The Calcutta High Court recently delivered an important judgment regarding penalty proceedings under Section 129 of the WBGST/CGST Act, 2017. The case revolved around a consignment of sponge iron detained due to an expired e-way bill. The Court ultimately set aside the penalty, recognizing the genuine difficulties faced by the transporter.
Background of the Case
The petitioners, engaged in the business of iron and steel, contracted for the supply of 29.630 MTs of sponge iron from Shyam Sel & Power Limited to Amit Metaliks Limited.
The goods were dispatched on 12th December 2023 via Sri Balaji Constructions and Logistics.
An e-way bill, generated on 3rd December 2023, expired at midnight of 13th/14th December.
On 14th December 2023, at 1:39 p.m., the vehicle was intercepted by GST authorities.
The primary allegation: the petitioners failed to revalidate the e-way bill within 8 hours, even though the distance was only 29 km, which could ordinarily be covered in 2–3 hours.
The consignment was released on 27th December 2023 after the petitioners paid penalty under Section 129(1)(a). A show-cause notice followed, and an order under Section 129(3) was passed on the same date, confirming the penalty.
Appeal and Reliance on Precedents
The petitioners appealed, but the appellate authority upheld the penalty on 29th August 2024, relying on the earlier ruling in Pushpa Devi Jain v. Assistant Commissioner of Revenue [2023 TAXONATION 485 (CALCUTTA)].
In the writ petition before the High Court, the petitioners argued:
The delay occurred due to vehicle breakdown, not tax evasion.
The appellate authority failed to properly consider this bona fide explanation.
Reliance was placed on judgments such as:
Asian Switchgear Pvt. Ltd. v. State Tax Officer [2023 TAXONATION 488 (Calcutta)]
M/s Maa Amba Builders v. Assistant Commissioner of Revenue [2024 TAXONATION 933 (Calcutta)]
Division Bench ruling in Pushpa Devi Jain (supra) [2023 TAXONATION 485 (CALCUTTA)], which emphasized that penalties cannot be imposed where no mala fide intent is shown.
Revenue’s Stand
There is no requirement to prove mens rea (guilty intent) for such penalties.
Despite multiple opportunities, the petitioners failed to submit any supporting documents proving the alleged breakdown.
Hence, the penalty was justified.
Court’s Observations
Justice noted the following key points:
Defence of breakdown: Although not raised during release proceedings, the petitioners specifically pleaded this in the appellate stage. The detailed statement mentioned how the driver waited overnight for a mechanic, causing a 15-hour delay.
Supporting documents: While the appellate authority rejected the plea for lack of documentary evidence, the Court observed that in real-life situations, especially breakdowns en route, supporting documents may not always be available.
Bona fide conduct: There was no evidence of wilful misconduct or tax evasion. The short delay appeared genuine and unavoidable.
Conclusion
The Calcutta High Court held that imposing penalty in such peculiar circumstances was unjustified. Accordingly, it:
Set aside the order dated 27th December 2023 under Section 129(3) and the appellate order dated 29th August 2024.
Directed that since the petitioners had already paid the penalty, they may apply for a refund, which the authorities must process within two weeks of application.
Disposed of the writ petition with these directions.
GST Case Law Amit Mines Private Limited Versus Assistant Commissioner of State Tax
Citation-2025 TAXONATION 1989 (CALCUTTA) (Click here to read full case law)
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