2022 (12) TMI 1538 - HC - GST

Levy of penalty - contention raised by the counsel for the petitioner is that there was no warrant for the imposition of any penalty on the petitioner as there was no suppression or evasion of tax - HELD THAT - The vehicle was intercepted within 24 hours from the expiry of the E Way Bill. The goods were accompanied by an invoice and also the E Way Bill. Moreover, the only reason in Ext.P3 for imposing a penalty is that the books of accounts or documents were not produced for verification as directed by the Tax Officer. The learned single Judge distinguished the judgment of the Division Bench in Ranjilal Damodaran v. Assistant State Tax Officer and another 2020 (11) TMI 831 - KERALA HIGH COURT with that of Satyam Shivam's case cited 2021 (6) TMI 378 - TELANGANA HIGH COURT and held that the imposition of major penalty for travelling with expired E Way Bill was not justified. Moreover, in Ext.P3, there is no finding that there was an attempt to evade tax. The learned single Judge has quashed Ext.P3 which imposed a major penalty along with the demand of IGST and directed only reconsideration of the amount of penalty to be imposed on the petitioner. It is not inclined to interfere with the discretion exercised by the learned single Judge in remitting the matter to the authorities for fresh consideration only on the amount of penalty. Therefore, confirming the order of the learned single Judge, the writ appeal is dismissed, but it is made clear that uninfluenced by any of the observations made by the judgment under appeal, the matter may be considered and disposed of by the concerned officer.

Summary

Issues:
1. Imposition of penalty under Section 129(1)(a) of the IGST/CGST Act, 2017 for transporting goods with an expired E Way Bill.
2. Validity of the imposition of penalty without evidence of tax evasion or suppression.
3. Jurisdiction of the High Court under Article 226 of the Constitution of India in cases where the remedy of appeal has been availed.

Analysis:
1. The case involved a transport contractor who was penalized for transporting a new tipper lorry with an expired E Way Bill. The petitioner filed a writ petition seeking to quash the penalty order and direct consideration of the appeal without a pre-deposit. The High Court noted that the vehicle was intercepted the day after the E Way Bill expired, and the penalty was imposed under Section 129(1)(a) of the Act amounting to Rs. 5,20,017/- along with IGST of Rs. 5,24,017. The petitioner argued that there was no suppression or evasion of tax, citing a mechanical problem with the vehicle as the reason for the delay.

2. The High Court referred to precedents, including a judgment from the Telangana High Court affirmed by the Supreme Court, where penalties were quashed in similar cases. The court held that the imposition of a major penalty for traveling with an expired E Way Bill was not justified, especially when there was no attempt to evade tax. The judgment distinguished previous cases and directed reconsideration of the penalty amount by the tax authorities. The court emphasized the importance of providing an opportunity for hearing before imposing penalties.

3. The Government Pleader argued that the petitioner should have extended the validity of the E Way Bill as per the CGST Rules and that the remedy of appeal had already been availed, barring the petitioner from invoking the High Court's jurisdiction under Article 226 of the Constitution. However, the respondent contended that the interception occurred within 24 hours of the E Way Bill's expiry, and the penalty was unjustified without evidence of tax evasion. The High Court upheld the single Judge's decision to remand the matter for fresh consideration only on the amount of penalty, without interfering in the discretion exercised.

In conclusion, the High Court dismissed the writ appeal, confirming the order to reconsider the penalty amount. The court emphasized that the concerned officer should review the matter without being influenced by any previous observations.