Check Post problems are the toughest problems for a Tax Practitioner. May it be the old Sales Tax or the Value Added Tax or the Goods and Service Tax, check post problem has been trouble for businessmen, tax practitioners and even the tax administrations. Today I have tried to take this article in form of Frequently Asked Question (FAQ) format. It’s important to note that the main provisions relating to the interception of vehicle and penalty thereof are contained in Section 68, 129 & 130 of the Goods and Service Tax Act, 2017 and Rule 138A, 138B, 138C, 138D & 138E of the Goods and Service Tax Rules, 2017. Circular 41/15/2018, Dt. 13th April 2018 can be treated as Master Circular with regards to the Check Post issues. Let’s study the problem in light of such sections, rules, Circular and some allied provisions also.
Q .1 Is the check post necessary at every border of the sates?
Ans: No, Now there are no mandatory requirements of the Check Posts at every border of the states. The Static check post under the previous Law, mainly VAT has been substituted by Mobile Check Posts.
Q 2. Who is the Proper officer for the purpose of carrying out the Check Post procedures?
Ans: As per the circular 41, the Commissioner shall by order designate the proper officer and staff to conduct the procedure of intercepting goods, inspection of conveyance etc. Usually the Superintendent of the Central Tax or the State Tax Officers are delegated the power to act as a proper officer.
Q 3. Is the E way bill necessary to be carried in Physical form?
Ans: No, E way bill is not necessary to be carried in physical form. The soft copy of the E way bill or even the SMS containing the E way bill unique number is enough for the purpose of verification. Even if the e way bill is mentioned on the invoice it is enough for the verification of E way bill.
Q 4. What is the duty of the Proper officer once he intercepts any vehicle?
Ans: At the time when the proper officers intercept the vehicle, he has to perform following duties:
EWB-03 Part A Within 24 hours of Inspection
EWB-03 Part B Within 3 Days of Inspection
The 24 hours or 3 days shall be calculated from the mid night of the day when the vehicle was intercepted.
Q 5. What is the recourse for a Taxpayer/Transporter if there is an unnecessary delay caused by the Check Post Officer?
Ans: Yes, as per rule 138D, if a vehicle has been detained for a period more than 30 minutes the transporter has been given option to intimate the same through EWB 04 on the GST Portal. Strangely the intimation of detention powers in EWB 04 has not been given to a Tax payer.
Q 6. If a vehicle has been inspected in a State or a Union Territory once, can another mobile squad can intercept and inspect the same?
Ans: No, once the vehicle has been inspected in a State or a Union Territory once, other mobile squad of the same State or Union Territory can’t inspect the same unless they have received credible information regarding the tax evasion subsequently.
Q 7. Can the vehicle carrying on the goods which are also liable to be seized?
Ans: Yes, as per the Section 129(1) the vehicle carrying on the goods which are in contravention (Which are suspected to be carrying the goods tax evaded goods) to this act or rules can also be seized.
Q 8. Is the penalty mandatory once the vehicle is intercepted and there is no E way bill?
Ans:Yes, as per section 129 of the GST Act, any contravention of the provisions of Act, Rules shall make the vehicle and goods liable to detention and seizure.
Q 9. When can the goods and the vehicle be released which are detained?
Ans: The goods and the vehicle once detained can be released on following things.
If the owner comes forward: Payment of Tax and penalty equal to 100% of Tax.
If the owner does not comes forward and Transporter pays: Payment of Tax and penalty equal to 50% of Tax.
If the owner or the transporter furnishes security equal to tax and penalty above.
In case of Exempted goods, if the Owner comes forward: The penalty equal to 2% of the total value or 25000/- whichever is lower.
In case of Exempted goods, if the Owner does not come forward and Transporter pays: The penalty equal to 5% of the total value or 25000/- whichever is lower.
Q 10. Before levying any tax or penalty is the opportunity of being heard necessary?
Ans: Yes, as per sec 129(4) of the GST act; the opportunity of being heard is necessary to be given to person concerned.
Q 11. Has the officer right to detain the goods or the vehicle after the payment of tax and penalty?
Ans: No, once the payment has been made for tax and penalty, the proceedings of detention shall be deemed to be concluded. He has no right to detention after the payment is made.
Q 12. How much time does the Owner or the transporter gets for payment of tax and penalty?
Ans: The Owner or the Transporter shall get 14 days from detention, to make the payment of tax and penalty.
Q 13. Has the officer any special powers to reduce the time limits of 14 days?
Ans: Yes, the officer has powers to reduce the time limit of 14 days to days he thinks fit if the goods are perishable in nature, hazardous in nature or has chances to depreciate.
Q 14. Is the Invoice necessary to be carried with the E way bill?
Ans: Yes, Invoice or the Delivery challan is necessary to be accompanied with the E way bill with the moment of goods.
Q 15. If the E way bill and invoice or delivery challan is produced by the person in charge of conveyance, can still proper officer proceed for inspection?
Ans: Yes, Circular 41 has made it clear that even if necessary documents are produced the proper officer may move for inspection.
