2024 (11) TMI 777 - HC - GST

Challenge to order passed under Section 107 of the Central Goods and Services Tax Act, 2017 - penalty imposed under Section 129(1) of the CGST Act due to non-generation of Part-B of the E-way bill - HELD THAT - It appears that it is not in dispute that in response to the show cause notice in Form GST MOV-07 dated 03.03.2022, the representative of the petitioner without any demur accepted the notice and paid the amount of Rs. 11,08,150/- as penalty voluntarily without any objections. The respondent No. 1 was therefore justified in passing the impugned order-in-original in Form GST MOV-09 for levy of the penalty of Rs. 11,08,150/- upon the petitioner for violation of the provisions of Section 129 (1) of the CGST Act. However, the fact remains that the petitioner had no intention to evade the tax as the petitioner was transporting the goods in question from the Port after clearance of the same by the Custom Authorities to the place of the manufacture. It is also emerging from the record that the petitioner had generated Part-A of the e-way bill and only the Part-B of the e-way bill was not accompanying the goods in the conveyance, when the same were intercepted at 6 05 p.m. on 01.03.2022. In the facts of the case, as the petitioner has paid the penalty pursuant to the notice after detention or seizure of the goods in question in response to the notice issued as per Sub-section 3 of the Section 129 of the CGST Act, the petitioner was liable to pay the penalty equivalent to two hundred per cent of the tax payable or however, in the facts of the case, as the IGST was already paid on the goods, the petitioner was subjected to the penalty of two hundred per cent of the tax paid, but, at the same time, considering the fact that the contravention of the Rule 138 is venial and technical as the goods in question were not accompanying with the Part-B of the e-way bill, the penalty as prescribed in Clause (a) of Section 129 (1) of the CGST Act is required to be modified and the lesser penalty of Rs. 25,000/- as stated in the said Clause would justify the contravention of the Rule 138 of the Rules committed by the petitioner for not having Part-B of the e-way bill in the facts of the case. The impugned order of penalty passed by Respondent No. 1 therefore stands modified to Rs. 25,000/- instead of Rs. 11,08,150/- levied and confirmed by the respondent authorities.

Summary

Issues Involved:

1. Validity of penalty imposed under Section 129(1) of the CGST Act due to non-generation of Part-B of the E-way bill.
2. Consideration of technical glitches as a valid reason for non-compliance with E-way bill requirements.
3. Applicability of CBIC Circular No. 64/38/2018 in the context of minor discrepancies in E-way bill documentation.

Issue-wise Detailed Analysis:

1. Validity of Penalty Imposed under Section 129(1) of the CGST Act:

The petitioner challenged the imposition of a penalty of Rs. 11,08,150/- under Section 129(1) of the CGST Act for transporting goods without generating Part-B of the E-way bill. The petitioner argued that the non-compliance was procedural and due to technical glitches, asserting there was no intention to evade tax as the goods were transported post-customs clearance. The Court considered that the petitioner had indeed paid the penalty voluntarily in response to the show cause notice without objections, which justified the initial order by the respondent authorities. However, it acknowledged that the petitioner had no intent to evade tax and that the lapse was minor, warranting a reduction in the penalty amount.

2. Consideration of Technical Glitches as a Valid Reason:

The petitioner claimed that the failure to generate Part-B of the E-way bill was due to technical glitches on the GST portal. However, the respondent authorities argued that there was no proof of such glitches provided by the petitioner, such as correspondence or complaints to the GST E-way Bill Portal Authority. The Court noted that the petitioner generated Part-B shortly after the interception of the goods, indicating a minor lapse rather than a deliberate contravention. This led to the conclusion that the penalty should be reduced, recognizing the technical nature of the lapse.

3. Applicability of CBIC Circular No. 64/38/2018:

The petitioner relied on CBIC Circular No. 64/38/2018, which suggests that proceedings under Section 129 may not be initiated for minor discrepancies if accompanied by an invoice and E-way bill. The respondent authorities contended that the absence of Part-B rendered the E-way bill invalid, thus justifying the penalty. The Court observed that the petitioner's case involved a minor procedural lapse, and the goods were accompanied by necessary documents, including Part-A of the E-way bill. Consequently, the Court found merit in the petitioner's argument for a lesser penalty, aligning with the spirit of the Circular for minor discrepancies.

Conclusion:

The Court modified the penalty from Rs. 11,08,150/- to Rs. 25,000/-, recognizing the minor and technical nature of the lapse. The decision balanced the procedural non-compliance with the absence of intent to evade tax, ensuring the penalty was proportionate to the infraction. The ruling underscored the importance of distinguishing between technical lapses and deliberate contraventions in the enforcement of GST regulations.