Introduction: The introduction of the E-Way Bill system under the Goods and Services Tax (GST) regime in India marks a significant step towards digitizing and streamlining the movement of goods. Governed primarily by Section 68 of the CGST Act, 2017, and Rule 138 of the CGST Rules, 2017, the E-Way Bill mandates the generation of an electronic document for the transportation of goods exceeding a specified value. This mechanism aims to enhance transparency, prevent tax evasion, and facilitate seamless inter-state and intra-state trade. However, the implementation of E-Way Bill provisions has not been without its complexities, giving rise to various challenges concerning compliance, interpretation of rules, and the imposition of penalties. Businesses often grapple with issues such as technical glitches, minor discrepancies in documentation, and understanding the nuances of different types of movements covered. Consequently, judicial pronouncements have played a crucial role in clarifying ambiguities, setting precedents, and ensuring that enforcement actions are balanced and just. This paper delves into the statutory framework, compliance requirements, penalty provisions, common challenges faced by taxpayers, and significant judicial views that have shaped the E-Way Bill landscape under GST.
1. Statutory Provisions Governing E-Way Bill
Section 68 of CGST Act, 2017
“The Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be specified to carry with him such documents and such devices as may be prescribed.”
- Empowers the government to prescribe documentation for goods in transit.
- Read with Rule 138 of CGST Rules for operational guidelines.
Rule 138 of CGST Rules, 2017
Title: Information to be furnished prior to commencement of movement of goods and generation of e-way bill.
Key Provisions:
Sub-rule (1): E-Way bill to be generated for movement of goods with value exceeding ₹50,000, in cases of:
1.Supply (sale)
2. For reasons other than supply (e.g. job work, own use)
3. Inward supply from an unregistered person
Sub-rule (3): E-way bill must be generated before movement begins.
Sub-rule (5): Validity period of EWB:
- Up to 200 km: 1 day
- For every additional 200 km or part thereof: 1 extra day
- For Over-Dimensional Cargo: 1 day per 20 km
Sub-rule (7): If transporter changes vehicle mid-transit, Part B of the EWB must be updated.
Sub-rule (9): No amendment allowed to Part A once generated, except to cancel within 24 hours (if not used).
2. Types of Movements Covered
- Inter-State & Intra-State Supplies (subject to thresholds by states)
- Delivery on Approval Basis
- Branch Transfers
- Job Work or Repair
- Own Use or Exhibition
- Imports and Exports
3. Exemptions from E-Way Bill Requirement
As per Rule 138(14) and Notification No. 12/2018 – Central Tax dated 7.03.2018, no EWB is required in the following cases:
- Transport by non-motorised conveyance
- Goods exempt from tax (Annexure to Rule 138(14))
- Movement of goods within a notified 10 km limit (intra-state)
- Empty cargo containers
- Transportation from port, airport, air cargo complex, and land customs station to inland container depot or container freight station for clearance by Customs
4. Documents Required During Movement
Invoice / Bill of Supply / Delivery Challan
E-Way Bill (physical copy or digitally carried)
Transporter’s ID or vehicle number (Part B)
5. Penalty Provisions for Non-Compliance
Section 129 – Detention, Seizure and Release of Goods and Conveyances
If goods are transported without EWB or in contravention of GST provisions:
| Particulars | Taxable Goods | Exempt Goods |
| If owner comes forward | Tax + 200% penalty | 2% of value or ₹25,000 (whichever is lower) |
| If owner does not come | Tax + 50% of value (reduced ITC) | 5% of value or ₹25,000 (whichever is lower) |
Goods and vehicle are released only upon payment of tax & penalty or furnishing security.
Section 130 Confiscation of goods or conveyances and levy of penalty.
(1) where any person-
(i) supplies or receives any goods in contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or
(ii) does not account for any goods on which he is liable to pay tax under this Act; or
(iii) supplies any goods liable to tax under this Act without having applied for registration; or
(iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to evade payment of tax; or
(v) uses any conveyance as a means of transport for carriage of goods in contravention of the provisions of this Act or the rules made thereunder unless the owner of the conveyance proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance, then all such goods or conveyances shall be liable to confiscation and the person shall be liable to penalty under section 122.