Q 16. What is the procedure to be followed by proper officer when the person in charge of vehicle not able to produce invoice or e way bill?
Ans: The proper officer shall record a statement of the person in charge of conveyance in MOV-01. He shall also give an order for physical verification of conveyance in MOV-02 requiring such person to station the conveyance at place mentioned in the order and inspect the conveyance.
Q 17. What is the time limit of making inspection after Mov-02 is issued and the conveyance is stationed?
Ans: Basically there is no specified time limit for inspection of the conveyance. But the proper officer is bound to submit the primary report electronically in Part 01 of EWB-03 and upload on common portal within 24 hours of giving MOV-02.
Q 18. What is the procedure after EWB-03 is uploaded?
Ans: Part A of EWB-03 is submission of primary report of inspection. The proper officer within 3 days from serving of MOV-02 concludes the proceedings of inspection. The proper officer shall prepare a final report of inspection in MOV-04 and give the same to the person in charge of conveyance. The proper officer needs also to upload Part B of the Form GST EWB-03 within 3 days of inspection of vehicle.
Q 19. Can the proper officer ask for the extension of time in physical verification?
Ans: Yes, Proper officer can ask for the extension in the time limits of physical verification if circumstances warrant such extension. This order of extension of time has to be in Mov-03 by the Commissioner or any authorized officer and it has to be communicated to the person in charge of the vehicle.
Q 20. What if there is no discrepancy found during the physical verification?
Ans: If there is no discrepancy found during the physical verification, the proper officer has to issue a release order in MOV-05 and allow the vehicle to move further.
Q 21. What if there is discrepancy found during physical verification?
Ans: If there is discrepancy found in the physical verification than the proper officer has to issue MOV-06 and detain the vehicle.
Q 22. What is the procedure to be followed by the proper officer once the vehicle is detained?
Ans: Once the vehicle is detained, the proper officer has to issue a notice in MOV-07 to the person in charge of vehicle, specifying the amount of tax and the penalty. The order in MOV-09 has to be uploaded on common portal and the liability in the order shall be added to the Electronic Liability Register.
Q 23. What is the procedure to be followed by the Taxpayer on receipt of MOV-09?
Ans: On receiving the MOV-09, the Taxpayer has to make the payment and has to set off the amount which is credited in the Cash ledger with DRC 03.
Q 24. Can the tax payer instead of making payment furnish security?
Ans: Yes, as per section 129(1)(c), the Taxpayer or any other person other than owner submit an bond in MOV-08 along with a security in form of Bank Guarantee.
Q 25. Can the Taxpayer or other person in charge of vehicle object the valuation of the tax and penalty given in MOV-07?
Ans: Yes, the Taxpayer can object the valuation of the tax and penalty given in MOV-07. It is the duty of the officer to consider the objections and pass the speaking order in MOV-09.
Q 26. What if the tax and penalty is not paid within fourteen days of the order of detention in MOV-06?
Ans: If the amount is not paid within fourteen days of detention order, the proper officer shall serve notice in MOV-10 proposing confiscation and imposing penalty.
Q 27. Can the Proper officer without following the procedure of MOV-01 TO MOV-09 directly proceed for MOV-10?
Ans: Yes, if the Proper officer is of the opinion that the moment of goods is being effected to evade the payment of tax, he may directly invoke Section 130 of the Goods and Service Tax Act by issuing MOV-10.
Q 28. In which form the order of confiscation of goods shall be passed?
Ans: The order of confiscation shall be passed in MOV-11 by the proper officer after considering the objection filled by the Owner or other person in charge of vehicle.
Q 29. What is the effect of confiscation of goods?
Ans: Once the order of confiscation is passed, the title of the goods shall be passed to Central/State government. The proper officer shall give the Tax payer or the other person suitable time not exceeding 3 months to make the payment of tax, penalty and fine imposed in lieu of confiscation of the goods confiscation. The order in MOV-11 shall be uploaded online on portal and shall create liability in Electronic Liability Register.
Q 30. Would there be dual liability created, as the liability has already been created by MOV-09 on the common portal?
Ans: No, there won’t be dual liability as once the order in MOV-11 is uploaded on portal; the order in MOV-09 in respect of the said goods shall stand withdrawn.
Q 31. What has to be done by the proper officer, if the tax, penalty and fine are not paid within the time stipulated in the notice?
Ans: If the tax, penalty or fines are not paid within the stipulated time, the proper officer shall proceed for public auction and remit the amount to Central/State government.
Q 32. When the order has been passed by Central officer, the same shall be deemed to be orders under State/U.T act?
Ans: No, when the order has been passed by Central officer, he has to pass the order under the State/U.T. act and also Compensation Act, if applicable.
Q 33. How would be the order communicated in the case where the person is unregistered?
Ans: In case where the person is unregistered, a temporary ID would be created on common portal and the demand shall be added to the Electronic Liability Ledger.
Q .34 What is DRC-07?
Ans: The DRC-07 is the form in which the summary of MOV-09 and MOV-11 is uploaded. I have tried to cover maximum questions.
If any more questions/queries arise, it may be sent via e mail at [email protected] or what’s app: 9924121700.