Is your material also stuck in transit and E-way Bill has expired – what to do during lockdown

Amidst India battling with Covid 19, government has ordered lockdown for a period up to 14th April 2020. This would mean that movement only for essential items shall be permitted. Movement of other goods including auto components, steel goods etc. has been restricted. So much so various states such as Punjab, Maharashtra, Delhi, Uttar Pradesh have sealed their borders with no permission whatsoever for transport vehicles except those carrying essential goods. Now under these circumstances, Industry is facing the issue in respect of goods in transit which are stuck at various places including transportation hubs, state borders and even at the gates of recipients who are not operating during this period of lockdown. On the top of it in most of the cases eway bills have also expired. Now question arises what to do and how to settle the situation.

Is your material also stuck in transit and E-way Bill has expired – what to do during lockdown

At the outset I would request not to panic at all. Since it is a pandemic which is a universal truth of year 2020, so no government shall be harsh enough to make this an opportunity to levy penalties. Instead of creating confusion we should work out solutions which prove the genuineness of the transaction and also genuine difficulty due to which this non-compliance took place. Since Covid-19 is an unforeseen crisis and therefore there are no suitable provisions in GST law to overcome it. Though we are expecting the relaxation by way of notification very soon, but till the time government does it here we have found certain solutions to your problems:

1. Goods have reached the place of recipient but unable to unload
2. Goods are stuck in the transport hub
3. Goods are stuck in transit in mid ways at no particular address
4. Goods were returning back after rejection but stuck at borders
5. Goods are stuck in transit and are now not usable at all

Situation 1: Goods have reached the place of recipient but unable to unload

It is situation where a taxpayer had issued an invoice against which goods have moved to the location of the recipient but due to lock down, recipient is unable to unload the same. Here are some steps to follow:

Step 1: Procure a declaration from the recipient regarding their inability to unload the goods, this will prevent you from any further charges which recipient may levy for not fulfilling the Purchase Order.

Step 2: Issue credit note against the tax invoice on which goods were actually sent.

Step 3: Generate fresh E-way bill against the credit note and ask the transporter to bring those goods back to your location.

Now since the movement might be restricted, if the recipient permits, it would be advisable to park the loaded truck at the recipient location till normal operations are resumed. This situation might be peculiar in interstate transport of goods as in most cases movement within the state is permitted.

Situation 2: Goods are stuck at transport hub

It is situation where a taxpayer had issued an invoice and had also generated e-way bill but the goods are stuck at the transport hub with no movement possible to recipient further. Here are some steps to follow:

Step 1: Issue an undertaking in duplicate mentioning the fact that due to crisis and lockdown the goods should not be moved any further and you wish to get them returned back to your premises. The undertaking must include full details of the original Tax Invoice and the original e-way bill against which goods were actually supposed to be transferred.

Step 2: Issue a delivery challan (Since it is other than supply) from the location of transporter to your location i.e. supplier location.

Step 3: Generate Fresh E-way bill against the delivery note and ask the transporter to send those goods back to your location.

Since under this situation it is most likely that transport hub and supplier place are located within same state, hence there shall not be any issue as far as movement of goods are concerned.

Situation 3: Goods are stuck in transit in mid ways at no particular address

It is situation where a taxpayer had issued an invoice and had also generated e-way bill but the goods are stuck in between the transit. For instance the goods are being transported from Chandigarh to Delhi and goods have reached Ambala. Now since movement is restricted the goods are stuck in between. Here are some steps to follow:

Step 1: Issue an undertaking in duplicate mentioning the fact that due to crisis and lockdown the goods should not be moved any further and you wish to get them returned back to your premises. The undertaking must include full details of the original Tax Invoice and the original e-way bill against which goods were actually supposed to be transferred.

Step 2: Issue a delivery challan (Since it is other than supply) with place of dispatch being the location where transport vehicle is stuck i.e. Ambala and place of delivery being your location i.e. supplier place of business.