(2) Whenever confiscation of any goods or conveyance is authorised by this Act, the officer adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such fine as the said officer thinks fit:
Provided that such fine leviable shall not exceed the market value of the goods confiscated, less the tax chargeable thereon:
Provided further that the aggregate of such fine and penalty leviable shall not be less than the penalty equal to hundred per cent. of tax payable on such goods
Provided also that where any such conveyance is used for the carriage of the goods or passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the confiscation of the conveyance a fine equal to the tax payable on the goods being transported thereon.
(3) Omitted by the Finance Act, 2021 and notified w.e.f 01.01.2022 via Notification No. 39/2021 – Central Tax dated: 21.12.2021. Prior to omission sun-section (3) read as under:
“(3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance.”Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance.”
(4) No order for confiscation of goods or conveyance or for imposition of penalty shall be issued without giving the person an opportunity of being heard.
(5) Where any goods or conveyance are confiscated under this Act, the title of such goods or conveyance shall thereupon vest in the Government.
(6) The proper officer adjudging confiscation shall take and hold possession of the things confiscated and every officer of Police, on the requisition of such proper officer, shall assist him in taking and holding such possession.
(7) The proper officer may, after satisfying himself that the confiscated goods or conveyance are not required in any other proceedings under this Act and after giving reasonable time not exceeding three months to pay fine in lieu of confiscation, dispose of such goods or conveyance and deposit the sale proceeds thereof with the Government.
6. Important Judicial Precedents
i. Vehicle cannot be stopped on expiry of E-Way Bill If the transaction is Genuine –
The Hon’ble High Court of Tripura in this matter held that the vehicle carrying goods ought not to be stopped/seized by the authorities on the expiry of E-way bill and instead an undertaking should be taken from the buyer or seller to appear before the assessing officers and make necessary compliance.
The Petitioner preferred the present writ petition seeking directions to the authorities to release its vehicle and the goods stopped/seized by the respondent authorities.
Held: –
The Hon’ble Court considering the fact that there is a need of bringing balance between the transportation of goods and taxing event, held that when the transaction is between the two registered dealers, there is no doubt about the genuineness of the transaction and all the relevant documents including E-way bill, as require under law, are available, the goods ought not to be stopped instead an undertaking from seller or the buyer, with intimation to the assessing officer, should be taken to appear before the concerned assessing officer and make necessary compliance. Any hindrance in the movement of goods or fray amounts to an obstacle of the development of the nation.
The Hon’ble Court took note of the fact that due to the stoppage the buyer is prevented from using the machinery for the contract entered into by him with the State. Therefore, to enhance the ease of business it is also necessary for the rule making authority to reconsider in their best wisdom whether the requirement of fixation of the period of time in the e-way bill is at all appropriate requirement in the circumstances?
The Hon’ble High Court with the above directions disposed of the writ petition directing the petitioner to appear and submit an undertaking before the check gate officer, and the check gate officer shall release the vehicle along with goods after accepting the undertaking with the appropriate information to be provided to the assessing officer of both, the seller and the buyer.
ii. Mere non mentioning of the tax payment details separately in e-way bill does not results in detention of goods
The Hon’ble Kerala High Court in this case, held as under the power of detention under section 129 is to be exercised only in cases where a transportation of goods is seen to be in contravention of the provisions of the Act and Rules and not simply because a document relevant for assessment does not contain details of tax payment. As per the statutory provisions applicable to the instant case, a person transporting goods is obliged to carry only the documents enumerated in Rule 138(A) of GST Rules, during the course of transportation. The said documents are (i) the invoice or bill of supply or delivery challan, as the case may be and (ii) the copy of e-way bill in physical form or e-way bill Number in electronic form etc. A reading of the said Rule clearly indicates that the e-way bill has to be in FORM GST EWB-01, and in that format, there is no field wherein the transporter is required to indicate the tax amount payable in respect of the goods transported. If the statutorily prescribed form does not contain a field for entering the details of the tax payable in the e-way bill, then the non-mentioning of the tax amount cannot be seen as an act in contravention of the rules. In the instant case, it is not in dispute that the transpiration was covered by a valid tax invoice, which clearly showed the tax collected in respect of the goods and an e-way bill in the prescribed format in FORM GST EWB-01. Since there was no contravention by the petitioner of any provision of the Act or Rule for the purposes of Section 129, the detention in the instant case cannot be said to be justified.
