2023 (2) TMI 94 - HC - GST

Levy of tax with penalty - validity period of the E-Way bill stood expired - Section 129(3) of the GST Act - HELD THAT - In the instant case, the consignment (GSV) transported from Pune, Maharashtra to Malli Bazar, Darjeeling. There was delay of only 41 minutes in delivering the consignment. The petitioner has made out a ground that the destination, Malli Bazar in Darjeeling is situated at a hilly terrain. Therefore, it is obvious that there might be few minutes delay in delivering the consignment - In the instant case, imposition of tax was made by the Adjudicating Authority within 40 minutes from the expiry of E-Way Bill. Having heard the learned Counsels for the parties and on careful perusal of the materials on record as well as the relevant rules, it is found Rule 138 of the CGST Rule 2017 clearly provides that the validity of the E-Way Bill may be extended within 8 hours from the date of its expiry. The submissions made by the learned Government Advocate cannot be accepted on the ground that where a statute provides extension of time to a transporter, the Adjudicating Authority before imposition of tax and penalty ought to have communicated to the transporter about his right to extend the period but the Adjudicating Authority failed to perform and the appellate authority failed to consider. So it is the discretion of the Adjudicating Authority to extend the period of E-Way Bill up to 8 hours from the time of its expiry. The Adjudicating Authority failed to exercise its discretion. On this score, the order passed by the Adjudicating Authority and affirmed by the Appellate Authority are liable to be set aside - petition allowed.

Summary

Issues:
1. Imposition of tax and penalty due to expired E-Way Bill validity.
2. Interpretation of the validity period extension for E-Way Bill.
3. Discretion of Adjudicating Authority in extending E-Way Bill validity period.

Analysis:
1. The petitioner, engaged in transportation business, transported a JCB from Hyderabad to Darjeeling. Despite valid tax documents, the JCB was not delivered on time, leading to a tax demand and penalty. The petitioner's appeal was dismissed, prompting the writ petition challenging the imposition of tax and penalty.
2. The issue of expired E-Way Bill validity was considered, referencing a previous case where penalties were set aside due to lack of willful tax evasion. The government advocate argued that a pending Supreme Court case could impact the decision on tax liability post E-Way Bill expiry.
3. The petitioner cited a Supreme Court case where delay was condoned with costs, emphasizing a 41-minute delay in delivering the consignment to a hilly terrain destination. The Adjudicating Authority imposed tax within 40 minutes of E-Way Bill expiry, leading to a debate on the extension of the validity period.
4. The Adjudicating Authority's failure to communicate the right to extend the E-Way Bill validity within 8 hours was highlighted. The court noted that the authority's discretion to extend the validity period was not exercised, leading to the setting aside of the orders imposing tax and penalty.
5. Ultimately, the court allowed the writ petition, emphasizing the Adjudicating Authority's failure to exercise discretion in extending the E-Way Bill validity period. The judgment did not impose any costs on either party, concluding the case.