2022 (9) TMI 92 - HC - GST

Expired e-way bill - Levy of penalty - Maintainability of petition - availability of alternative remedy of appeal - Detention of goods alongwith the vehicle - suppression or evasion of tax or not - HELD THAT - The availability of the alternate remedy does not dissuade from granting relief as it is opined that the demand for tax and the imposition of a major penalty, in the facts of this case, was clearly without jurisdiction. The reason for invoking Section 129 of the CGST laws in this case, is only one, that the e-way bill has expired - In the facts of the present case, it is clear from a reading of Ext.P3 that the vehicle (the goods) was accompanied by an invoice which showed the value of the vehicle to be Rs.23,96,505.64 including IGST at Rs.5,24,016.86. It was also accompanied by an e-way bill that was valid up to 8.7.2019. The only discrepancy noted was that the e-way bill had expired on 8.7.2019. Circular No.64/38/2018 dated 14- 09-2018 reveals that the purpose of issuing such a Circular was to mitigate the hardships being caused to taxpayers for minor discrepancies, which had no bearing on the liability to tax or on the nature of goods being transported. The circular is statutory in nature and is binding on the Tax Officers. Thus minor discrepancies cannot be penalized contrary to the mode and procedure contemplated under the Circular. In the instant case, the discrepancy pointed out is only on the date of invoice which is shown as 03.02.2021 while that shown in the e-way bill was 02.03.2021. All other details in the invoice and the e-way bill including the nature of goods transported, the details of consignor and consignee, the GSTIN of supplier and recipient, place of delivery, invoice number, value of goods, HSN code, vehicle number etc. tallied and had no discrepancy. Thus the error noticed is insignificant and not of any consequence for invoking the power conferred under section 129 of the Act to impose tax and penalty. The situation arising in the instant case, warranted imposition of only a minor penalty as contemplated under the Circular. In view of the above, the imposition of tax and penalty upon the petitioner to the extent imposed in Ext.P6 is perverse and illegal, warranting interference under Article 226 of the Constitution of India. The matter will stand remanded to the 1st respondent who shall consider the amount of penalty to be imposed on the petitioner taking note of the findings in this Judgment and also keeping in mind the observations of this Court in Ext.P6 judgment (extracted hereinbefore), after affording an opportunity of hearing to the petitioner - petition allowed by way of remand.

Summary

Issues Involved:
1. Validity of the penalty imposed due to the expiry of the e-way bill.
2. Jurisdictional error in imposing tax and penalty.
3. Applicability of alternative remedy under Section 107 of the CGST/SGST Acts.
4. Validity of the conditions for maintaining the appeal under Section 107 of the CGST/SGST Acts.

Issue-wise Detailed Analysis:

1. Validity of the penalty imposed due to the expiry of the e-way bill:
The petitioner, engaged in the transportation of goods, was penalized because the e-way bill for transporting a tipper lorry from Tamil Nadu to Kozhikode expired on 8.7.2019, and the vehicle was detained on 9.7.2019. The petitioner argued that the vehicle couldn't cross the check post due to mechanical issues and the closure of the Bandipur Highway at night. The petitioner cited judgments from various High Courts to argue that minor discrepancies should not attract major penalties, especially when there is no intent to evade tax. The Court noted that the vehicle was accompanied by an invoice showing the value and IGST, and the only discrepancy was the expired e-way bill. It emphasized that the officer did not find any attempt to evade tax, and the explanation for the delay was not adequately considered.

2. Jurisdictional error in imposing tax and penalty:
The Court held that the imposition of a major penalty and demand for IGST was without jurisdiction. It referenced the judgment in Podaran Foods India Pvt. Ltd., which emphasized that detention of goods and vehicles should only occur if there is a possibility of tax evasion. The Court reiterated that Section 129 of the CGST/SGST Acts should be strictly construed and that detention should be justified only if there is a contravention of the Act's provisions related to transportation or storage of goods. The Court found that the detention in this case was solely due to the expired e-way bill, without any indication of tax evasion.

3. Applicability of alternative remedy under Section 107 of the CGST/SGST Acts:
Despite the availability of an alternative remedy, the Court decided to grant relief because the demand for tax and the imposition of a major penalty were clearly without jurisdiction. The Court emphasized that the statutory Circular No.64/38/2018, issued by the Central Board of Direct Taxes and Customs, aimed to mitigate hardships caused by minor discrepancies, which had no bearing on tax liability. The Court noted that the discrepancy in this case was minor and did not justify the imposition of a major penalty.

4. Validity of the conditions for maintaining the appeal under Section 107 of the CGST/SGST Acts:
The Court did not find it necessary to examine the validity of the conditions stipulated in Ext.P5 for maintaining Ext.P4 appeal, given its findings on the other issues. The Court quashed Ext.P3 and remanded the matter to the 1st respondent to reconsider the penalty, taking into account the findings in the judgment and providing an opportunity for the petitioner to be heard.

Conclusion:
The writ petition was allowed, and Ext.P3 was quashed. The matter was remanded to the 1st respondent to reconsider the penalty, with the Court emphasizing that minor discrepancies should not attract major penalties and that the explanation for the expired e-way bill should be adequately considered. The Court's decision was influenced by the binding precedent set by the Telangana High Court, affirmed by the Supreme Court, which held that the power of detention under Section 129 was wrongly invoked in cases where there was no intent to evade tax.