The Joint Commissioner (Appeals)-Ii vs. Sanskruthi Motors

Held

The High Court held that the learned single judge was correct in distinguishing the case of Ranjilal Damodaran v. Assistant State Tax Officer from that of M/s. Satyam Shivam Papers Pvt. Ltd. and Another. The Court found that the imposition of a major penalty for travelling with an expired E-Way Bill, where the interception occurred shortly after expiry and there was no finding of tax evasion, was not justified. The learned single judge had quashed the order imposing the major penalty and directed reconsideration of the penalty amount. The Division Bench, in this intra-court appeal, found no reason to interfere with the learned single judge's discretion to remit the matter for fresh consideration solely on the quantum of penalty. The appeal was dismissed, confirming the order of the learned single judge, with a direction that the matter be considered and disposed of by the concerned officer uninfluenced by any observations in the judgment under appeal.

Facts

The appellants, the Joint Commissioner (Appeals)-II and the State Tax Officer, are challenging a judgment of the High Court. The respondent, Sanskruthi Motors, a transport contractor, was transporting a new tipper lorry from Tamil Nadu to Kozhikode. The vehicle, valued at Rs. 23,96,505.64 (including IGST of Rs. 5,24,016.86), was intercepted on July 9, 2019, by GST officials. The E-Way Bill accompanying the vehicle had expired on July 8, 2019. Consequently, an order (Ext.P3) was passed imposing a penalty of Rs. 5,20,017/- and IGST of Rs. 5,24,017/- under Section 129(1)(a) of the IGST/CGST Act, 2017. The respondent filed an appeal (Ext.P4) against this order.

Key Issues

1. Whether the imposition of penalty under Section 129(1)(a) of the IGST/CGST Act, 2017, was justified when the E-Way Bill had expired slightly after its validity period, and the vehicle was intercepted within 24 hours of expiry, with an explanation for the delay due to mechanical issues and highway closure. Contentions: Petitioner (Appellants): The petitioner could not transport the tipper lorry after the expiry of the E-Way Bill without extending its validity as per Rule 138(10) of the CGST Rules. The power of detention under Section 129 is to prevent tax evasion, and penal provisions can be invoked. The petitioner had already availed the remedy of appeal and therefore could not invoke the writ jurisdiction. Respondent (Respondent): The E-Way Bill was valid up to 11:59 p.m. on July 8, 2019, and the vehicle was intercepted shortly thereafter. The goods were accompanied by an invoice and E-Way Bill. The penalty was imposed solely because books of accounts or documents were not produced. The learned single judge distinguished a previous judgment and held that a major penalty for a minor delay in E-Way Bill validity was not justified, especially without a finding of tax evasion.