Goods in transit are subject to inspection, verification, and detention by tax authorities to ensure compliance with GST regulations. This process can be complex and time-consuming for businesses, as it involves navigating various rules and procedures across different states and jurisdictions. Understanding the legal requirements and procedures for inspection, verification, and detention of goods in transit is crucial for businesses to ensure smooth and efficient transportation of their goods.

E-way bills are primarily used to enable efficient transit of goods through checkpoints. Let’s look at the many steps that are taken when transporting goods from one location to another. When the products are prepared for transport, the transporter must ensure to carry an invoice and an e-way bill or e-way bill number.

Investigation or Interception by an Appropriate Officer

An appropriate authority may inspect vehicles transporting goods to verify the contents or examine the validity of the paperwork. However, if a physical verification of identical products has already been conducted in any state or union territory, the officer cannot conduct another one. In case of suspected tax fraud, the officer may make an exception and stop the vehicle for inspection.

Documents Required for an Inspection or Interception

Following the interception, the officer must file the following documentation:

1. Within 24 hours of the examination, a summary report in Form GST EWB-03 Part A.
2. Within three days of the inspection, a final report in Form GST EWB-03 Part B.

Transporter’s Inability to Provide Documents

The authorised officer must take the following actions if the transporter refuses to deliver the documentation requested for verification: 

1. Fill out Form GST MOV- 01 with the transporter’s statement. 
2. Fill out Form GST MOV- 02 to issue an order to inspect goods. 
3. A report in Form GST MOV- 04 must be updated after the case is over.

Consequences of the Discrepancy Found or Not

Given below are some of the consequences of discrepancies being found in different situations:

No Discrepancy Observed During the Inspection

An order in Form GST MOV-05 shall be passed, releasing the vehicle and goods, and the vehicle may proceed if no anomalies are discovered throughout the inspection and verification process. The abovementioned procedure shall be completed immediately and three days after the inspection order.

On Inspection, a Discrepancy was Discovered

The officer may take the following steps if they determine that the goods need to be held after the inspection and verification process:

1. Give detention notice using Form GST MOV- 06
2. A notification levying the tax and penalty using Form MOV-07

Action to be Taken by the Owner as per the Order

The owner of the goods may do any of the following after receiving the notice to pay tax and penalty:

1. Accept the tax and penalty.
   • Pay the tax and penalty.
   • Furnish a bank guarantee equal to the given amount.
   • The tax should be paid along with the penalty within 7 days. 
   • Hereafter, an order releasing the goods is passed in Form GST MOV-05.

2. Contest the penalty and tax.
   • In this situation, the officer must consider the objections and pass a speaking order in Form GST MOV-09. 

Consequences of not Paying Taxes and Penalties

The officer must serve a notice proposing to seize the items and vehicle if the specified amount is not paid or he suspects tax evasion.

1. The tax, penalty, and fine in lieu of confiscation that must be paid must be specified in the notice. This sum must be paid in three months.
2. The officer must give the taxpayer a chance to be heard before making a final decision.

Passing of Final Order

Form GST MOV-09 will be withdrawn, and Form GST MOV-11 will be used to pass the final order. The common portal must also be updated with an order summary. When a vehicle is seized, the vehicle’s name and contents are given to the central government; after a fine has been paid, the vehicle is returned.

When the taxpayer is unregistered under the situations mentioned above, a temporary ID must be generated to process the payments. Below is a table with a summary of the different forms involved.

Form Name	Purpose
GST MOV-01	Statement of owner, driver or person in charge of the vehicle
GST MOV-02	Order for physical verification and inspection of goods, conveyance or documents
GST MOV-03	Order for extension of time beyond 3 days for inspection
GST MOV-04	Physical verification report
GST MOV-05	Release order
GST MOV-06	Order of detention
GST MOV-07	Notice specifying the tax and penalty amount
GST MOV-08	Bond for provisional release of goods/ conveyance
GST MOV-09	Order of demand of tax and penalty
GST MOV-10	Notice for the confiscation of goods
GST MOV-11	Order of confiscation of goods and conveyance and demand of tax, fine and penalty

Conclusion

The advantages of these techniques have not yet been realised because they are still in the early stages of development. The e-way bill system has brought about significant changes in how goods in transit are inspected, verified, and detained.

The system has enabled authorities to track transportation of goods in real time, ensuring compliance with tax laws and preventing tax evasion. Additionally, the e-way bill has reduced the need for physical inspections, saving time and resources for both the authorities and transporters.