Hindusthan Biri Leaves And Anr vs. Assistant Commissioner Of State Tax Bureau Of Investigation Durgapur Zone And Ors
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The petitioners, Hindusthan Biri Leaves & Anr., are engaged in the trading of kendu leaves. They placed an order with a supplier in Chhattisgarh who dispatched 329 bags of leaves on July 21, 2022, with Invoice No. 08/22-23. An e-way bill was generated, valid until July 27, 2022. The vehicle carrying the goods was intercepted on July 29, 2022, after the e-way bill had expired. The authorities initiated confiscation proceedings, and a show-cause notice was issued. The petitioners contended that the goods were perishable and, without prejudice, paid the penalty to secure the release of the goods. They then filed an appeal before the appellate authority. The primary dispute revolves around the expired e-way bill, with the Department not disputing the petitioners' plea of delay due to traffic blockage.
Held
The Court allowed the appeal and the writ petition, setting aside the orders passed by the original and appellate authorities. The Court reasoned that the sole ground for detention was the expired e-way bill, and the Department had not disputed the petitioners' contention that the delay was caused by traffic blockage. The Court noted that under Rule 138 of the WB GST Rules, transporters are allowed an 8-hour window to seek an extension for the e-way bill. Even with this allowance, the delay in the present case was 17 hours, which the Court considered in light of the fact that the distance was only 200 kilometers and could be covered in under 4 hours. Crucially, the Court found no evidence of an intention on the part of the appellants to evade tax. Therefore, imposing a 200% penalty in a mechanical manner was deemed unjustified. The Court relied on the Division Bench decision in Progressive Metals Pvt. Limited Vs. The Deputy Commissioner, State Tax, Bureau of Investigation, South Bengal, Durgapur Zone & Ors. The Court directed the appropriate authority to refund the penalty recovered from the appellants within eight weeks of their application. No costs were awarded.
Key Issues
1. Whether the imposition of a 200% penalty under Section 129 of the CGST/WBGST Act, 2017, is justified solely on the ground of an expired e-way bill, when the delay was allegedly due to traffic blockage and there was no intention to evade tax? Petitioner's Arguments: The petitioners argued that the penalty imposed under Section 129 was unjustified as the sole ground for detention was the expiry of the e-way bill. They relied on several Supreme Court and High Court decisions, including Assistant Commissioner (ST) Vs. Satyam Shivam Papers (P.) Ltd., which held that penalty orders under Section 129 could be set aside if the only issue was an expired e-way bill. They also pointed to the fact that the delay was not disputed by the Department and that there was no intention to evade tax. Furthermore, they highlighted that the distance to be covered was only 200 kilometers, which could be completed in less than 4 hours, and that Rule 138 of the WB GST Rules allows for an 8-hour extension for transporters. Revenue's Arguments: The respondents did not dispute the petitioners' plea of delay due to traffic blockage. Their contention was primarily based on the fact that the e-way bill had expired.
Sections Cited
Section 129, Section 129(1), Section 129(3), Section 68(3), Rule 138
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Cause title — parties, addresses and appearances
common judgment and order.
We have heard the heard the submissions of the learned advocate appearing for the respondents on the above submission.
With the consent of the learned advocates on either side, the writ petition as well as this appeal are disposed of by this common judgment and order.
The appellants had filed the writ petition challenging the order passed by the Senior Joint Commissioner, State Tax, Berhampore Circle, Murshidabad under Section 129(1), Section 129(3) read with Section 68(3) of the West Bengal Goods and Services Tax Act, 2017 read with the relevant provisions of the Central/Union Territory Goods and Services Tax Act, 2017, Integrated Goods and Services Tax Act, 2017 and Goods and Services (Compensation to States) Act, 2017 and the Rules made thereunder.
The assessee is a partnership firm engaged in the trading business of Biri (kendu leaves). They had placed an order with M/s. Shakti Swaroop Enterprise at Chhattisgarh and the supplier had submitted 329 bags of the said leaves and raised Invoice No.08/22-23 dated 21st July, 2022 on the appellants and the goods were loaded in a vehicle bearing Registration No.CG04DM2811 and the goods were to be delivered to the appellants at Krishnanagar, West Bengal. The vendor generated e-way bill No.881241037262, which was valid upto 27th July, 2022. The vehicle was intercepted by the authority on 29th July, 2022 at about 1:05 a.m. noting that the e-way bill had expired in the midnight of 27th July, 2022 and the 3 3 goods were sought to be confiscated. The show-cause notice was issued and the appellants appeared before the authority and contended that since the goods were perishable, without prejudice to the rights and contentions, they had paid the penalty and the goods may be released. After the goods were released, the appeal was preferred before the appellate authority. Various grounds have been raised and reliance was placed on the various decisions of the Courts, which have held that when the goods could not be delivered within validity period of e-way bill because of traffic blockage and while detaining the goods, the GST officer kept the same in the house of his relative instead of a designated place. Additional cost was imposed on the authority in view of the harassment faced by the assessee. In this regard, reliance was placed on the decision of the Hon’ble Supreme Court in reported in [2022] 134 taxmann.com 241 (SC).
In the instant case, admittedly there is no other dispute or discrepancy raised by the Department except to state that the e-way bill had expired. Under the statute, the transporter or the owner of the goods or the supplier can extend the e-way bill within a period of 8 hours. If the said 8 hours time is given to the appellants, then the delay would be 17 hours. The appellants would state that the delay occurred on account of traffic blockage, which fact has not been disputed by the Department nor there is any record to dispute the said plea raised by the appellants.
That apart, there is nothing to indicate that there was an intention on the part of the appellants to evade the payment of tax and in such circumstances, imposition of penalty @ 200% per cent that too in a Bengal, Durgapur Zone & Ors. in M.A.T. 562 of 2023 dated 28th April, 2022. 8. The distance between the place where the vehicle was intercepted and the place, where the goods were delivered was 200 kilometres to be covered within less than 4 hours.
Thus, considering the undisputed facts and the only allegation being that the e-way bill was not extended, we are of the view that it is not a case where 200% penalty should have been imposed on the appellants.
In Progressive Metals Private Limited (supra) more or less similar facts were considered by the Court and after taking note of Rule 138 of the W.B.G.S.T. Rules, which allows the transporter 08 hours time to seek for extension and if such allowance was granted in the facts and circumstances of the case, the delay was 01 hour and 35 minutes though in the case on hand, the delay after giving the 08 hours allowance, is 17 hours, the revenue has not been able to demonstrate lack of bona fides on the part of the appellants.
Therefore, we are of the clear view that the case on hand is not one such case, where 200% penalty could have been imposed.
Accordingly, appeal and the writ petition are allowed and the orders passed by the appellate authority and the original authority are set aside and the appropriate authority of the Department is directed to refund the penalty recovered from the appellants upon an application being filed by the appellants within eight weeks from the date of filing such application.
No costs.
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Urgent photostat certified copy of this order, if applied for, be furnished to the parties expeditiously upon compliance of all legal formalities.
(T.S. SIVAGNANAM) CHIEF JUSTICE I agree. (CHAITALI CHATTERJEE (DAS), J.)
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.