2022 (8) TMI 814 - HC - GST

Levy of penalty - invalid/expired E-way bill - existence of element of tax evasion or not - non-rebuttal of fraudulent intent and negligence on the part of petitioner - HELD THAT - The respondents could not establish that there exist any element of evasion of tax, fraudulent intent or negligence on the part of the petitioner. In this backdrop, the impugned notice/order 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 - In the instant case, the delay of almost 4 30 hours before which E-way Bill stood expired appears to be bonafide and without establishing fraudulent intent and negligence on the part of petitioner, the impugned notice/order could not have been passed. The penalty imposed is set aside - petition allowed.

Summary

Issues:
1. Challenge to notice and order regarding E-Way Bill violation and penalty imposition.

Analysis:
The petitioner, a registered Government contractor, challenged a notice and order related to the expiration of an E-Way Bill during the transportation of goods. The petitioner received a work order for construction and placed an order for TMT bars. The supplier raised an invoice and generated an E-Way Bill for the goods' movement. However, the vehicle carrying the goods faced mechanical issues, resulting in a delay. The Assistant Commissioner stopped the vehicle, claiming the E-Way Bill had expired, leading to the detention of the goods.

The petitioner contended that the penalty imposed was disproportionate and unwarranted, highlighting the absence of fraudulent intent or negligence. Citing a Telangana High Court judgment, the petitioner argued that the mere lapse of time on the E-Way Bill does not justify penalty imposition. Additionally, a Calcutta High Court judgment and a circular were referenced to support the argument against penalty for clerical errors.

The Department defended the notice and penalty, acknowledging the E-Way Bill's expiry as the sole deficiency in the documents provided. However, the Department's action was deemed justifiable under the relevant provisions.

After considering the arguments, the Court found that there was no evidence of tax evasion, fraudulent intent, or negligence on the petitioner's part. Referring to precedents, the Court emphasized the importance of proportionality in penalties and set aside the penalty imposed, directing the refund of the deposited amount to the petitioner.

In conclusion, the Court allowed the writ petition, ruling in favor of the petitioner and ordering the refund of the penalty amount. The judgment emphasized the need for proportionate penalties and the absence of fraudulent intent or negligence in the case at hand.