Levy of GST with Penalty for want of E-WAY bill is not warranted when there is no intention to evade tax

[Ganeshan Kalyani]

The applicant M/S. NEVA PLANTATION PRIVATE LIMITED VERSUS ACSTE-CUM-PROPER OFFICER NORTH ENFORCEMENT ZONE PALAMPUR HP [2020 (2) TMI 892 - APPELLATE AUTHORITY, GST, HIMACHAL PRADESH] is engaged in supply of exempted goods. The applicant was not aware of the provision that GST registration is not required if the goods supplied are exempted. However the appellant had taken GST Registration and filling GST returns by showing exempted supplies.

The appellant had sent one machine named “Auto Clave” for repair to its supplier M/s. Pragati Laboratory Equipment under the cover of Delivery Challan. In the delivery challan, it was specifically mentioned that “not for Sale” and “Only for Repair.” Along with delivery challan, the appellant had also enclosed one certificate wherein the purpose of transportation of machine was mentioned as “…..Faulty Auto Cleve machine, which is send on below address for repair. This machine is not for sale……”. The appellant had also enclosed photocopy of purchase invoice of above machine along with the above documents. The machine was purchased from the above firm i.e. M/s Pragati Laboratory Equipment having declared taxable value of ₹ 3,30,000/- with IGST @ 18% amounting to ₹ 59,400/-.

The above machine along with conveyance was detained due to non-availability of E-way bill. A detention order served for the payment of IGST of ₹ 59,400/- i.e. 18% on ₹ 3,30,000/- with equal penalty of ₹ 59,400/-.

The appellant replied to the authority that he was under bonafide belief that since he is engaged in the supply of exempted goods, he is not required to issue e-way bill. He further submitted that since there is no intent to evade GST the detention of vehicle and levy of tax and penalty is also not warranted. The non-issuance if e-way bill in such a situation is only a procedural lapse and due to this there is no revenue loss to the Govt. 

On the other hand the adjudicating authority was of the view that e-way bill is required irrespective of the fact that there is no supply and the machine is sent only for repair. The adjudicating authority passed an order with tax demand of ₹ 59,400/- and penalty of ₹ 59,400/-.

Being aggrieved by the oder, the appellant prayed to the Ld. Additional Commissioner (Appeals) to set aside the impugned order confirming IGST demand of ₹ 59,400/- and imposing equal penalty of ₹ 59,400/- and allow the present appeal and refund the same amount deposited. Any other order deemed just & proper may also be passed.

Order:

Both the parties submission has been considered. It appears that the goods transported by the petitioner is only for the purpose of repair and that there is no supply. Since there is no supply, GST is not applicable. The appellant's failure to generate e-way bill is only a procedural lapse. The revenue is not under loss in the absence of e-way bill not generated for the movement of exempted goods. Hence, the order demand tax and equal penalty is set aside. 

The appellant has however contravened the provision of e-way bill and therefore a penalty of ₹ 20,000/- is levied u/s 122 of GST Act, 2017.

Discussions to this article

[Gnanamuthu samidurai]

19) Though section 129(a) empowers the proper officer to release the goods detained on payment of penalty equal to one hundred percent of the tax payable, section 126 of the Act mitigates the rigour of section 129 and it prescribes certain disciplines related to penalty. According to sub section (2) of section 126 it is stipulated that “the penalty imposed under this Act shall depend on the facts and circumstances of each case and shall be commensurate with the degree and severity of the breach.

20) So also , sub section (5) of section 126 states that when a person voluntarily discloses to an officer under this Act, the circumstances of a breach of tax law,regulation or procedural requirement prior to the discovery of the breach by the officer under this Act, the proper officer may consider this fact as a mitigating factor when quantifying a penalty for that person.

In view of the above provision, I am of the view that the orders of the Appellate Authority is found to be reasonable

Samidurai

(Retd) Deputy Commissioner(CT)

(State of Tamilnadu)

[Ganeshan Kalyani]

Thanks Sir for sharing provision in support of the subject.