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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
PUSHPENDRA SINGH BHATI, MUNNURI LAXMAN, JJ.
Faruk Rathore Prop. Of M/s Hindustan Trading Company – Appellant
Versus
Dy. Commissioner, Central Goods And Service Tax – Respondent
D.B. Civil Writ Petition No. 13473 of 2022
Decided on : 15-04-2024
CGST - Goods and Services Tax - Section 122, Section 129(3) - The court discussed the provisions of the CGST Act, particularly Section 122 concerning penalties for certain offenses and Section 129 regarding the detention and seizure of goods in transit. The court interpreted these sections to emphasize that the imposition of penalties should be proportionate to the offense committed. It highlighted that the mere expiration of an e-way bill, without any intent to evade tax, should not attract severe penalties, thus influencing the decision to quash the orders against the petitioner.
Fact of the Case:
The petitioner, a dealer of iron items, faced penalties after the e-way bill for goods transported expired due to unforeseen delays during transit. The goods were detained by the CGST department, leading to a notice and subsequent penalties under Section 129(3) of the CGST Act, which the petitioner contested as arbitrary and unjustified.
Finding of the Court:
The court found that the delay in unloading the goods was beyond the control of the petitioner and the driver, and there was no intent to evade tax. The court emphasized that the penalty imposed was disproportionate to the minor offense of an expired e-way bill.
Issues: Whether the imposition of penalties under Section 129(3) of the CGST Act for the expiration of an e-way bill, without evidence of tax evasion or fraudulent intent, was justified.
Ratio Decidendi: The court held that penalties should be proportionate to the offense and that the mere expiration of an e-way bill, without any intent to evade tax, does not warrant severe penalties. The court referenced previous judgments that supported this interpretation.
Final Decision: The court quashed the impugned notice and orders, ruling that the penalties were unjustified and ordered the return of the excess penalty paid by the petitioner, adjusting it to a nominal penalty of Rs. 10,000 under Section 122 of the CGST Act.
JUDGMENT :
Dr. Pushpendra Singh Bhati, J:
1. This writ petition has been preferred under Article 226 of the Constitution of India claiming the following reliefs:
i) To quash and set aside the notice issued u/s 129(3) of CSGT Act, 2017 (Ann.-3) as such is out of jurisdiction, ultra virus, arbitrary, unfair and unreasoned.
ii) To quash and set aside the order passed u/s 129(3) of CGST Act, 2017 (Ann.-4) as such is out of jurisdiction, ultra virus, arbitrary, unfair and unreasoned.
iii) To quash and set aside the order of the Appellate Authority i.e. the Addl. Commissioner (Appeals) GST, dated 24.05.2022 (Ann.-7).
iv) Any other suitable order or direction, which the Hon’ble Court may deem just and proper in the facts and circumstances of the case, may kindly be passed in favor of the Petitioner.”
2. Brief facts of the case, as placed before this Court by learned counsel for the petitioner, are that the petitioner is a dealer of Iron items and conducting his business from Deshnok, District Bikaner and the petitioner-Firm is registered under the Central Goods & Services Tax Act, 2017 (hereinafter referred to as ‘CGST Act, 2017’) having registration No.08BFWPR2595M1Z8. During the course of its business, the petitioner purchased goods amounting to Rs. 9,43,993/- i.e. Iron Channel, Beam and angles from R.K. Steels, Jaipur on 25.02.2021 and an e-way bill No.781176882246 (valid upto 27.02.2021) was generated accordingly at 05:03 a.m. on 25.02.2021, whereafter, the said goods were loaded in a truck, along with the goods of one other Mahaveer Iron Store by the transporter and the vehicle started its journey late evening on the date of purchase.
2.1. However on the way from Jaipur to Bikaner, the truck’s tyre got punctured resulting in the vehicle reaching Bikaner late at night on 26.02.2021 thereby resulting in delay in unloading of the truck at Mahaveer Iron Store due to unavailability of labour, and thus, unloading could be done only at 6 p.m. on 27.02.2021.
Thereafter, the petitioner was informed that the truck would reach late evening around 9 p.m. on 27.02.2021, however due to unavailability of labour to unload the goods, it was decided that the truck should reach on 28.02.2021, thus the driver stayed in Bikaner during the night.
2.2. On the night of 27.02.2021, inspection of the vehicle (bearing registration No.RJ 14 GE 1832) was conducted by the Inspector, Central Goods & Services Tax (CGST) Department at about 12:44 a.m. on 28.02.2021, during the course of which, the documents and goods were checked, however it was found that the e-way bill had expired on 12 a.m. on 27.02.2021, and accordingly, the proceedings were initiated and the goods were detained under Section 68 (3) of the CGST Act, 2017.
2.3. Thereafter, a notice in the Form of MOV-07 under Section 129(3) of the CGST Act, 2017 dated 01.03.2021 was issued by the Deputy Commissioner, CGST, Division-F, Bikaner to both the petitioner as well as the driver, whereafter the petitioner deposited tax and penalty for release of the goods, and accordingly, the respondent released the goods vide order dated 01.03.2021; thereafter the petitioner preferred an appeal (No.GST/BK/16/IV/2021) before the learned GST Appellate Authority against the said order, and vide order dated 24.05.2022 the appeal was dismissed. Aggrieved of the notice & order dated 01.03.2021 and the appellate order dated 24.05.2022, the present petition has been preferred claiming the afore-quoted reliefs.
3. Learned counsel for the petitioner submits that the petitioner has duly complied with the provisions of GST specifically Rule 138 A of the CGST Rules, 2017; further, the requisite documents such as e-way bill were accompanied with the goods and though it had expired on 27.02.2021, however the maximum distance had been covered i.e. 331 kms out of 361 kms.
3.1. Lear
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.
Penalties for minor breaches under the CGST/SGST Acts should be proportionate and not severe unless there is intent to evade tax.
For imposition of penalties under the GST Act, intent to evade tax must be established; mere expiration of documents does not suffice.
Expiration of an e-Way Bill during transit does not invoke penalties under Section 129 without evidence of intent to evade taxes.
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.
Minor documentation discrepancies do not imply intent to evade tax, and valid transport documents render penalty imposition inappropriate.
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.
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