iii. No seizure order to be passed, where Goods cannot be seized, where E-way bill has been generated before the date of detention and seizure of goods and vehicle
The Hon’ble Allahabad High Court in this case, perused the relevant documents, namely, Invoice, Goods receipt, E-way Bills etc., which are enclosed as Annexures to the writ petition and found that the E-way bill under the UPGST Act has been downloaded by the petitioner, much before the detention and seizure of the goods and the vehicle, disclosing all the necessary information’s. In view of the aforesaid facts, we find no irregularity in the present transaction and, therefore, the seizure order as well as penalty notice dated 28.03.2018 issued under Sections 129(1) and 129 (3) of the Act as well as the consequential proceedings are hereby set aside.
iv. Release goods and vehicle on petitioner depositing proposed amount of tax and penalty –
The Hon’ble Allahabad High Court in this case, held that where Competent Authority had seized goods of petitioner under transport and vehicle on ground that goods were not accompanied with E-way bill, said authority was directed to release goods and vehicle on petitioner depositing proposed amount of tax and penalty.
v. If effective price of goods is less than 50,000 then detention could not be made –
The Hon’ble Kerala High Court in this case, held that where the effective value of the goods that was transported was only Rs. 8.99 as evident from Ext.P4 invoice, and the provisions of the Act and Rules mandate that an e-way bill is required only for consignments whose value exceeds Rs. 50,000/, the detention at the instance of the respondent cannot be said to be justified.
vi. Vehicle cannot be stopped on expiry of E-Way bill if the transaction is genuine –
The Hon’ble High Court of Tripura vide its order, held that the vehicle carrying goods ought not to be stopped/seized by the authorities on the expiry of E-way bill and instead an undertaking should be taken from the buyer or seller to appear before the assessing officers and make necessary compliance.
vii. No proceedings under section 129, if the mistake is bonafide – E-way Bill –
The Hon’ble High Court of Madhya Pradesh held that the proceedings under Section 129 of the Act, should not be initiated against the assessee for bonafide /clerical mistakes in E-Way Bill.
viii. Vehicle Not To Be Detained Under Section 129 When Diversion Is Due To Human Error
The Hon’ble High Court of Karnataka held that the order of detention under Section 129 (3) of the CGST Act, 2017 is not sustainable when the diversion of vehicle carrying the goods, was due to human error and it cannot be concluded that the diversion was deliberate as the driver in charge filed an affidavit to that effect, and the intended purchasers also confirmed that they were supposed to receive the said goods.
ix. Goods Not To Be Detained When Particulars Could Not Be Filled In The E-Way Bill Due To Shortcomings Of The Portal –
The Hon’ble High Court of Allahabad in this case held as under:
After considering the submissions made and the facts of the case, found that the only allegation on which the goods were seized was that Part – B of the E-way Bill was not filled up and there is no allegation that the goods in question were being transported without the payment of tax.
Further it was found that the submissions/explanations made by the petitioner for not filing the Part – B of the E-way Bill, is clearly supported by the Circulars issued by the Ministry of Finance wherein the problem arising in filling the part – B of E-way Bill was noticed and advisories were issued.
Lastly, that in the present matter no intent to evade the duty could be ascertained against the petitioner, as the vehicle in the which the goods were being transported on a Delhi number. Moreover, the issue involved in the present matter is covered with the decision of this Court in VSL Alloys India Pvt. Ltd. vs. State of U.P. and another, wherein the similar situation was dealt with by this Court.
Hence, set aside the orders passed for detention of the vehicle on the ground of not filling the Part -B of the E-way Bill.
x. Penalty u/s 129 cannot be imposed for minor typographical error in the e-way bill, where there is no intent to evade tax –
The High Court has held that a typographical error in the e-way bill without any further material to substantiate the intention to evade tax should not and cannot lead to imposition of penalty.
