Section 68 of the Central Goods and Services Tax (CGST) Act, 2017 deals with the inspection of goods in movement. It provides the legal framework under which the Government can require a person in charge of a conveyance carrying a consignment of goods to carry prescribed documents and devices and produce them for verification when the conveyance is intercepted by a proper officer.
The provision is closely connected with the e-way bill system under Rules 138 to 138D of the CGST Rules, 2017. In practical terms, Section 68 provides the statutory authority for verification of documents and goods while they are being transported, whereas the detailed requirements relating to e-way bills, documents to be carried, interception, verification and physical inspection are prescribed through the GST Rules. CBIC’s clarification on interception of conveyances also specifically links Section 68 with Rules 138 to 138D.
Section 68 is therefore particularly important for businesses, suppliers, recipients, transporters and other persons involved in the movement of goods.
What is Section 68 of the CGST Act?
Section 68 is titled “Inspection of goods in movement.”
The provision contains three main parts:
- The Government may require the person in charge of a conveyance carrying a specified consignment of goods to carry prescribed documents and devices.
- The details of the documents carried must be validated in the prescribed manner.
- When the conveyance is intercepted by the proper officer, the person in charge can be required to produce the prescribed documents and devices for verification and allow inspection of the goods.
The detailed operational procedure is provided through the CGST Rules, particularly Rules 138, 138A, 138B, 138C and 138D.
Text and Meaning of Section 68
Section 68(1) allows the Government to require the person in charge of a conveyance carrying a consignment of goods exceeding the prescribed value to carry such documents and devices as may be prescribed.
Section 68(2) provides that the details of the documents required to be carried must be validated in the prescribed manner.
Section 68(3) provides that when the conveyance is intercepted by the proper officer, the officer may require the person in charge to produce the prescribed documents and devices for verification. The person in charge is also required to allow inspection of the goods.
Thus, Section 68 establishes the basic statutory framework, while the Rules provide the practical procedure.
Why is Section 68 Important?
Goods are frequently transported from one location to another as part of business transactions.
For example:
- A manufacturer sends goods to a distributor.
- A wholesaler sends goods to a retailer.
- A supplier sends goods to a customer.
- Goods are transported to a job worker.
- Goods are moved from one warehouse to another.
- Goods are transported for reasons other than supply.
During transportation, the GST authorities need a mechanism to verify whether the movement is supported by appropriate documentation.
Section 68 provides that mechanism.
The objective is to enable the proper officer to verify the documents and the goods during transit and identify cases where the goods being transported may not correspond with the declared transaction or accompanying records.
Section 68 and the E-Way Bill
The most important practical connection of Section 68 is with the e-way bill system.
Rule 138 provides the framework for furnishing information before commencement of movement of goods and generation of an e-way bill. Under the rule, a registered person causing movement of goods with a consignment value exceeding ₹50,000 generally has to furnish the prescribed information before commencement of movement where the movement is:
- In relation to a supply;
- For reasons other than supply; or
- Due to inward supply from an unregistered person.
The Rules also contain specific exceptions and special provisions, including certain inter-State movements to job workers and handicraft goods.
The ₹50,000 threshold is therefore primarily a Rule 138 requirement, rather than an amount directly written into Section 68 itself. Section 68 instead gives the Government power to prescribe the value and documentation requirements.
What Documents Must Be Carried During Movement of Goods?
Rule 138A deals with the documents and devices that must be carried by the person in charge of a conveyance.
Generally, the person in charge of a conveyance is required to carry:
- The invoice; or
- The bill of supply; or
- The delivery challan, as applicable; and
- The e-way bill or e-way bill number, as prescribed.
The e-way bill may be carried physically or the e-way bill number may be available electronically, subject to the applicable provisions. CBIC’s clarification specifically states that Rule 138A requires the person in charge to carry the relevant invoice, bill of supply or delivery challan and, for road transportation, the e-way bill or e-way bill number in the prescribed manner.
Invoice, Bill of Supply or Delivery Challan
The document accompanying the goods depends on the nature of the movement.
Tax Invoice
A tax invoice is generally relevant where taxable goods are being supplied by a registered supplier.
Bill of Supply
A bill of supply is used in circumstances where a registered person is required to issue a bill of supply instead of a tax invoice.
