GST Update No 278 on detention for expiry of E-way bill by few hours

The highest cases are being reported with respect to detention and seizure of goods during their transportation on account of discrepancies found in e-way bill. There had been various Judicial Rulings wherein the High Courts have delivered that delay in delivery after expiry of e-way bill would not result into detention or imposition of penalty unless there is intention to evade tax. Further, the Apex Court in the case of ASSISTANT COMMISSIONER (ST) & ORS. V/S SATYAM SHIVAM PAPERS LIMITED held that no penalty can be levied for delay in the transportation of goods due to bottleneck of traffic. Recently, on similar lines, case was reported before Madhya Pradesh High Court in the case of M/s DAYA SHANKAR SINGH AND STATE OF MADHYA PRADESH. The decision imparted in this case is subject matter of discussion of our present update.
The petitioner is registered Government Contractor and had received work order from Divisional Project Engineer of Public Works Department for construction of additional laboratory and classroom at the Dindori college. The quotation was received from Mittal Steels for supply of TMT bars and hence, order was placed to them in Raipur. Mittal steels generated E-way bill for movement of goods from Raipur to Dindori. However, the vehicle subsequently suffered the problem and the clutch-plates of vehicle got damaged. The proprietor of “Maa Rewa Transport” sent vehicle for servicing to “Rama Moto Cooperation” Raipur on 18.05.2022. As on 19.05.2022, the vehicle got repaired and tax invoice was also raised for changing parts. Thereafter, the vehicle started its movement after getting gate pass. The vehicle reached at destination on 19.05.2022 between 10:30 to 10:45 pm and upon reaching the petitioner directed the driver to take the vehicle to weigh bridge. The Assistant Commissioner at 04:35 am as on 20.05.2022 stopped the truck and demanded all the relevant documents which were duly furnished by the driver.
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However, the authority objected the E-way bill stating that it got expired as on 19.05.2022 at 12:00 am. Hence, GST MOV-02 was issued to the petitioner stating that e-way bill is expired and the vehicle was detained.
The petitioner requested that material detained should be supplied to him since the same were necessary for construction of classroom and laboratory. The written submissions of petitioner were not accepted and hence, MOV-06 and 07 were also issued specifying the penalty demanded. The Counsel of petitioner submitted that the proceedings under Section 129 are not justifiable and principles of natural justice were not followed. Further, no penalty should be imposed for “minor breaches” or procedural lapses. Also, the petitioner is not guilty of any fraudulent or gross negligence, hence, penalty imposed is totally unwarranted. It was argued that the respondent failed to see that there was no revenue loss. The intention of E-Way bill mechanism was to keep a check on movement of goods without tax invoice and to regulate tax evasion and the act of respondent however runs contrary to the scheme of mechanism. Reliance was placed on decision of Telangana High Court in the case of Satyam Shivam Papers Pvt. Ltd. V/s Asst. Commissioner, ST & Others, Calcutta High Court in the case of Ashok Kumar Sureka V/s Asst. Commissioner, State Tax, Durgapur Range, Divisional Bench in the case of Robbins Tunnelling & Trenchless Technology (India) Pvt. Ltd. V/s State of Madhya Pradesh & Others. Further reference was made to Circular No. 64/38/2018-GST dated 14.09.2018.
The Counsel of department argued that the order and notice issued in the present case contains no discrepancy or deficiency and the action taken is in accordance with the provisions of the Act.
The Court held that the submissions of appellant as regards to violation of principle of natural justice and gross negligence were not rebutted by the respondent. Reference was made to decisions on which the petitioner placed reliance. Hence, it was concluded that there is gross negligence on the part of revenue department since there is no tax evasion. It was bonafide mistake only and hence, no penalty should be imposed. It was directed to refund the amount of penalty paid within 30 days failing which interest at the rate of 6% is
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payable to the petitioner by the department.
The above decision is yet another example in support of the fact that harsh and vindictive penalties should not be levied in case of technical breaches and lapses. Reference can be drawn to various decisions such as R.K. Motors V/s State Officers, M.R. Traders V/s Assistant State Tax Officer, Godrej Consumer Products Ltd. v/s ACST & E-Cum etc. It is high time that these settled Judicial Pronouncements should be followed by the departmental authorities before initiating any action against the taxpayers in order to avoid the unnecessary litigations.

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GST Update No 278 on detention for expiry of E-way bill by few hours

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