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2024 (11) TMI 777 - HC - GSTChallenge 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. Rs.11,80,150/- 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. Rs.11,80,150/- 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. Rs.11,80,150/- levied and confirmed by the respondent authorities.
Issues Involved:
1. Legality of the penalty imposed under Section 129(1) of the CGST Act for non-generation of Part-B of the E-way bill. 2. Procedural compliance concerning E-way bill generation and its implications. 3. Application of Circulars issued by the Central Board of Indirect Taxes and Customs (CBIC) regarding minor discrepancies in documentation. 4. Justification for the imposition and quantum of penalty under the CGST Act. Detailed Analysis: 1. Legality of the Penalty Imposed under Section 129(1) of the CGST Act: The petitioner challenged the order confirming a penalty of Rs. 11,80,150/- under Section 129(1) of the CGST Act, arguing that the non-generation of Part-B of the E-way bill was a procedural lapse due to technical glitches. The petitioner contended that there was no intention to evade tax since the goods were imported after paying IGST and were being transported from the port to the manufacturing site. The court acknowledged that the petitioner had no intention to evade tax, as the goods were cleared by customs and were accompanied by necessary documentation, except for Part-B of the E-way bill, which was generated shortly after the interception. 2. Procedural Compliance Concerning E-way Bill Generation: The petitioner argued that the failure to generate Part-B of the E-way bill was a minor procedural lapse, not warranting a hefty penalty. The court noted that Part-A of the E-way bill was generated before the interception, and Part-B was generated shortly after, indicating no intent to contravene the law. The court considered this a minor lapse and not a substantial violation of the CGST Act. 3. Application of CBIC Circulars on Minor Discrepancies: The petitioner relied on CBIC Circular No. 64/38/2018, which provides guidelines for handling minor discrepancies in documentation. The circular suggests that proceedings under Section 129 may not be initiated if a consignment is accompanied by an invoice and an E-way bill, even if there are minor discrepancies. The court found that the petitioner's case fell within the scope of this circular, as the goods were accompanied by the necessary documents, and the lapse was minor. 4. Justification for Imposition and Quantum of Penalty: The court examined the provisions of Section 129(1) of the CGST Act, which allows for detention and penalty if goods are transported in contravention of the Act. The court observed that while the petitioner paid the penalty voluntarily, the contravention was venial and technical. Considering the petitioner's compliance with other requirements and the minor nature of the lapse, the court modified the penalty to Rs. 25,000/-, deeming it a more appropriate sanction for the procedural lapse. Conclusion: The court concluded that the imposition of a penalty of Rs. 11,80,150/- was excessive given the minor procedural lapse and absence of intent to evade tax. The penalty was reduced to Rs. 25,000/- in light of the facts and applicable CBIC circulars. The court emphasized the importance of proportionality in penalties and the need to consider the intent and nature of the contravention. The rule was made absolute to the extent of modifying the penalty, with no order as to costs.
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