Delivery Challan
A delivery challan can be used for certain movements where a tax invoice is not required to be issued at the time of movement.
For example, goods may be transported for purposes other than supply in circumstances permitted under the GST Rules.
The relevant document should accurately correspond with the actual movement of goods.
What is an E-Way Bill?
An e-way bill is an electronically generated document containing prescribed information relating to the movement of goods.
Rule 138 provides the framework for generation of the e-way bill.
Once the e-way bill is generated, a unique E-Way Bill Number (EBN) is made available to the relevant persons through the common portal.
The e-way bill helps the tax administration connect the physical movement of goods with the transaction information furnished electronically.
Who Generates the E-Way Bill?
The person responsible for generating the e-way bill depends on the circumstances of the movement.
Where the registered person transports goods as consignor or the recipient transports goods as consignee, the relevant person may generate the e-way bill after furnishing the prescribed information.
Where the goods are handed over to a transporter for transportation by road and the e-way bill has not already been generated by the consignor or consignee, the registered person furnishes the relevant transporter information and the transporter can generate the e-way bill on the basis of the information provided.
The Rules also contain provisions for movements caused by unregistered persons and special categories of movement.
E-Way Bill for Movement Below ₹50,000
Rule 138 generally requires an e-way bill for specified movements where the consignment value exceeds ₹50,000.
However, the Rules permit the registered person or transporter, at their option, to generate and carry an e-way bill even where the consignment value is below ₹50,000.
There are also specific situations where an e-way bill may be required irrespective of the normal ₹50,000 threshold, such as certain inter-State movements of goods sent by a principal to a job worker and specified inter-State transportation of handicraft goods.
Therefore, it is incorrect to state that every movement below ₹50,000 is automatically outside the e-way bill framework in every situation.
What Happens When a Conveyance Is Intercepted?
Section 68(3) provides the statutory authority for the proper officer to intercept a conveyance covered by Section 68.
After interception, the proper officer may require the person in charge to:
- Produce the prescribed documents.
- Produce the prescribed devices where applicable.
- Allow inspection of the goods.
The purpose is to verify whether the physical movement corresponds with the documents and information available to the department.
Who Can Intercept a Conveyance?
Rule 138B provides the procedure for verification of documents and conveyances.
The Commissioner or an officer empowered by the Commissioner may authorise the proper officer to intercept conveyances for verification of the e-way bill or e-way bill number for both:
- Inter-State movement; and
- Intra-State movement of goods.
The Rule also provides for physical verification of conveyances by the proper officer authorised for that purpose. Where specific information regarding evasion of tax is received, physical verification of a specific conveyance may also be carried out after obtaining the required approval.
Can Both Inter-State and Intra-State Goods Be Checked?
Yes.
Rule 138B expressly provides for verification of e-way bills or e-way bill numbers for inter-State as well as intra-State movement of goods.
Therefore, Section 68 is not limited only to goods moving from one State to another.
Goods moving within the same State or Union territory can also come within the verification framework where the applicable GST provisions require an e-way bill or other prescribed documents.
What Does the Officer Verify?
During verification, the officer may examine whether the goods correspond with the information contained in the relevant documents and e-way bill.
Depending on the circumstances, verification can include:
- Description of goods
- Quantity of goods
- Value of goods
- Supplier details
- Recipient details
- Invoice details
- Delivery challan details
- E-way bill details
- Vehicle or conveyance details
- Movement details
- Other relevant particulars
The officer may also physically inspect the goods where authorised under the applicable provisions.
Physical Verification of Goods
Section 68(3) expressly requires the person in charge to allow inspection of the goods when the conveyance is intercepted and the officer requires such inspection.
Rule 138C provides the procedural framework for physical verification of goods.
The proper officer is required to record a summary report of every inspection of goods in transit online in the prescribed form within the specified period and record the final report within the prescribed period.
This creates an electronic record of the inspection.
Can the Same Vehicle Be Physically Verified Again?
Rule 138C contains an important restriction on repeated physical verification.
Where physical verification of goods being transported on a conveyance has already been carried out during transit at one place within a State or Union territory or in another State or Union territory, the same conveyance should generally not be subjected to another physical verification in the State or Union territory.
