compliance enforcement.
Road and Ship Transport Integration
A significant improvement introduced on June 1, 2021, allows users to update the mode of transport to ‘Ship/Road cum Ship’. This feature is useful when goods are first moved by road and then by ship. It allows the entry of both vehicle number and bill of lading details in the e-way bill. This update enables better tracking of multi-modal transportation and helps in availing benefits under Over Dimensional Cargo (ODC) movement policies.
HSN Code Requirement for Job Work Consignments
When goods are sent for job work, the e-way bill must contain at least one Harmonized System of Nomenclature (HSN) code related to goods. Only entering a Services Accounting Code (SAC), such as 99 for services, is not sufficient. This requirement, introduced on March 17, 2021, ensures accurate classification and monitoring of goods even during job work transactions.
When Is an E-Way Bill Required?
An E-Way Bill is required when there is a movement of goods in a vehicle or conveyance of value exceeding ₹50,000, either due to a single invoice or through a bill or delivery challan. This is applicable in the case of supply, return, inward supply from an unregistered person, or any other reason for movement. The registered person causing the movement of goods—either as consignor, consignee, or transporter—is responsible for the generation of the E-Way Bill. If the supplier does not generate the E-Way Bill, the transporter must generate it based on the information provided by the supplier.
Who Can Generate an E-Way Bill?
An E-Way Bill can be generated by the consignor, consignee, or transporter, depending on the situation. If the goods are handed over to a transporter for transportation by road, the E-Way Bill must be generated by the transporter. If goods are transported by the registered person as consignor or recipient of supply as consignee in their vehicle or a hired one, the E-Way Bill needs to be generated by that person. Unregistered persons are also required to generate an E-Way Bill if they are causing the movement of goods. However, if the recipient is registered, it becomes the recipient’s responsibility.
Validity of an E-Way Bill
The validity of an E-Way Bill depends on the distance the goods need to be transported. For regular vehicles or transportation other than over-dimensional cargo, the validity is one day for every 200 km or part thereof. For over-dimensional cargo, the validity is one day for every 20 km or part thereof. The validity period is counted from the time of generation of the E-Way Bill. In exceptional cases, the validity of the E-Way Bill can be extended by the generator, either before or after its expiry, but within the prescribed rules.
Documents Required During Transit
The person in charge of the conveyance must carry the following documents during the movement of goods: a tax invoice, bill of supply, or delivery challan, and a copy of the E-Way Bill or the E-Way Bill number mapped to a Radio Frequency Identification Device (RFID) embedded on the vehicle. This ensures that any GST officer can verify compliance with the provisions of the GST law related to the movement of goods.
Rejection and Cancellation of E-Way Bill
If the goods are not transported as per the details mentioned in the E-Way Bill or the consignment is canceled, the E-Way Bill must be canceled electronically on the common portal within 24 hours of its generation. However, an E-Way Bill cannot be canceled if it has been verified in transit. Rejection may also occur if the details provided do not match or if the consignment is not accepted by the recipient. In such cases, the consignor must initiate the cancellation or correction process.
Consolidated E-Way Bill
A transporter can generate a consolidated E-Way Bill, which is a single document containing multiple E-Way Bills for multiple consignments. This is helpful when the transporter is carrying multiple consignments in one vehicle. It simplifies the compliance process and helps in faster checks during transit. However, it does not replace individual E-Way Bills, which still need to be generated for each consignment.
E-Way Bill Generation for Various Modes of Transport
The E-Way Bill can be generated for goods being transported by road, air, rail, or waterways. In road transport, the registered person or transporter can generate the E-Way Bill on the common portal. For air, rail, or vessel transportation, the E-Way Bill needs to be generated before the goods are handed over to the respective carrier. It is essential to provide the transporter document number, such as the airway bill number or railway receipt number, while generating the E-Way Bill. This ensures that movement through different transportation modes remains compliant with GST provisions.
E-Way Bill in Case of Imports and Exports
For import transactions, an E-Way Bill must be generated by the registered person when the goods move from the port, airport, air cargo complex, or land customs station to the inland location of the importer. In such cases, details such as the bill of entry must be mentioned in the E-Way Bill. For exports, when goods are moved from the business premises to the port, airport, or land customs station for export, an E-Way Bill is also required. Export invoice details must be provided, and the mode of transportation selected must correspond with the export channel.
