GST Update No 325 on detention proceedings for expiry of E-way bill

It is well known that the concept of E-way bill system was introduced to curb the practice of selling without invoice or receiving the goods without proper invoice which resulted into loss of revenue to the Government. However, it seems that the revenue authorities take undue advantage of these powers and thereby take harsh actions against the taxpayers. There had been catena of cases on similar subject matter wherein the Courts have stepped forward and granted relief to the bonafide assessees. On similar note, one more case was reported before Madras High Court in the case of IDEAL MOVERS PRIVATE LIMITED V/S STATE TAX OFFICER. The decision imparted in this case is subject matter of discussion of our present update.

The petitioner is a transporter and engaged in transportation of consignment by Essar Steel India Limited to One Neel Metal Products Ltd., being consignor and consignee respectively. The consignment was accompanied by invoices. An e-way bill was generated on 12.01.2020 which was valid till 16.01.2020. However, the lorry broke down on 13.01.2020 with major gear box damage near Vellore at Lawrence Automotive Private Limited who certified the same vide certificate dated 16.01.2020 wherein it was confirmed that the delay in carrying out the repair was on account of intervening Pongal holidays. Afterwards, the lorry proceeded to deliver the goods to the destination along with E-way bill which expired on 16.01.2020. The lorry was intercepted and detained for non-possession of valid e-way bill. The petitioner argued that no valid Goods Detention Notice was served by the respondent. However, records that were summoned revealed that a notice was issued on 17.01.2020 and served on lorry driver. On noticing the same, the petitioner does not pursue the present ground further.

The next question lying with the Court is whether goods are liable to be released. Reference was placed on provisions of Section 129 of CGST Act, 2017. Furthermore, the question that arise is whether the phrase “owner of goods coming forward to pay tax and penalty” could include an offer by consignor to make the payment. Since the clauses (a) and (b) commences with the phrase on payment, it is not sufficient for the consignor to merely make an offer or remit tax, but actually remit the payment is more important. Section 129 of the CGST Act, 2017 deals with all the situations addressing the violation during the transit leading to detention of goods irrespective of the gravity of violation. Therefore, it was stated that the offence is only on account of expiry of E-way bill and that too for bonafide reasons. Hence, the offence cannot be viewed harshly. Further as regards to the penalty amount it was stated that the petitioner enjoys the benefit of Circular no.10 of 2019 dated 31.05.2019 wherein as per Para 10 the Commissioner reduces the penalty payable to Rs. 5,000/-. Therefore, in the present case as well, the penalty was reduced and it was directed to release the consignment.

The above decision is yet another example of the fact that bonafide taxpayers should not be treated at par with malafide taxpayers. There had been various cases in the past as well wherein the courts ordered that harsh actions should not be taken merely because of expiry of e-way bill due to bonafide mistake. These judicial pronouncements should be followed at the earliest to avoid any further litigations in the future.

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GST Update No 325 on detention proceedings for expiry of E-way bill

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