However, an exception applies where specific information relating to evasion of tax becomes available subsequently.
This provision is intended to avoid unnecessary repeated physical verification of the same conveyance while preserving the ability of authorities to act when specific information regarding tax evasion becomes available.
What is Form GST INS-03?
Rule 138C provides for recording the inspection report in FORM GST INS-03.
The rule provides for:
- A summary report of the inspection; and
- A final report of the inspection.
The reports are recorded electronically within the prescribed time limits.
It is important not to confuse this with the similarly numbered forms used under the inspection, search and seizure provisions. The e-way bill inspection framework has its own prescribed forms and procedures under the Rules.
What Happens If a Vehicle Is Detained for More Than 30 Minutes?
Rule 138D provides a facility for the transporter where a vehicle has been intercepted and detained for a period exceeding 30 minutes.
The transporter may upload information regarding the detention in FORM GST EWB-04 on the common portal.
This provides an electronic mechanism for reporting prolonged detention of the vehicle.
Section 68 and Section 129
Section 68 deals primarily with the inspection of goods in movement.
Section 129 deals with detention, seizure and release of goods and conveyances in transit in the circumstances specified by that section.
Therefore, the two provisions should not be treated as identical.
A basic distinction is:
Section 68 → Verification and inspection of goods in movement
Section 129 → Statutory consequences relating to detention, seizure and release in specified cases
CBIC’s Circular No. 41/15/2018-GST specifically explains the relationship between Section 68, the e-way bill rules and Sections 129 and 130.
What Happens If There Is a Discrepancy in the E-Way Bill?
An e-way bill discrepancy does not necessarily have the same consequence in every case.
The nature of the discrepancy, the documents accompanying the goods and the applicable statutory provisions have to be considered.
CBIC issued Circular No. 64/38/2018-GST specifically to address situations involving minor discrepancies in e-way bill details where there were no major lapses in the invoices accompanying the goods. The circular was issued to ensure uniformity in the implementation of the relevant provisions.
Therefore, taxpayers and transporters should distinguish between:
- A minor clerical discrepancy;
- A material mismatch;
- Absence of required documents;
- Invalid or expired e-way bill;
- Undeclared movement;
- Goods not matching the documents; and
- Situations indicating possible tax evasion.
The legal consequences can differ depending on the facts.
Example of a Section 68 Inspection
Suppose ABC Traders in Delhi sends goods worth ₹2,00,000 to a registered customer in Haryana.
Before the movement begins, the required e-way bill is generated.
The vehicle carries:
- The relevant tax invoice; and
- The required e-way bill information.
During transportation, a proper officer intercepts the vehicle.
The officer verifies:
- Invoice number
- Supplier GSTIN
- Recipient GSTIN
- Goods description
- Quantity
- Taxable value
- GST details
- E-way bill
- Vehicle details
The officer may also inspect the goods.
If the goods and documents are consistent, the verification can be completed without further action.
If a material discrepancy is identified, the officer may take action according to the applicable GST provisions.
👉 Read More → Section 67 – Power of inspection, search and seizure
Example of Movement Without Supply
Goods do not always move because of a sale.
For example, a manufacturer may send machinery to another location for repair or send inputs to a job worker.
Rule 138 recognises movements of goods for reasons other than supply.
Where an e-way bill is required for such movement, the relevant document may be a delivery challan rather than a tax invoice, depending on the circumstances.
This is why businesses should not assume that an e-way bill applies only to ordinary sales transactions.
Example of Goods Sent to a Job Worker
Suppose a principal located in Delhi sends goods to a job worker located in Haryana.
The movement is not necessarily a sale of the goods to the job worker.
Nevertheless, the Rules contain a specific provision requiring an e-way bill for certain inter-State movements of goods sent by a principal to a job worker, irrespective of the value of the consignment.
The applicable e-way bill requirements should therefore be checked before the movement begins.
What Should the Person in Charge of the Vehicle Carry?
A transporter or person in charge should ensure that the required documents are available before the vehicle begins its journey.
Depending on the transaction and applicable rules, this may include:
- Tax invoice;
- Bill of supply;
- Delivery challan;
- E-way bill;
- E-way bill number;
- Other prescribed information or devices.
