Sections 68 of The CGST Act 2017, requires the person in charge of a conveyance carrying any consignment of goods of value exceeding Rs. 50,000.00 ( may vary state to state in case of intra state transaction) carry with him such documents and such devices as may be prescribed.
As Per Rule 138 of The CGST Rules 2017 Eway bill is one of the important document to be carried by the person in charge of a conveyance carrying any consignment of goods.
Penal provisions in terms of Section 129 of CGST Act 2017
where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made thereunder, then all such goods and conveyance would be liable to detention or seizure and after detention or seizure, on payment of penalty which is presently the applicable tax and penalty equal to 100% GST payable on such goods, such goods detained can be released.
In the case of exempted goods, the penalty would be 2% of the value of goods or Rs.25,000 whichever is less. If the owner does not come forward, then the goods can be released on payment of applicable tax and a penalty equal to 50% of the value of the goods reduced by the tax amount paid. This provision is amended through Finance Act, 2021 to levy a penalty equal to 200% of the tax payable on such goods in case of taxable goods where the owner of the goods comes forward for payment of such penalty. In other cases, a penalty would be equal to 50% of the value of the goods or 200% of the tax payable on such goods, whichever is higher. However, this provision would come into effect on notification to give effect to this provision.
So, In case person in charge of a conveyance carrying any consignment of goods without eway bill or carrying with expired e way bill he is liable to proceedings under section 129 and 130 of the CGST Act, 2017
However, there are provisions to extend validity of eway bill but sometime person in charge of a conveyance carrying any consignment of goods with expired eway bill, either due avoidable or unavoidable circumstances, penalty under section 129 imposed on him even though his contention his bona fide and there is no any intention to evade tax.
Although in this case it is not possible every time for dealer to prove his contention, Here are some case laws favouring dealer:
GOVERNMENT OF WEST BENGAL Vs ASHOK KUAMR SUREKA, PROPRIETOR OF SUBHAM STEEL
Date of Order – 12-05-2022 - MAT 470 of 2022 With I.A. No. CAN 1 of 2022
HIGH COURT OF THE CALCUTTA ( Please lofin to read full case law)
This is an appeal made the department against the order passed by the learned Single Bench. The case of the department was that the respondent dealer took first time ground before the bench
which (ground) was neither taken before the appellate authority nor in the pleadings in the writ petition. The respondent had stated anything about the vehicle being broken down or that non- extension of the validity of the e-way bill was not deliberate and wilful but due to the circumstances as stated.
The Court held that we need not go into the controversy as to whether there was a breakdown of the vehicle, etc. The case has to be approached by considering the bona fides of the transaction as to whether the case warrants detention of the goods and collection of tax and penalty. The explanation offered by the respondent / writ petitioner was an acceptable explanation and a case cannot be made out that there was a deliberate and wilful attempt on the part of the respondent /writ petitioner to evade payment of tax so as to justify invocation of the power under Section 129 of the Act. Thus, we are of the view that the relief granted by the learned writ Court is fully justified.
DHABRIYA POLYWOOD LIMITED Vs UNION OF INDIA
Date of Order – 27-04-2022 - R/SPECIAL CIVIL APPLICATION NO. 7702 of 2022
HIGH COURT OF GUJRAT ( Please lofin to read full case law)
The petitioner’s case was that there was discrepancy in the E-way bill with regard to ‘wrong vehicle type’. Though all documents such as invoice and e-way bill were available when the goods were detained.
The Hon’ble High Court quashed and set-aside the notice. Accordingly, order of detention of goods was quashed and directed to release the goods at earliest.
The Court held that the case of the petitioner was covered under Circular Nos.41/15/2018-GST dated 13.04.2018 and 49/23/2018-GST dated 21.06.2018. The circular makes it clear that in case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, the proceedings under Section 129 of the CGST Act may not be ordinarily initiated, more particularly, in the situation, as highlighted in para 5 of the circular.
M/s A.S. ENTERPRISE Vs COMMISSIONER OF STATE TAX U.P
Date of Order – 01-04-2022 - Writ Tax No. 1126 of 2021
HIGH COURT OF ALLAHABAD ( Please lofin to read full case law)
The petitioner’s case was that the petitioner could not produce relevant documents at the time of inspection of goods in transit. The same (all documents) were produced at the time of physical verification. The authority declined to verify the same. The detaining authority formed a view that further documents may be produced only along with show cause notice. The petitioner produced the entire set of documents being original invoices to establish that the goods in question were covered by regular tax invoice with respect to transaction on inter-state sale on which IGST had been paid.
