Police Authorities have no power to check invoices/e-way bills of goods in transit- Need for issuance of Directions by State Government
In recent years, the unauthorized interception of goods vehicles by police to check invoices and e-way bills has become a significant issue, causing disruptions and unnecessary harassment for businesses. Despite clear guidelines indicating that only GST officials have the authority to conduct such checks, police intervention continues. This practice not only undermines the ‘Ease of Doing Business’ policy but also opens avenues for corruption. This article delves into the legal framework governing the interception of goods in transit, highlights a landmark judgment from the Allahabad High Court, and underscores the urgent need for state governments to issue directives to curb this illegal practice.
Before deliberating on the subject, it would be relevant to refer to the communique of the Directorate General of Taxpayer Services, Central Board of Indirect Taxes & Customs as available on their official website www.cbic.gov.in regarding power of enforcement in relation to Electronic Way Bill issued under GST which reads as under:
“Enforcement-
The Commissioner or an officer empowered by him in this behalf may authorise any officer to intercept any conveyance to verify the e-way bill or the e-way bill number for all inter-State and intra-State movement of goods. The physical verification of conveyances may also be carried out by the proper officer as authorised by the Commissioner or an officer empowered by him in this behalf. Physical verification of a specific conveyance can also be carried out by any officer, on receipt of specific information on evasion of tax, after obtaining necessary approval of the Commissioner or an officer authorised by him in this behalf.
A summary report of every inspection of goods in transit shall be recorded online by the proper officer in Part A of FORM GST EWB-03 within twenty-four hours of inspection and the final report in Part B of FORM GST EWB-03 shall be recorded within three days of such inspection.
Once physical verification of goods being transported on any conveyance has been done during transit at one place within the State or in any other State, no further physical verification of the said conveyance shall be carried out again in the State, unless a specific information relating to evasion of tax is made available subsequently.
Where a vehicle has been intercepted and detained for a period exceeding thirty minutes, the transporter may upload the said information in FORM GST EWB-04 on the common portal.
No confiscation in case of minor typographical mistakes ”
From the foregoing, it is crystal clear that the power to intercept a vehicle is vested only on the officer who has been duly authorised in this behalf by the GST Commissioner. This exercise has not be carried out in a routine manner but when there is specific information in this regard.
A question therefore arises is that from which statute or power does the police have right to intercept a vehicle and to check the invoice/ e-way bill of the goods being transported in the vehicle? Is this action illegal and tantamount to misuse of power by the ‘khaki’?
It would be trite to refer to the Landmark Judgment of the division bench of the Allahabad High Court in the case of Vishal Gupta vs State of U.P. And Another decided on 25 August, 2021(AIRONLINE 2021 ALL 2599).
The brief facts of the case are that 5 bags of cut supari & 3 bags of tobacco were found on search of Omni vehicle. According to police, the driver could not show the papers of the vehicle and as the packets did not have Batch number, name of manufacturer & company Registration number, the police inferred that the material was illegal and accordingly a first information report (FIR) dated 20.02.2021 was registered as Case Crime No. 0015 of 2021 under section 420 (Cheating and dishonestly inducing delivery of property),188 I.P.C. (Disobedience to order duly promulgated by public servant) & section 63 of the Copy right Act in the police station Nandi Gaon District Jalaun. The accused pleaded that he is engaged in supply of goods in market. The only allegation in the impugned first information report is that on being asked by the Sub Inspector Police, the petitioner could not show valid papers relating to transportation of betelnuts and tobacco.
The Court observed that the basic requirement of presence of two witnesses was absent. The Court also observed that the alleged act does not prima facie fall within the meaning of the word “cheating” and no case is made out under Section 420 I.P.C. Section 188 I.P.C. relates to disobedience of the order promulgated by a public servant. The Court also noticed that the impugned first information report does not reveal that the petitioner has disobeyed the order promulgated by a public servant. Similarly, the Court held that prima facie the ingredients of an offence under Section 63 of the Copy Right Act were non existent. Thus, the Court opined that the FIR was malicious and gross abuse of power by the Sub Inspector of Police. The Court categorically held that only the GST officials had power to check the invoiced but police had no authority to check invoices/ e-way bills. The Court held thus:
” If the goods were not accompanied by proper documents for transportation, it is only the authorities under the U.P. Goods and Service Tax Act, 2017/Central Goods and Service Tax Act, 2017 and I.C.S.T. Act, 2017, as the case may be, are empowered to check and take action in accordance with law, as provided under the relevant Acts and Rules. But the police has no authority to check invoices etc. and accounting the goods during transportation.”
