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2024 (10) TMI 1239 - HC - GSTLevy of penalties u/s 122 and 129 of the CGST/SGST Acts - Expiry of the e-way bill - mens rea in penalty imposition - HELD THAT - In the facts of the present case, the e-way bill was generated at 10 00 P.M on 23.10.2021 for transporting goods over a distance of about 107 km and the e-way bill was therefore valid for a period of 24 hours, i.e., till 10 00 P.M on 24.10.2021. The third proviso to Sub-rule (10) of Rule 138 of the CGST/SGST Rules indicates that the petitioner had time till 06 00 AM on 25.10.2021 to extend the validity of the e-way bill. However, the petitioner had not done so and the vehicle was intercepted at 09 59 A.M on 25.10.2021. Technically, there is a violation of the law by the petitioner and the reason stated for transporting goods without revalidating the e-way bill (see paragraph 4 of the writ petition) may not be supported by any material. However, the question remains as to whether this should automatically lead to the initiation and conclusion of the proceedings under Section 129 of the CGST/SGST Acts resulting in the imposition of a huge amount as tax and penalty. The learned Government Pleader may be right in contending that there is justification for the initiation of proceedings under Section 129 of the CGST/SGST Acts in the facts of this case. However, once a plausible explanation is provided by the transporter/assessee, and it is found that there is no attempt to evade any tax, the question remains as to whether the proceedings must thereafter culminate in an order under Section 129 of the CGST/SGST Acts imposing the maximum penalty in terms of the provisions contained in Section 129 of the CGST/SGST Acts. While the initiation of the proceedings under Section 129 of the CGST/SGST Acts, in the facts of this case, cannot be found to be without jurisdiction, the fact remains that once the transporter/assessee had offered an explanation and had demonstrated that there was no attempt to evade tax and in the absence of any finding of an attempt to evade tax, the officer should have imposed a penalty as contemplated by the provisions of Section 122 (1) (xiv) of the CGST/SGST Acts only, without imposing penalty as contemplated by the provisions of Section 129 of the CGST/SGST Acts. Coming to the judgment of a Division Bench of this Court in Daily Express 2019 (3) TMI 596 - KERALA HIGH COURT it has to be held that the decision follows the view taken by the same bench in Indus Towers Ltd 2018 (7) TMI 1181 - KERALA HIGH COURT . It no doubt takes the view that in a case covered by Section 129 and in view of the non-obstante clause neither the general discipline in the imposition of penalties in Section 126 nor the provisions of Section 122 would bar the imposition of penalty under Section 129. It is declared that the provisions of Section 129 of the CGST/SGST Acts do not authorise the imposition of tax/penalty as contemplated by the provisions of Section 129 (1) (a) or Section 129 (1) (b) in cases where only minor discrepancies are noticed and such penalty can be imposed only for violations which may lead to evasion of tax or where the transport was with an intent to evade tax or in cases of repeated violations (even of a minor nature). In other cases, the authorities will impose penalties having due regard to the provisions of Sections 122 and 126 of the CGST/SGST Acts. In the facts of the present case, this Court is of the considered opinion that a penalty of Rs. 10,000/-, as contemplated by the provisions of Section 122 (1) (xiv) of the CGST/SGST Acts can be imposed. On payment of the penalty as directed above, the Ext.P7 bank guarantee produced by the petitioner shall be released to it. Petition disposed off.
Issues Involved:
1. Expiry of the e-way bill and its legal implications. 2. Applicability of penalties under Sections 122 and 129 of the CGST/SGST Acts. 3. Interpretation of non-obstante clauses and their effect on statutory provisions. 4. Consideration of mens rea in penalty imposition under the CGST/SGST Acts. 5. The role of procedural lapses versus intent to evade tax. Issue-wise Detailed Analysis: 1. Expiry of the e-way bill and its legal implications: The petitioner, a registered dealer, transported goods with an e-way bill that expired before the goods reached their destination. The authorities initiated proceedings under Section 129 of the CGST/SGST Acts due to the expired e-way bill. The petitioner contended that the expiry was a technical lapse without any intent to evade tax. The court noted that the e-way bill was valid for 24 hours from 10:00 PM on 23.10.2021 to 10:00 PM on 24.10.2021, and the petitioner had until 06:00 AM on 25.10.2021 to extend it. The vehicle was intercepted at 09:59 AM on 25.10.2021, indicating a technical violation without evidence of tax evasion. 2. Applicability of penalties under Sections 122 and 129 of the CGST/SGST Acts: The petitioner argued that penalties for technical violations should be minimal and referred to Section 122 (xiv) for a minor penalty of Rs. 10,000/-. The court agreed, emphasizing that if there is no attempt to evade tax, penalties should align with Section 122 (xiv) rather than the harsher penalties under Section 129. The court highlighted that Section 129 should be applied when there is a clear attempt to evade tax, not for minor procedural lapses. 3. Interpretation of non-obstante clauses and their effect on statutory provisions: The court examined the non-obstante clause in Section 129, which suggests its provisions override other conflicting sections. However, the court emphasized a harmonious interpretation, stating that the clause does not mean Section 129 operates in isolation. Instead, it should be read alongside Sections 122 and 126, ensuring penalties are proportionate to the nature of the violation. 4. Consideration of mens rea in penalty imposition under the CGST/SGST Acts: The court addressed whether intent (mens rea) is necessary for imposing penalties under Section 129. It concluded that while mens rea is not a prerequisite, the absence of intent to evade tax should influence the penalty's severity. The court cited precedents emphasizing that penalties should not be automatic but should consider the circumstances and intent behind the violation. 5. The role of procedural lapses versus intent to evade tax: The court distinguished between procedural lapses and intentional tax evasion. It reiterated that Section 129 is designed to prevent tax evasion, not to penalize every procedural error. The court stressed that penalties should reflect the breach's nature and severity, with minor lapses attracting minimal penalties under Section 122 (xiv). Conclusion: The court quashed the order imposing a significant penalty on the petitioner, directing a penalty of Rs. 10,000/- under Section 122 (xiv) instead. It clarified that while proceedings under Section 129 can be initiated for technical violations, the penalty should be proportionate and reflect the absence of intent to evade tax. The judgment emphasized the importance of a balanced approach in applying statutory provisions, ensuring fairness and adherence to constitutional principles.
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