M/S Daya Shanker Singh vs. The State Of Madhya Pradesh

Held

The Court allowed the writ petition, setting aside the penalty order. The Court found substantial force in the petitioner's arguments, noting the similarity to cases decided by the Telangana and Calcutta High Courts. The respondents failed to establish any element of tax evasion, fraudulent intent, or negligence on the part of the petitioner. The delay of approximately 4.5 hours after the e-way bill expired was considered bonafide. The Court emphasized that the principles of natural justice and the doctrine of proportionality, as recognized in Section 126 of the Act, mandate that punishment should be commensurate with the breach. Since fraudulent intent and negligence were not established, the impugned notice and order could not have been passed. The Court directed the refund of the already deposited penalty amount to the petitioner within 30 days, failing which it would carry 6% interest. The Court relied on the Supreme Court's affirmation of the Telangana High Court's decision and the Calcutta High Court's reasoning, which also emphasized the lack of willful violation or intent to evade tax in similar circumstances.

Facts

The petitioner, M/s Daya Shanker Singh, a registered government contractor, challenged a notice and order imposing a penalty of Rs. 6,82,030.00. The petitioner had procured TMT bars, for which an e-way bill was generated on May 17, 2022, valid until May 19, 2022. Due to a vehicle breakdown on May 18, 2022, the vehicle carrying the goods was delayed. The vehicle reached Dindori on May 19, 2022, but was intercepted at 4:35 AM on May 20, 2022, after the e-way bill had expired. The Assistant Commissioner found no other discrepancy except the expired e-way bill. The petitioner argued that the delay was unintentional and there was no tax evasion.

Key Issues

1. Whether the imposition of penalty under Section 129 of the GST Act is justifiable when the delay in transit was due to reasons beyond the petitioner's control and there was no fraudulent intent or tax evasion, thereby violating the principles of natural justice and the doctrine of proportionality as enshrined in Section 126 of the Act? Petitioner's Arguments: - The proceedings under Section 29 of the GST Act were not justifiable. - Principles of natural justice and statutory requirements of Section 126 of the Act were not followed, as no penalty should be imposed for 'minor breaches' or procedural omissions without fraudulent intent or gross negligence. - The penalty was disproportionate and unwarranted as there was no revenue loss and the E-Way Bill mechanism's object was to check tax evasion, not penalize unintentional delays. - Relied on Telangana High Court's judgment in *Satyam Shivam Papers Pvt. Ltd. Vs. Asst. Commissioner, ST* (upheld by SC) and Calcutta High Court's judgment in *Ashok Kumar Sureka Vs. Asst. Commissioner, State Tax*. - Relied on Circular No. 64/38/2018-GST and this Court's judgment in *Robbins Tunnelling & Trenchless Technology (India) Pvt. Ltd. Vs. State of Madhya Pradesh*. - The petitioner had deposited the penalty amount and sought its refund. Respondents' Arguments: - The action taken by the Department is in consonance with the enabling provisions, and no fault can be found in the impugned notice/order. - The singular flaw was the expired E-way Bill, and the vehicle was intercepted thereafter.