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IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
T.S. SIVAGNANAM, HIRANMAY BHATTACHARYYA, JJ.
Ashish Kumar Sharma –Appellant
Versus
The Deputy Commissioner, State Tax, Bureau Of Investigation – Respondent
F.M.A. 504 OF 2024, I.A. NO. CAN 01 OF 2024
Decided on : 25-04-2024
e-way bill - West Bengal Goods and Services Tax Act, 2017 - Section 129(1), Rule 138 of the CGST Rules - The court considered the imposition of penalty under Section 129 of the Act without considering the intention to evade tax, the validity period of e-way bill, and the peculiar facts of the case. The court found that while the appellant was not wholly exonerated, the imposition of a 200% penalty was harsh, and granted some indulgence to the appellant, directing a reduced penalty of Rs. 1,00,000.
Fact of the Case:
The appellant challenged the imposition of penalty for carrying goods with an expired e-way bill, citing breakdowns during the journey as the cause of delay.
Finding of the Court:
The court found that the imposition of a 200% penalty without considering the intention to evade tax and the peculiar facts of the case was harsh. The court granted some indulgence to the appellant, directing a reduced penalty of Rs. 1,00,000.
Issues: Imposition of penalty under Section 129 of the Act without considering the intention to evade tax and the validity period of e-way bill.
Ratio Decidendi: The court held that the imposition of a 200% penalty without considering the intention to evade tax and the peculiar facts of the case was harsh. The court granted some indulgence to the appellant, directing a reduced penalty of Rs. 1,00,000.
Final Decision: The appeal was partly allowed, and the appellant was directed to pay a reduced penalty of Rs. 1,00,000.
JUDGMENT :
T.S. Sivagnanam, J.
1. The unsuccessful writ petitioner is the appellant before us. The writ petition was filed challenging an order passed by the appellate authority under the provisions of the West Bengal Goods and Services Tax Act, 2017 dismissing the appeal filed by the appellant challenging the order passed by the adjudicating authority imposing penalty on the appellant on the ground that the e-way bill which was generated by the appellant had expired and at the time when the vehicle was intercepted four days had lapsed.
2. The learned writ court was of the view that the appellant though contended that the vehicle suffered a breakdown did not annexe supporting documents in the writ petition and merely contending that he had no intention to evade tax is not sufficient and if such contention is accepted transporting without a valid e-way bill will remain a piece of paper and a mere idle formality.
3. The following facts would be relevant for the disposal of this appeal.
4. The appellant is engaged in the business of trading of dehydrated coal tar and allied products. In the course of business, they procured goods for resale from Odisha among other suppliers. Tax invoice dated 02.09.2023 was issued by the vendor for supply of 22.17 MTS dehydrated coal tar on which applicable IGST at 18% was charged. The said tax invoice was duly incorporated in the e-way bill generated by the appellant and the goods were loaded in the vehicle on 02.09.2022. The transportation started on 03.09.2022 for onward delivery to the place of business at Liluah.
5. The case of the appellant is that the vehicle suffered breakdown during the course of its journey and on the date the vehicle was intercepted on 10.09.2022, e-way bill generated by the appellant on 02.09.2022 had expired and four days had lapsed by then. The authority who detained the vehicle namely the State Tax Officer, Bureau of Investigation (South Bengal) Howrah Zone while ordering for physical verification/inspection of conveyance goods and documents in Form GST MOV-02 stated that the inspection is required to be done in accordance with Section 68(3) of the WBGST Act read with CGST Act, 2017 or under Section 20 of IGST Act for the reasons that the e-way bill expired for more than four days. The Deputy Commissioner passed an order of detention under Section 129(1) on the ground that the e-way expired for more than four days. A showcause notice was issued under Section 129(3) of the Act proposing to levy of 200% penalty on the grounds that the e-way had expired for more than four days and the vehicle was moving with the loaded consignment without an e-way bill.
6. The appellant submitted their reply on 13.09.2022 stating that the material loaded in the vehicle belongs to them and though the loading was done on 02.09.2022, the journey was started by the driver on 03.09.2022; before entering the state of West Bengal the vehicle passed through Paza toll plaza on 05.09.2022 at 7:35 AM and then passed through Kokpora toll plaza on 05.09.2022 at 11:21 AM and later passed through Balibhasa toll plaza at 1:48 PM. After passing through Balibhasa toll, the vehicle suffered a breakdown and it was repaired and it started its journey again and reached Debra toll plaza on 07.09.2022 at 9:57 PM. After crossing the said toll plaza, there was a malfunction of the battery of the vehicle and therefore the vehicle could not move further and the same was repaired and the vehicle reached Dhulagarh toll plaza on 08.09.2022 at 9:12 AM. After it reached the said toll plaza, the vehicle got stuck in a hole and the services of a crane was engaged and the vehicle was pulled out and was to commence the journey. On 09.09.2022, the vehicle was delayed due to no entry for heavy vehicles to enter into Bally area. On 09.09.2022, late at night the driver started the journey and on 10.09.2022 at 1:05AM the vehicle was intercepted by the officers. With these submissions, the appellant requested for release of the mater
Imposition of penalty under Section 129 of the Act should consider the intention to evade tax and the validity period of e-way bill, and should take into account the peculiar facts of the case.
Expiration of an e-Way Bill during transit does not invoke penalties under Section 129 without evidence of intent to evade taxes.
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.
For imposition of penalties under the GST Act, intent to evade tax must be established; mere expiration of documents does not suffice.
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.
The main legal point established in the judgment is the requirement for proportionate punishment under the GST Act, emphasizing the lack of evidence of tax evasion, fraudulent intent, or negligence.
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