The GST Council has recommended amendments to the Central Goods and Services Tax (CGST) Act, 2017, to rationalise enforcement provisions governing the movement of goods, including requiring specific intelligence and authorisation by an officer not below the rank of Joint Commissioner for interception of a conveyance carrying goods.
The proposed changes to Sections 68, 129 and 130 of the Act seek to define the circumstances in which goods in transit can be intercepted, inspected and detained, while restricting certain enforcement actions by states through which goods are merely passing.
Under the recommendations, inspection and further action for detention or seizure would be permitted where either the supplier or the recipient is located or registered in the state in which the interception takes place. The proposed framework would therefore narrow the scope for enforcement action by transit states.
However, the recommendations provide for exceptions where an e-way bill has not been generated or the conveyance is not carrying documents establishing the origin or destination of the goods, as applicable. In such cases, the proposed framework would retain the scope for inspection, detention or seizure irrespective of the jurisdiction in which the interception takes place.
The Council has also recommended that the confiscation provisions under Section 130 of the CGST Act should not apply to goods or conveyances in transit.
What the proposed changes mean for businesses
The recommendations could provide greater certainty to businesses transporting goods across state borders by prescribing conditions for interception and introducing a higher level of authorisation.
For companies managing interstate supply chains, the proposed changes could reduce the risk of transit-related disruptions arising from enforcement action in states that are neither the origin nor the destination of a consignment.
However, the proposed exceptions relating to e-way bills and documents establishing the origin or destination of goods mean that businesses would continue to need to comply with applicable documentation requirements during transportation.
The recommendations relate to proposed amendments to the CGST Act and do not, by themselves, bring the changes into force. Implementation will depend on the legislative process and the final provisions enacted.