Step 3: Generate Fresh E-way bill against the delivery note and ask the transporter to send those goods back to your location from the place where the transport vehicle has stopped.

Now since the movement might be restricted, there might be situation that movement might be restricted. Since under those circumstances and it being a situation of crisis, you might not have any remedy other than to station the vehicle at the place where it has reached and continue to bear charges. This situation might be peculiar in interstate transport of goods as in most cases movement within the state is permitted, hence should not be an issue.

Situation 4: Goods were returning back after rejection but stuck at borders

It is situation where a taxpayer goods are returning back from the recipient either on credit note issued by the taxpayer or tax invoice issued by the recipient. Under first circumstance where are goods are being returned on your credit note and are stuck in transit you may follow the procedure as mentioned in Situation 3 or 2 as the case may be. But in second case where the recipient is returning goods on tax invoice, in that case it shall become the prerogative of the recipient. But nevertheless in such cases of rejection of goods it is your payment which is stuck and you might have to pay the costs if goods don’t return within time. Here are some steps to follow:

Step 1: Issue an undertaking in triplicate to both the transporter and the original recipient mentioning the fact that due to crisis and lockdown the goods should be returned back to your premises.

Step 2: Since the goods are being moved on the invoice of your recipient, request your recipient to issue delivery challan from place of dispatch being place where goods are stuck. But where recipient does not agree to cooperate or there is any genuine inability at their end, then move to Step 3.

Step 3: Issue a delivery challan from the location where the goods are stuck to your location.

Step 4: Generate a fresh e-way bill against the delivery challan and while goods are moving the transporter must carry the undertaking, original tax invoice & e-way bill of recipient along with delivery challan issued by you coupled with e-way bill.

Now since the movement might be restricted, there might be situation that movement might be restricted. Since under those circumstances and it being a situation of crisis, you might not have any remedy other than to station the vehicle at the place where it has reached and continue to bear charges. This situation might be peculiar in interstate transport of goods as in most cases movement within the state is permitted, hence should not be an issue.

Situation 5: Goods are stuck in transit and are now not usable at all

During this lockdown situation, there might be a possibility that the goods are stationed at a location and they are damaged or spoiled which no remain useful. Under these circumstances, taxpayer would wish to scrap them off at the nearest location instead of bringing them back to its premises. Since the GST Act does not permit you to make a supply from place where you are not registered, it is advisable that you must call those goods back to your registered premises and then scrap them off. But there may be situation where this might not be possible especially in pharma industry. Under those circumstances, you may take following steps:

Step 1: Issue an undertaking in quadruplicate for transporter, original recipient, your jurisdictional officer and gst office of state where goods are stuck mentioning the fact that due to crisis and lockdown the goods remained stuck at the location and you intend to dispose them at the same location proving the genuine hardship for not able to bring them back. You must annex all the relevant documents in that regards. Please do also mention that you don’t intend to take registration at the location where goods are stuck or you may opt for registration as Casual Taxable person (CTP) in case you wish to.

Step 2: Issue a tax invoice in the name of the scarp dealer/buyer from your registered premises itself, mentioning the place of dispatch as place where the goods are stuck.

Step 3: Generate the fresh e-way bill against the invoice issued for disposal of goods.

Step 4: Intimate both your jurisdictional officer along with relevant GST Authorities of that state.

In general, under all the situations above, it is advisable that you must keep the GST Department in loop, keeping them informed and updated in the matter would prove your honest belief. This will help you avoid any hefty penalties/late fees/fines which department may levy. Not keeping department informed about the situation might prove your malafide intentions which may bring difficult time for you as a taxpayer.

The views expressed by the author is based on his understanding of law and the prevailing circumstances. Taxpayers are requested to use the views judiciously and author shall not be liable for any gain/loss which might arise by referring his article.

Keshav R Garg
(B.Com, FCA, CS, ISA (ICAI), LLB)
3328, First Floor, Sector 27 D, Chandigarh, INDIA 160019
Phones: +91-172-461-3328, +91-98880-90008
E-mail: keshavgarg@kdai.in