CBIC’s Section 68 clarification specifically states that Rule 138A requires the person in charge to carry the invoice, bill of supply or delivery challan, and the prescribed e-way bill information.
What If the Goods Are Transferred From One Vehicle to Another?
Goods may sometimes need to be transferred from one conveyance to another during transportation.
Rule 138 contains provisions requiring the relevant conveyance details to be updated before further movement in applicable circumstances.
Therefore, businesses and transporters should update the e-way bill information whenever a change of conveyance requires such updating.
Failure to keep the e-way bill information consistent with the actual movement can create verification issues during interception.
What If the E-Way Bill Was Generated but the Goods Are Not Transported?
Rule 138 provides a mechanism for cancellation of an e-way bill in certain circumstances.
Where an e-way bill has been generated but the goods are either:
- Not being transported; or
- Not being transported according to the details furnished,
the e-way bill may be cancelled electronically within the prescribed period.
However, the rule also provides that an e-way bill cannot be cancelled if it has already been verified in transit.
Validity of an E-Way Bill
Rule 138 prescribes validity periods based on the distance to be transported.
The standard table in the Rules provides:
| Distance | Validity |
|---|---|
| Less than 100 km | 1 day |
| 100 km or more but less than 300 km | 3 days |
| 300 km or more but less than 500 km | 5 days |
| 500 km or more but less than 1,000 km | 10 days |
| 1,000 km or more | 15 days |
The Rules also permit the Commissioner to extend the validity period for specified categories of goods by notification.
The validity period is calculated from the relevant date as specified in Rule 138.
What Is the Role of the Transporter?
The transporter has an important role in the e-way bill system.
Depending on the circumstances, the transporter may:
- Generate the e-way bill;
- Update conveyance details;
- Carry the prescribed documents;
- Produce the e-way bill number;
- Cooperate during interception;
- Allow inspection of the goods;
- Report prolonged detention through the prescribed mechanism.
The exact responsibility depends on how the movement is arranged and who generated the e-way bill.
Section 68 and E-Invoice
Section 68 and e-invoicing are related to GST compliance but are not the same requirement.
E-invoice concerns the prescribed electronic authentication/reporting of specified invoices.
E-way bill concerns the movement of goods.
A business may therefore have to comply with both requirements where the relevant conditions apply.
During movement, the person in charge must comply with the documents prescribed for transportation, while the underlying invoice may also be subject to e-invoicing requirements where applicable.
Section 68 and Delivery Challan
A delivery challan can be relevant where goods are transported without issuing a tax invoice at the time of movement in circumstances permitted under the GST Rules.
For example, certain movements for purposes other than supply may be supported by a delivery challan.
The delivery challan should contain the prescribed particulars and the corresponding movement should be appropriately reflected in the e-way bill wherever required.
Difference Between Section 67 and Section 68
Section 67 and Section 68 both involve inspection-related powers, but they operate in different situations.
| Particular | Section 67 | Section 68 |
|---|---|---|
| Main subject | Inspection, search and seizure | Inspection of goods in movement |
| Location | Premises or places covered by Section 67 | Goods being transported in a conveyance |
| Main document | Search/inspection authorisation and prescribed forms | Invoice/bill of supply/delivery challan and e-way bill |
| Search power | Yes, under specified conditions | No general search power created by Section 68 |
| Seizure power | Yes, subject to Section 67 | Section 68 itself does not provide the general seizure power |
| Main purpose | Investigation and enforcement in specified cases | Verification of goods and documents during movement |
Thus, Section 68 is specifically focused on goods in transit.
Difference Between Section 68 and Section 71
Section 71 deals with access to business premises.
It enables an authorised officer to enter the business premises of a registered person to carry out activities such as:
- Audit;
- Scrutiny;
- Verification;
- Checks; and
- Other activities carried out under the CGST Act.
Section 68, in contrast, concerns the inspection of goods while they are being transported.
Important Forms Related to Section 68 and E-Way Bill Verification
The e-way bill framework uses several forms.
| Form | General purpose |
|---|---|
| GST EWB-01 | E-way bill |
| GST EWB-02 | Consolidated e-way bill |
| GST EWB-03 | Verification report in the prescribed e-way bill framework |
| GST EWB-04 | Information regarding detention of vehicle exceeding 30 minutes |
The exact use of forms is governed by the relevant CGST Rules and their current prescribed formats.