The Court thus held that the impugned FIR, prima facie, reflects ill intention of the Police Sub Inspector and obstruction in free flow of trade and commerce. The Court was annoyed by the conduct of the Police officials involved in the case and held thus:
“Despite our repeated orders, the respondents are not able to show their authority to interfere with the movement of goods in the normal course of business. They have also not been able to show the commission of any cognizable offence under Indian Penal Code or under any other criminal law as well as their authority to register the impugned FIR with respect to the goods in question.”
The Court expressed it’s displeasure that there have been no change in the approach of respondents authorities to protect their gross illegal, arbitrary and unconstitutional action and asked the police officials to show cause that why appropriate orders, adverse to them, may not be passed and why the exemplary cost may not be imposed. The Court also directed the Additional Chief Secretary, Home to produce the policy of ‘Ease of Doing Business’. The ACS (Home) tendered his unconditional and unfettered apology before the Court for the inconvenience caused to the Court inadvertently. It was also averred that the concerned Police officials responsible for the illegal action have been placed under suspension and a departmental inquiry had been ordered against them. It was also brought to the knowledge of that the charge sheet pursuant to the impugned FIR had been withdrawn.
The Court deprecated the conduct of the State Government for protection of trade, commerce and industry from grossly illegal, unauthorised or unconstitutional actions of government officers/ employees at all levels. The Court criticised the efforts of the State Government and observed thus:
“7. During the course of submissions, the Additional Chief Secretary (Home) through the learned Additional Advocate General, has produced a note on “Ease of Doing Business” policy but perusal thereof shows that no step has yet been taken by the State Government to protect trade, commerce and industry from grossly illegal, unauthorised or unconstitutional actions of government officers/ employees at all level, particularly at the ground level. If steps in this regard are taken by the State Government then it may prove to be a boon for the policy of “Ease of Doing Business,” economy of the State and job opportunities to people, on one hand and on the other hand it may strengthen public faith in the Rule of Law.”
The Court directed the ACS (Home) to ensure that Police authorities do not act without authority of law and do not interfere with the movement of goods in the ordinary course of business except by authority of law. Disposing the writ petition and observed thus:
“Therefore, the writ petition is disposed off with the direction that the Additional Chief Secretary (Home) shall take all necessary steps to ensure that police authorities may not act without authority of law and may not interfere with the movement of goods in the ordinary course of business except by authority of law and the policy of the State Government “Ease of Doing Business” is implemented in letter and spirit. The respondent No.1 and 4 shall ensure that the departmental proceedings initiated against the erring officers as stated in the aforequoted paragraphs of the affidavit of Additional Chief Secretary (Home), are concluded in accordance with law within THREE MONTHS.”
Three years have elapsed since the Division Bench of the Allahabad High Court pronounced this historic judgment. However, there is hardlly any change witnessed in this regard on the ground level in all states of our country including the State of Uttar Pradesh. It is a matter of great concern that the binding declaration of law by the Court is not being followed by the Police Authorities in it’s true spirits. There is urgent need of bringing awareness both amongst the business/trade/industry as well as amongst the Police Authorities.
After the authoritative pronouncement of the Division Bench of the Allahabad High Court in this regard, it is imperative that Directions be issued by all Governments of States & Union Territories that the police authorities have no legal right to intercept any vehicle for checking the GST invoice/ e-way bill. This will not only curb corruption at this level but would foster the much committed ‘Ease of Doing Business’.
Conclusion: Three years since the landmark judgment, the issue of unauthorized police checks on goods vehicles remains prevalent. This persistent problem underscores the need for state governments to issue explicit directives ensuring that only authorized GST officials conduct such checks. By doing so, they can uphold the principles of ‘Ease of Doing Business,’ reduce corruption, and protect the legitimate rights of traders and businesses. It is imperative for both business communities and police authorities to be made aware of the legal boundaries and to act within them, fostering a more conducive environment for trade and commerce.
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