E-Way Bill for Job Work
When goods are sent from a principal to a job worker, the E-Way Bill must be generated even if the value is less than ₹50,000. This is mandatory under the GST rules. Either the principal or the job worker, if registered, can generate the E-Way Bill. This provision ensures proper tracking and compliance with goods movement under the job work procedure. The same applies when the goods are returned after processing.
E-Way Bill for Delivery to Unregistered Persons
In cases where a registered supplier is delivering goods to an unregistered person, the supplier must generate the E-Way Bill if the value exceeds the specified threshold. The name and address of the unregistered recipient must be included, along with the necessary transport details. The responsibility lies entirely with the registered supplier since the unregistered recipient is not covered under the GST portal and cannot generate an E-Way Bill.
Impact of E-Way Bill on Supply Chain Efficiency
The introduction of the E-Way Bill has significantly enhanced supply chain transparency and reduced tax evasion. It has also minimized physical documentation and border delays. Since tax officials can now verify shipments electronically, businesses experience faster movement of goods, lower transit times, and better compliance. The central tracking mechanism also enables real-time monitoring, improving logistics efficiency and reducing operational bottlenecks.
Penalties for Non-Compliance with E-Way Bill Rules
Failure to generate or carry an E-Way Bill when required may result in hefty penalties and seizure of goods and vehicles. Under Section 129 of the CGST Act, goods transported without valid documents are liable to be detained or confiscated. The penalty could be 100% of the tax payable or ₹10,000, whichever is higher. Businesses must remain diligent in their documentation to avoid disruptions and legal complications during transit.
Validity of E-Way Bill
The validity of the E-Way Bill depends on the distance the goods are to be transported. For regular vehicles and transportation modes other than over-dimensional cargo, an E-Way Bill is valid for one day for every 200 kilometers or part thereof. For over-dimensional cargo, the validity is one day for every 20 kilometers or part thereof. The validity period starts from the date and time of the generation of the E-Way Bill. The person in charge of the conveyance must complete the movement of goods within this validity period. Extensions can be granted in exceptional cases due to natural calamities, transshipment delays, or vehicle breakdowns, provided the extension is sought before the expiry of the original period.
Cancellation of E-Way Bill
An E-Way Bill can be canceled within 24 hours of its generation if the goods are not transported or if there is any error in the entry. Cancellation is not allowed if the E-Way Bill has already been verified in transit by a proper officer. Cancellation ensures that incorrect or unused E-Way Bills do not remain active in the system, which could otherwise lead to confusion or misuse.
E-Way Bill and RFID Integration
The government has mandated the use of Radio Frequency Identification Devices (RFID) for certain categories of transporters. The E-Way Bill number needs to be embedded in the RFID tag and fixed on the vehicle. This system allows for automated verification at check posts and reduces the need for manual intervention. RFID integration is a step toward improving compliance and reducing delays in cargo movement.
Role of GST Officers in E-Way Bill Verification
GST officers have the authority to intercept any vehicle to verify the E-Way Bill during transit. They can inspect the goods and documents and upload a summary report on the GST portal within 24 hours. If necessary, a final report must be submitted within three days. In case of detention beyond 30 minutes, the transporter can upload a complaint on the portal. This system ensures accountability and provides relief to transporters against undue delays.
Exemptions from E-Way Bill Requirement
Certain goods are exempted from the requirement of an E-Way Bill, such as live animals, fresh fruits and vegetables, and certain postal baggage. Exemptions also apply for specific transactions, such as transport of goods under customs supervision, movement within notified areas, or goods transported for non-supply purposes like exhibitions. These exemptions simplify compliance for certain sectors and scenarios.
E-Way Bill and Invoicing Systems
The E-Way Bill system is integrated with the GST invoicing process. It captures data such as invoice number, date, value, and HSN code. This reduces duplication of entries and ensures consistency across systems. Integration with e-invoicing, which is mandatory for businesses above a certain threshold, ensures that the E-Way Bill is auto-generated in many cases. This seamless connection between invoicing and transport documentation strengthens the GST compliance ecosystem.
Conclusion
The E-Way Bill is a vital part of the GST regime, ensuring transparency and accountability in the transportation of goods. It helps reduce tax evasion, improves logistics efficiency, and promotes ease of doing business. While it brings compliance obligations for taxpayers and transporters, its role in digitizing and streamlining the supply chain process is significant. Businesses must stay updated with evolving rules and ensure timely and accurate E-Way Bill generation to avoid penalties and disruptions in movement.