Penalty not to be imposed on expiry of E-way Bill if there is no intent to evade tax.

Facts: –

• The Petitioner is a registered contractor having registration with GSTIN No. 23BDRPS9015A1ZK. The petitioner received a work order dated 21.04.2022 from Divisional Project Engineer of Public Works Department (PIU), Dindori for construction of additional laboratory and class room at Chandravijay College, Dindori.
• The Petitioner got quotation from Mittal Steels for supply of TMT Bars and placed an order to Mittal Steel, for supply of TMT Bars.
• That Mittal Steels in furtherance of the order, raised commercial invoice on 17.05.2022 charging IGST @ 18% i.e., Rs. 3,41,011.37/- and generated an E-way bill for movement of goods from Raipur to Dindori on 17.05.2022 at 08:08 P.M., in terms of Section 68 read with rule 138-A.
• The vehicle carrying the TMT Bars, while travelling from Raipur to Dindori suffered a problem and clutch plates of the vehicle were damaged. The proprietor of ‘Maa Rewa Transport’ sent a vehicle for servicing to ‘Rama Moto Cooperation’, Raipur on 18.05.2022. 
• That On 19.05.2022, the vehicle bearing No. CG04MW3477 got repaired and tax invoice raised for changing parts, and thereafter, getting the gate pass started the movement of goods from Raipur to Dindori.
• The said vehicle reached Dindori on 19.05.2022 between 10.30 to 10.45 P.M. well within the time mentioned in the E-way Bill. However, after the conversation over the phone with the petitioner, the truck driver was asked to take the vehicle to Weigh Bridge.
• While the vehicle was on the way to Weigh Bridge, it was stopped at 4.35 A.M. on 20.05.2022 by the Assistant Commissioner and the relevant documents with respect to transportation were demanded.
• The truck driver provided all the relevant documents required for transportation; however, the Assistant Commissioner except E-way Bill was satisfied with the all the other documents. It was the opinion of the Assistant Commissioner that E-way Bill expired on 19.05.2022 at 12 A.M.
• That repeated requests were made by the truck owner and the transporter submitting that the vehicle reached Dindore before 12 A.M. well within time and unintentional delay occurred thereafter. The Assistant commissioner did not accept the request and ignoring the same issued FORM GST MOV-02 stating the E-way Bill got expired, ultimately, the vehicle was detained in the custody of City Police Station, Dindori.
• Thereafter, the written submissions made by the petitioner requesting to release the material, as the same to be supplied/necessary for construction of class room and laboratory, however, the same was not accepted and FORM GST MOV-06 was issued followed by GST FORM MOV – 07 specifying the penalty amounting to Rs. 6,82,030/-.

Petitioner’s Submissions: –

• It was submitted on the behalf of the petitioner that in the present case, proceedings initiated under Section 129 were not justifiable and the principles of natural justice in terms of Section 126 were not followed, which clearly provides that no penalty should be imposed for ‘minor breaches’ or procedural requirements or omission. Moreover, the petitioner was not found guilty of any fraudulent intent or gross negligence. Thus, the imposition of penalty was unwarranted and not sustainable.
• There was no revenue loss and the intention of introducing the E-Way Bill mechanism was to keep a check on the movement of goods without tax invoice and to regulate tax evasion, the penalty notice issued for expiry of E-Way Bill was unjustifiable and runs contrary to object of the scheme or mechanism.
• Reliance was placed on the judgment of Telangana High Court in the matter of Satyam Shivam Papers Pvt. Ltd. Vs. Asst. Commissioner, ST & Others, where imposition of penalty was set-aside as the evasion of tax on the petitioner could not be established. Further it was submitted that the appeal filed by the Department against the said judgment of Satyam Shivam Papers was also dismissed.  That reliance was also placed on the decision of Calcutta High Court in Ashok Kumar Sureka Vs. Asst. Commissioner, State Tax, Durgapur Range, wherein the similar issued was dealt with.
• Lastly, referring to the Circular No.64/38/2018-GST, dated 14.09.2018, reliance was placed on the decision of this Court in Robbins Tunnelling & Trenchless Technology (India) Pvt. Ltd. Vs. State of Madhya Pradesh & Others, where in it was held that ‘imposition of tax and penalty in case of clerical error is bad in law’. Further the appeal filed against the said judgment was also dismissed by the Hon’ble Supreme Court in The State of Madhya Pradesh & Ors. Vs. Robbins Tunnelling & Trenchless Technology (India) Pvt. Ltd. Thus, it was prayed to set aside the impugned notice and the penalty order, and direct the department to refund the amount of penalty already deposited by the petitioner in view of the Hon’ble Court’s Order dated 30.05.2022.

Respondents’ Submissions: –

• On the other hand, supporting the impugned notice/order it was admitted on the behalf of the respondents that except the single flaw of expiry of E-Way Bill in the documents provided by the truck driver, no other deficiency was found.
• Further it was submitted that the action taken by the Department was in consonance of the provisions of the Act and no fault can be found in impugned notice/order.

Held: –

• The Hon’ble Court entertained the writ petition in the absence of Statutory Appellate Forum and after considering the submissions made, facts of the case and the documents produced, found that it is quite evident from the submissions made that the E-way Bill of the petitioner was valid up to 19/05/2022 and truck was intercepted on 20/05/2022 at Dindori at 4.35 A.M. The specific contention raised on the behalf of the petitioner was that there was no element of tax evasion, fraudulent intent and negligence on the petitioner and the same has not been rebutted on the behalf of the respondents.
• The Hon’ble Court referring to the decision relied upon by the petitioner in Satyam Shivam Papers Pvt. Ltd. vs. Asst. Commissioner, ST & others (W.P.No.9688 of 2020) – (Telangana High Court), found that in the said matter the writ petition was allowed and the action of levying tax and penalty was set aside. Further the respondents were directed to refund the amount with interest.
• It was also found that the said judgment of Hon’ble High Court was put to test before the Hon’ble Supreme Court in Assistant Commissioner (ST) & others vs. Satyam Shivam Papers Pvt. Ltd. & Another, wherein it was held that As noticed hereinabove, on the facts of this case, it has precisely been found that there was no intent on the part of the writ petitioner to evade tax and rather, the goods in question could not be taken to the destination within time for the reasons beyond the control of the writ petitioner’.
• Thereafter, the Hon’ble Court taking reference of the decision relied upon by the petitioner in Ashok Kumar Surekha Vs. Assistant Commissioner, State Tax, Durgapur Range, found that there is force in the contention raised on the behalf of the petitioner and the issue in the present case is similar to the above referred judgments. Further the respondents could not establish that there was element of evasion of tax, fraudulent intent or negligence on the part of the petitioner, and in the circumstances, the impugned could not have been passed.
• The principles of natural justice were statutorily recognized and ingrained in Section 126(1)(3) of the Act. The Law Makers have taken care of doctrine of proportionality while bringing sub-section (1) of Section 126 in the Statute Book. The punishment should be commensurate to the breach is the legislative mandate as per subsection (1) of Section 126.
• It was also found that delay of almost 4:30 hrs., after expiry of E-Way Bill, appears to be bonafide and without establishing fraudulent intent and negligence on the part of the petitioner. Thus, the impugned notice/order could not have been passed.

The Hon’ble Court with the above findings set aside the order dated 25.05.2022, imposing penalty.  Further directions were given to refund the amount of penalty already deposited by the petitioner within 30 days, failing which it will be paid with interest @6%.

To read the complete judgment 2022 Taxo.online 819