For the inspection of goods in transit, Rule 138C also provides for recording inspection reports electronically.
Important Responsibilities of Businesses
Businesses involved in movement of goods should establish a proper transportation compliance process.
Before Dispatch
Check:
- Correct invoice or delivery challan;
- Correct GSTIN of supplier and recipient;
- Correct description of goods;
- Correct quantity;
- Correct value;
- Correct vehicle information;
- E-way bill requirement;
- E-way bill validity.
During Transportation
The person in charge should have the prescribed documents and e-way bill information readily available.
When Vehicle Details Change
Update the e-way bill as required before continuing movement.
During Interception
The person in charge should produce the required documents and cooperate with the inspection.
After Inspection
The business should retain relevant records of the movement and address any discrepancy identified by the authorities.
Practical Compliance Example
Consider a manufacturer dispatching goods worth ₹8,00,000 from Delhi to a distributor in Uttar Pradesh.
Before dispatch:
- The manufacturer prepares the tax invoice.
- The applicable e-way bill is generated.
- The vehicle details are correctly entered.
- The transporter receives the relevant information.
- The person in charge carries the required documents/e-way bill information.
During transit, the vehicle is intercepted.
The officer verifies the e-way bill and invoice and compares the physical goods with the documents.
Suppose the invoice states:
500 units
but the physical verification finds:
550 units
The difference may require an explanation and may result in further action depending on the circumstances and applicable law.
This example demonstrates why invoice records, stock records and e-way bill details should accurately correspond with the actual movement of goods.
Key Points of Section 68
The major points of Section 68 can be summarised as follows:
- Section 68 deals with inspection of goods in movement.
- It forms part of Chapter XIV of the CGST Act.
- The Government can prescribe documents and devices that must be carried with specified consignments.
- The detailed requirements are prescribed through the CGST Rules.
- Rule 138 provides the framework for e-way bills.
- Rule 138A deals with documents and devices to be carried by the person in charge of a conveyance.
- Rule 138B deals with verification of documents and conveyances.
- Rule 138C deals with inspection and verification of goods.
- Rule 138D provides a mechanism for reporting detention of a vehicle exceeding 30 minutes.
- The standard e-way bill threshold under Rule 138 is ₹50,000, subject to exceptions and special provisions.
- The person in charge may be required to produce the prescribed documents and e-way bill information.
- The person in charge must allow inspection of the goods.
- Both inter-State and intra-State movement can come within the verification framework.
- Repeated physical verification of the same conveyance is generally restricted unless specific information relating to tax evasion subsequently becomes available.
- An e-way bill is a movement document and should correspond with the actual transportation of goods.
- Section 68 should be distinguished from Section 67, which deals with inspection, search and seizure.
- Section 68 should also be distinguished from Section 129, which deals with detention, seizure and release of goods and conveyances in specified circumstances.
Conclusion
Section 68 of the CGST Act, 2017 provides the statutory framework for inspection of goods in movement. It allows the Government to prescribe the documents and devices that must accompany specified consignments and permits the proper officer to intercept a conveyance and verify the required documents and goods.
The practical operation of Section 68 is closely connected with the e-way bill provisions under Rules 138 to 138D. For most specified movements of goods above the prescribed threshold, the e-way bill provides an electronic record that can be checked during transportation. The person in charge of the conveyance is also required to carry the prescribed invoice, bill of supply or delivery challan and the applicable e-way bill information.
During interception, the proper officer may verify the documents and inspect the goods. The Rules also provide safeguards against unnecessary repeated physical verification of the same conveyance, while allowing another verification where specific information relating to tax evasion becomes available.
Businesses should therefore ensure that the physical goods, invoice or delivery challan, e-way bill and vehicle details are consistent with one another before dispatch. Proper documentation and accurate e-way bill compliance can significantly reduce difficulties during transit verification.
Section 68 is primarily a verification provision. It should be read together with the relevant e-way bill Rules and, where a discrepancy or contravention is found, with the other applicable provisions of the CGST Act, including the provisions dealing with detention, seizure, release and confiscation where their statutory conditions are satisfied.
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