Treating the above explanation to be an afterthought and solely on account of absence of such documents at the stage of interception of the goods and physical verification, it has been assumed, the goods were being imported into the State of U.P. in contravention of law. Accordingly, tax and penalty had been demanded and confiscation made.
There is no dispute to the fact that the documents that were produced by the petitioner though at the stage of the show cause notice were original tax invoices issued by the petitioner. No enquiry was made to doubt the genuineness of such tax invoices or to doubt the date of issue of such invoices. Thus, all tax invoices produced by the petitioner to cover the disputed goods are dated 31.07.2021. No enquiry appears to have been made from the revenue authorities in the State of Punjab to confirm if the transactions were genuine. Then, it is not the case of the revenue that the goods found transported were different from the goods disclosed in the tax invoices produced by the petitioner. No enquiry was conducted by the respondent authorities either from the purchasing dealers or the Assessing Authority to doubt the transaction at the end of the consignee.
In view of the above lack of enquiry and lack of reasonable doubt, the continued seizure and confiscation as also the demand of tax and penalty is based solely on presumptions and conjectures.
Consequently, though the detention did not suffer from any illegality, however, the further orders of the seizure etc. are found to be not based on any material or evidence on record. Accordingly, the impugned orders dated 7.10.2021 and 6.9.2021 are set aside. The goods as also vehicle may be released forthwith.
M/s CREATE CONSULTS Vs THE STATE OF MADHYA PRADESH
Date of Order – 16-03-2022 - WRIT PETITION NO.344 OF 2022
HIGH COURT OF MADHYA PRADESH ( Please lofin to read full case law)
The case of the petitioner say A is that A placed order to Mumbai Supplier B for supply of goods to his buyer C in Gujrat. Inadvertently in e-way bill consignor name was typed A (i.e. petitioner’s name) in place of B who was the actual supplier of goods. There was no any mistake found in other documents such as tax invoice, courier receipt, vehicle number etc.. The goods were detained and proceedings initiated on the ground that supplier name was not correctly mentioned in the e-way bill issued.
The Hon’ble Court passed the order in favour of the petitioner. The court held that the mistake appears to be bonafide inasmuch as the detail of vehicle, dispatch date is same. In our considered view, the case in hand appears to be a case where e-way bill was generated wrongly in the name of petitioner on account of some clerical or typographical error. It is further directed that respondents will be at liberty to consider the case of petitioner for imposition of a minor penalty while treating the mistake in question to be a clerical mistake as per circular dated 14/09/2018 bearing no. CBEC/20/16/03/2017-GST issued by Ministry of Finance, Government of India.
PODDER & PODDER INDUSTRIES PRIVATE LIMITED Vs THE STATE OF TRIPURA AND OTHERS
Date of Order – 29-03-2022 - WP(C) No.285 of 2022
HIGH COURT OF TRIPURA ( Please lofin to read full case law)
Due to technical fault in the vehicle the goods could not be entered in buyer’s state within time as stipulated on the e-way bill. The e-way bill was also not extended after its expiry. The vehicle was stopped at entry point of the state and the proceeding were initiated due to expiry of the e-way bill though all other documents were complete and valid.
The Court took the view that any impact on the free-flow of goods and services (bona fide) ought to be encouraged and not discouraged since the free-flow and movement of goods and services throughout the Union of India is meant to be for the purpose of development of the nation.
The court agreed that the movement of goods from one state to another is controlled by the taxation department under the GST regime on the e-way bill issue. Therefore, since the transaction admittedly is between two registered dealers located in two different states, there is no justification for stoppage in transit of the vehicle and goods.
Writ petition is disposed of directing the petitioner to appear before the check gate officer and to submit an undertaking or bond before the check gate officer and the check gate officer shall release the vehicle as well as the goods by accepting the undertaking or bond and such information as may be appropriate be provided to the assessing officer of both the seller and buyer who may be at liberty to initiate appropriate action against the registered dealer who shall be duty bound in law to make such compliances failing which they shall be liable for whatever consequences law has prescribed.
Part 2 to be continued……
Author - CA Jatin Minocha
Phone- 99115-41774
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