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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BHARGAV D. KARIA, D.N. RAY, JJ.
DYNAMIC RUBBERS PRIVATE LIMITED – Petitioner
Versus
DEPUTY COMMISSIONER (AE) CGST, KUTCH – Respondent
Special Civil Application No. 17738 of 2023
Decided On : 24-10-2024
Key Points: - Penalty under Section 129(1) modified from Rs.11,08,150 to Rs.25,000 due to minor/technical lapse in non-generation of Part-B of E-way bill (!) (!) (!) (!) (!) . - Court held that non-generation of Part-B constitutes violation but penalty should be proportionate to the contravention and not punitive for technical lapses (!) (!) .
JUDGMENT :
BHARGAV D. KARIA, J.
1. Heard learned advocate Mr. Vijay Patel for learned advocate Mr. Rahil P. Jain for the petitioner and learned advocate Ms. Hetvi H. Sancheti for the respondents.
2. Having regard to the controversy involved, which is in a narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing.
3. Rule returnable forthwith. Learned advocate Ms. Hetvi H. Sancheti waives service of notice of rule on behalf of the respondents.
4. By this petition, the petitioner has challenged the order dated 28.11.2022 passed under Section 107 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the CGST Act”) whereby, the respondent No. 1 has confirmed the order dated 03.03.2022, imposing penalty of Rs.11,08,150/- under Section 129(1) of the GST Act.
5. The petitioner company is into the business of manufacturing of various items of rubber and is also having registration under the GST Act. The petitioner had imported material from China for the purpose of its business after payment of Integrated Goods and Service Tax (IGST) on 14.12.2021.
5.1 The petitioner imported Rubber Conveyor Belt and allied materials, and obtained bill of lading and certificate of origin from the Custom Authorities who after inspection of the goods gave such clearance. The petitioner after clearance of the goods by the Custom Authority was transporting its goods from the Port at Mundra to godown at Ahmedabad by generating Part-A E-waybill on 01.03.2022 at 4:05 p.m. It is the case of the petitioner that the Part-B of the E-waybill could not be generated due to technical glitches on the portal and without generation of Part-B of the E-waybill as prescribed in Form GST EWB-01, the petitioner transported the goods in conveyance being GJ-12-BV-7132.
5.2 The respondent No. 1-Deputy Commissioner (AE) CGST, Kutch, intercepted the conveyance at Padan National Highway No. 41 and issued Form GST MOV-01 and GST MOV-02, after inspection of the goods and the conveyance, passed an order dated 01.03.2022 of detention in Form GST MOV-06 on the same day.
5.3 The respondent No. 1 issued a show cause notice dated 03.03.2022 in Form GST MOV-07 calling upon the petitioner to show cause as to why the penalty of Rs.11,08,150/- should not be imposed on the petitioner and he was further directed to appear in-person or through authorized representative on 04.03.2022.
5.4 It is the case of the petitioner that the goods in question were required by the petitioner for manufacturing activity. The petitioner deposited the amount of penalty i.e. Rs.11,08,150/- as stated in show cause notice in Form GST MOV-07. The respondent No. 1, therefore, passed the order in Form GST MOV-09 dated 03.03.2022, confirming the penalty to the tune of Rs.11,08,150/-.
5.5 The petitioner being aggrieved by the order passed in Form CGST MOV-09 preferred appeal under Section 107 of the CGST Act and prayed for deletion of penalty imposed under Section 129(1) (a) of the CGST Act on the ground that there was no contravention of any of the provisions by the petitioner.
5.6 However, the First Appellate Authority by the impugned order dated 28.11.2022 confirmed the order-in-original, imposing penalty of Rs.11,08,150/-.
5.7 Being aggrieved, the petitioner has preferred this petition.
6. Learned advocate Mr. Vijay H. Patel for the petitioner submitted that the petitioner had imported the goods after payment of IGST and was transporting the goods from the Port at Mundra to the place of manufacturing of the petitioner and only because there was a non-compliance of generation of Part-B of the E-waybill, which is procedural in nature, the penalty to the tune of Rs.11,08,150/- could not have been levied upon the petitioner by the respondent authority.
6.1 It was submitted that the goods in question were neither sold or purchased by the petitioner and the same was being transported after clearance by the Custom Authorities from the Port at Mundra and
Minor procedural lapses in compliance with tax regulations should not attract severe penalties, especially when there is no intent to evade tax.
Minor errors in e-way bills do not justify detention under Section 129 of the CGST Act if the goods are otherwise properly documented.
For imposition of penalties under the GST Act, intent to evade tax must be established; mere expiration of documents does not suffice.
Intention to evade tax is a prerequisite for imposing penalties under GST Act; mere technical issues should not warrant such penalties.
Minor documentation discrepancies do not imply intent to evade tax, and valid transport documents render penalty imposition inappropriate.
Penalties under GST Act require evidence of intent to evade tax; mere technical omissions do not warrant penalties when tax has been duly paid.
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.
The imposition of penalties for minor discrepancies in tax-related documents without intent to evade tax is not justified under the CGST/SGST Acts.
Expiration of an e-Way Bill during transit does not invoke penalties under Section 129 without evidence of intent to evade taxes.
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