Further, in the case of M/s. Varun Beverages Limited (supra) there was a typographical error in the e-way bill of 4 letters (HR – 73). In the present case, instead of ‘5332’, ‘3552’ was incorrectly entered into the e-way bill which clearly appears to be a typographical error. In certain cases where lapses by the dealers are major, it may be deemed that there is an intention to evade tax but not so in every case. Typically when the error is a minor error of the nature found in this particular case, I am of the view that imposition of penalty under Section 129 of the Act is without jurisdiction and illegal in law. The Petition is accordingly allowed.
xi. No GST liability arises when goods are transported to one’s own factory from the port after Custom clearances –
The Bombay High Court has held that transportation of machinery from Jawaharlal Nehru Port Authority (JNPT) to the factory of the assessee does not constitute supply under Section 7 of the MGST Act, as it involves no consideration or transfer of title between different entities, and hence GST is not payable. Therefore, the transportation in question does not trigger GST liability. The court analyzed the applicability of Section 129 (1) of the MGST Act. Also, it was concluded that he transport of machinery from JNPT to the petitioner’s factory does not constitute “supply” under Section 7 of the MGST Act, as it involves no consideration or transfer of title between different entities.
It was observed that the applicability of Section 129 (1) of the MGST Act. The State GST Authority in the impugned order has erroneously applied the rate of GST without first satisfying itself whether the transportation to one’s own factory can at all fall within the charging section. The applicability of the rate of tax would get triggered only if a transaction falls within the meaning of the term “supply” as per Section 7 of the Maharashtra Goods and Service Tax Act (MGST Act).
The petitioner is not liable to pay GST on the transportation of machinery from JNPT to its factory. The impugned orders imposing higher penalties are modified to impose a penalty of Rs. 25,000/- only under Section 129(1) of the CGST Act.
Levy of penalty – Part B of E-Way Bills was not filled up – presumption for evasion of tax or not – existence of mens rea or not – HELD THAT:- The crux of the issue herein is that the petitioner explained the reason of non filling up of Part B of the E-Way Bills to the authorities. However, the authorities have not considered the explanation and rejected the same on the basis of only the factual aspect that the distance between Delhi and Meerut is about 75 kilometers. The presumption that has been made by the authorities that there was intention to evade tax is based only on the factual matrix that the distance between Delhi and Meerut is only about 75 kilometers, which could have allowed the petitioner to carry out multiple trips. In my view, no other material has been brought on record by the authorities to indicate that there was any mens rea on the part of the petitioner to evade tax.
The reason of presumption of evasion of tax is without any basis in law, and accordingly, the order of detention and subsequent appellate order are illegal and required to be set aside.
The order levying penalty and order dated May 18, 2019 are quashed and set-aside – The writ petition is allowed.
xiii. Imposing Heavy Penalty Not Sustainable When E-way Bill Expired During The Transit And the Assessee Was Not In A Position To Renew The Same –
The Hon’ble High Court of Tripura set aside the order imposing heavy penalty on the assessee for expiry of E-way Bill. It was found that the E-way bills expired during the transit and the assessee was not in a position to ask for its renewal to the competent authority.
7.Circular No. 64/38/2018-GST dated 14.09.2018: Modification of the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances, as clarified in Circular No. 41/15/2018-GST dated 13.04.2018 and Circular No. 49/23/2018-GST dated 21.06.2018 – regarding
Summary :
- A consignment of goods is accompanied by an invoice or any other specified document and not an e-way bill, proceedings under section 129 of the CGST Act may be initiated.
- in case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, proceedings under section 129 of the CGST Act may not be initiated, inter alia, in the following situations:
a) Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct;
b) Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN code should not have the effect of increasing the validity period of the e-way bill;
c) Error in the address of the consignee to the extent that the locality and other details of the consignee are correct;
d) Error in one or two digits of the document number mentioned in the e-way bill;
e) Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct;
f) Error in one or two digits/characters of the vehicle number penalty to the tune of Rs. 500/- each under section 125 of the CGST Act and the respective State GST Act should be imposed (Rs.1000/- under the IGST Act) in FORM GST DRC-07 for every consignment.
8. Conclusion & Recommendations
While the E-Way Bill framework enhances tax transparency and compliance, the enforcement must align with principles of fairness and proportionality. Courts have repeatedly held that technical breaches without mala fide intent should not attract harsh penalties.
Use robust compliance practices
Stay updated with judicial trends
Ensure correct documentation at dispatch and transit
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