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IN THE HIGH COURT AT CALCUTTA
BIBEK CHAUDHURI, J.
Ashok & Sons (HUF) - Appellant
Versus
Joint Commissioner, State Tax & Others - Respondent
WPA. No. 190 of 2023
Decided On : 06-02-2023
E-Way Bill - Imposition of SGST and Penalty - Section 129 of GST Act
Fact of the Case:
The petitioner, a manufacturer/supplier of Bitumen Emulsion, transported goods with a valid E-Way bill, but the vehicle suffered a breakdown, leading to the expiration of the E-Way bill. The authority imposed SGST and penalty, which the petitioner contested.
Finding of the Court:
The court found that the authority was lawfully permitted to impose penalty under Section 129 of the GST Act as the goods were detained in the state's territory, dismissing the petitioner's arguments.
Issues: Validity of SGST and penalty imposition due to expired E-Way bill, interpretation of Section 129 of GST Act
Ratio Decidendi: The court held that under the circumstances, the authority was justified in imposing penalty under Section 129 and SGST as the goods were detained in the state's territory.
Final Decision: The writ petition was dismissed without costs.
JUDGMENT
By filing the instant writ petition, the petitioner has assailed and imposition of SGST and penalty for the year 14th March, 2022 passed by the Assistant Commissioner, Bureau of Investigation (North Bengal) Headquarter.
It is the case of the petitioner that the petitioner is the manufacturer/supplier of milestone Bitumen Emulsion and Allied products. The petitioner is a Registered Taxable Person duly registered under the GST Act with specific GSTIN number. In course of business, the petitioner supplied 158 drums of Bitumen Emulsion containing 200 kgs in each drum, in all measuring about 31,600 kgs with invoice No.555/2021-22 dated 5th March, 2022 generating proper E-Way bill dated 5th March, 2022 which was valid up to 9th March, 2022 from Begusarai to Guwahati. For the purpose of transporting the said goods the petitioner paid IGST at the rate of 18% amounting to Rs.2,58,804. On payment of IGST E-Way bill was generated for transportation of the said goods from Begusarai to Guwahati. In course of transportation the good carriage suffered from breakdown and it was detained in a motor vehicle garage within the jurisdiction of Jalpaiguri. The vehicle was intercepted by the State Tax Officer on 12th March, 2022 and on inspection it was found that E-Way bill in respect of the consignment had expired. Subsequently, the Assistant Commissioner, Bureau of Investigation Headquarter imposed SGST at the rate of Rs.2,58,804/- and penalty on SGST to the tune of Rs.7,18,900 and asked the petitioner to pay the said tax with penalty. In order to release the vehicle the petitioner had to pay tax and the vehicle, but preferred an appeal before the appellate authority. By an order dated 23rd August, 2022 the appeal was dismissed.
Learned Advocate for the petitioner submits that validity of E-Way bill expired on the expiry of 9th March, 2022. The vehicle was intercepted on 12th March, 2022. Thereafter SGST and penalty was imposed as the E-Way bill has expired. It is submitted by the learned Advocate for the petitioner that the petitioner has no intention to evade tax. He paid IGST at the rate of 18% on the value of the goods and procured E-Way bill. However, it was not within the control of the petitioner that there would be mechanical defect of the said truck. Under such circumstances, the respondent authority cannot impose any SGST and fine on the ground that the E-Way bill had expired.
It is further submitted by the learned Advocate for the petitioner that GST is a destination based tax, i.e., the goods and services will be taxed at the place where they are consumed and not at the origin or during its transit. So, the state where they are consumed will have the right to collect IGST. The petitioner did not evade tax. As the vehicle could not proceed due to breakdown from the territory of the State of West Bengal the petitioner is not entitled to pay any tax. In support of his contention the learned Advocate for the petitioner refers to a decision of this Court in M/s Hanuman Ganga Hydroprojects Private Limited vs. Joint Commissioner, State Tax Authority, Siliguri Circle & Anr. (WPA 1480 of 2022 dated 6th July, 2022). He also placed his reliance on the judgment of this Court dated 1st March, 2022 in WPA No.11085 of 2021 (Ashok Kumar Sureka vs. Assistant Commissioner, State Tax, Durgapur Range, Government of West Bengal).
Learned Advocate for the respondent, on the other hand, submits that if a vehicle with certain consignment is found in statutory condition for this together it is supposed under the GST Act that the said goods are presumed to be delivered within the territory of the state itself. In the instant case the petitioner’s consignment was found lying within the territory of the state for more than three days. The E-Way bill had expired. The driver of the vehicle stated that the vehicle suffered a breakdown. In support of his contention he failed to produce proper document. The petitioner had the opportunity to extend the validity of
Section 129 of the GST Act empowers the authority to detain the vehicle and seize goods, releasing them only on payment of penalty equal to 200% of the tax payable on such goods.
For imposition of penalties under the GST Act, intent to evade tax must be established; mere expiration of documents does not suffice.
The imposition of penalties for minor discrepancies in tax-related documents without intent to evade tax is not justified under the CGST/SGST Acts.
The expiration of an e-way bill during transit, without any intent to evade tax, does not justify severe penalties under the CGST Act; penalties must be proportionate to the offense committed.
Penalties for minor breaches under the CGST/SGST Acts should be proportionate and not severe unless there is intent to evade tax.
A penalty under Section 129(3) of the Act requires proof of mens rea for tax evasion, which was absent in this case, leading to the quashing of the penalty orders.
Transporting goods without a valid E-Way Bill violates the GST Act, supporting the imposition of penalties.
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