GST Update No 316 on expiry of E-way bill due to clerical error

After implementation of GST regime, one of the common point for litigation is detention of goods due to expiry of e-way bill. It is often observed that the goods are being moved even after expiry of e-way bill due to procedural irregularities and inability to extend the said e-way bill. However, there is no malafide intention attributed on the part of the supplier of goods but departmental authorities exercise their power of detention of goods thereby levying heave penalties. The Courts are flooded with detention cases wherein they have stepped forward and delivered that the harsh penalties should not be levied merely because of technical errors in e-way bills. Recently, one such issue on similar subject matter was reported before Tripura High Court in the case of TIRTHAMOYEE ALUMINIUM PRODUCTS V/S STATE OF TRIPURA. The decision imparted in this case is subject matter of our present update.The petitioner is a proprietor and engaged in the business of manufacturing of alumininum utensils. Certain products were purchased from Hindalco Industries Ltd. which is a Government company and would be supplied to Kolkata to be transported to Agartala by road. Invoice was generated for transporting goods from Howrah to Agartala. Further, Test Certificate and Packing Slip of the goods under transportation were also generated regarding number of items, their weight, chemical composition etc. The petitioner submitted that due to clerical error the distance of place of origin to destination was shown as 470 Kms instead of 1470 kms and hence, the validity period of e-way bill was of 5 days. The goods were intercepted at Tripura border and a memo of detention of goods was also issued stating that the goods were transported without a valid E-way bill. A show cause notice dated 05.11.2018 was issued to the petitioner to pay GST along with penalty. On same day the impugned order was also passed confirming the
principal tax along with penalties. The petitioner submitted challenged the order and argued that expiry of e-way bill was due to clerical error which would not result into any tax liability.The counsel of revenue stated that transporter was carrying the goods without valid E-way bill. Further, the tax inspector was within his right to demand taxes and penalties.

The Court stated that defect of the goods in transporting without valid E-way bill was due to minor oversight and a clerical error. It is clearly a typographical error wherein distance is wrongly mentioned as 470 kms instead of 1470 kms. Therefore, it was stated that inspector had no power to demand GST along with penalty. Reference was further drawn to CBIC Circular dated 14.09.2018 wherein the manner to deal with clerical errors was mentioned. It was stated that as per Circular, proceedings under Section 129 of the CGST Act, 2017 should not be initiated if there is an error of one or two digits in a document number mentioned in the E-way bill. In such a situation, at best, penalty of Rs.500 & 1000/- under State and Central GST may be collected under Section 125 of the Act. It was concluded that the present case is not a fit case where petitioner is relegated to file appeal more importantly when the order suffered from gross irregularity of no hearing been granted to the petitioner since the show cause notice and order was passed on the same day. This was wholly impermissible since it does not treat this order as a tentative demand but as a mandatory demand. Therefore, the impugned orders were set aside.The above decision is a landmark decision as it seeks to quash the detention orders where the e-way bill had expired due to genuine mistake occurred while mentioning the distance of travel. There had been various cases wherein it is ruled out that clerical mistakes should not lay a foundation for levying heavy penalties. Reference can be drawn to M/s Daya Shankar Singh and State of Madhya Pradesh, R.K. Motors V/s State Officers, M.R. Traders V/s Assistant Tax Officer etc. It is high time that judicial rulings like these should be followed by the revenue authorities unconditionally failing which the Courts will be flooded with petitioner similar to the one discussed in this update.

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GST Update No 316 on expiry of E-way bill due to clerical error

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