The Calcutta High Court has quashed the penalty for transporting goods after e-way bill expiry as there was lack of intention of GST evasion.
The bench of Justice Rajarshi Bharadwaj has observed that procedural compliance under the GST framework is crucial, penalties imposed purely for procedural lapses without evidence of tax evasion or malicious intent may not serve the legislative intent.
The Petitioner/assessee is a reputed organization engaged in the manufacture of various plastic products, including buckets and containers, at its manufacturing unit located in Ramchandrapur, Sonarpur, South 24- Parganas, Kolkata. The Petitioner has consistently complied with all legal requirements, including tax payments, filing returns and dispatching/receiving goods as per statutory mandates, with no history of tax evasion or involvement in defrauding the revenue.
A regular customer of the Petitioner, one M/s Norton Chemicals & Specialties Private Limited, placed an order for 6,000 buckets of Bharatbenz Genuine Adblue and 61,750 buckets of Tata Genuine D.E.F. 20 litres, to be delivered to the customer’s unit in Vidyasagar Industrial Park, Kharagpur, West Bengal. The order was fulfilled in parts. Therefore, on June 30, 2023, the Petitioner prepared and dispatched 7,632 buckets of Tata Genuine D.E.F. loaded onto the vehicle accompanied by E-invoice, Manual Invoice, and E-way Bill with the E-way bill validity expiring on July 1, 2023 at 11:59 PM.
The goods were in transit when the E-way bill expired at midnight on July 1, 2023. The Petitioner, due to unforeseeable circumstances, was not informed by the driver, who was inexperienced and unaware of the procedural implications of transporting goods with an expired E-way bill.
The Petitioner’s office had a half-day on July 1, 2023 and was closed on July 2, 2023 i.e., on Sunday, resulting in the expiry of the E-way bill going unnoticed. However, during transit on July 2, 2023, the Respondent intercepted the vehicle near Basantpur, National Highway, and initiated physical verification.
A show-cause notice was issued in Form GST MOV-07 on July 5, 2023, proposing a penalty of Rs. 1,98,316/- each under CGST and WBGST, citing violation of Section 68 of the Act due to transportation on an expired E-way bill.
Upon notification, the Petitioner sought release of the detained goods by providing a bank guarantee and bond. However, the department demanded penalties in Form GST MOV-09, disregarding the Petitioner’s submissions and the circumstances of the expired E-way bill.
The Petitioner filed an appeal on the GST Portal on August 30, 2023, by paying 25% of the disputed penalty. The appellate proceedings conducted by respondent no.3 concluded with the confirmation of the initial order on June 19, 2024, rejecting the Petitioner’s arguments on the grounds that they would set an undesirable precedent. Owing to the unfavourable order passed by the Appellate Authority the present petition has been preferred.
The petitioner contended that the department exceeded their statutory authority under the CGST/IGST Acts by intercepting, detaining and imposing penalties based solely on the expiry of the E-way bill, neglecting the surrounding extenuating circumstances. The department erred in upholding the order, as it failed to account for the unintentional nature of the E-way bill lapse and the driver’s lack of knowledge of the procedural requirements.
The court held thatwhile procedural compliance under the GST framework is crucial, penalties imposed purely for procedural lapses without evidence of tax evasion or malicious intent may not serve the legislative intent. Given the absence of any attempt to divert the goods or evade tax, and based on the petitioner’s compliance record, this Court observes that imposing a penalty was unwarranted in this instance. This Court therefore, emphasizes that rules, including those on e-way bill validity, should be applied contextually, taking into account the facts and intentions involved.
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Case Details
Case Title: Excellent Polycon Private Limited -Vs- The State Tax Officer
Case No.: W.P.A 22271 of 2024
Date: 14.11.2024
Counsel For Appellant: Anil Kumar Dugar
Counsel For Respondent: A. Roy
