2020 (3) TMI 729 - Commissioner - GST

Appellate authority overturns tax penalty, orders refund due to technical difficulties.

M/s Om Dutt, S/o Sh. Bal Krishan VPO Bass Tehsil Nangal Distt. Ropar Punjab Versus ACSTE-cum-Proper Officer Central Enforcement Zone Una HP

The appellate authority found the tax and penalty imposed under Section 129(3) of the CGST/HPGST Act, 2017 unsustainable due to technical difficulties ... Detention of goods alongwith the vehicle - error in the E-way bill - demand under section 129(3) of CGST/HP GST Act, 2017 - HELD THAT:- The only mistake the e-way bill part-B was that the number of the vehicle in which the goods were transshipped had not been entered at the time of inspection of the vehicle. The appellant updated the e-way bill and the number of the second vehicle was updated in the part-B of the e-way bill. Despite the updation of the part-B of EWB the Ld. Respondent detained the vehicle and imposed tax/penalty to the tune of ₹ 1,43,432/-. As there is no doubt that the taxpayer has made procedural lapse and violated the provisions of the CGST/HPGST Act, 2017 and HPGST Rules 138(10) which says as 'Provided further that where, under circumstances of an exceptional nature, including trans-shipment, the goods cannot be transported within validity period of e-way bill, the transporter may extend the validity period after uploading the detail in part B of the FORM GST EWB-01, if required'. Therefore appellant should have updated the part B of EWB before resuming his journey further. So keeping in view the above facts the appellant is liable to pay miner penalty. The instant appeal is accepted and the order passed by Assistant Commissioner State Taxes & Excise-cum- Proper Officer, Central Enforcement Zone Una dated 06.11.2018 is set aside. The tax and penalty deposited by the appellant under section 129(3) may be refunded and a penalty of Rs Ten Thousand only (₹ 10,000/-) is imposed on the taxpayer under section 122(xiv) of the Act. Issues Involved:1. Legality of tax and penalty imposition under Section 129(3) of the CGST/HPGST Act, 2017.2. Applicability of Section 126 for minor procedural lapses.3. Justification for imposing a lesser penalty as per Circular No. 64/38/2018-GST.4. Consideration of the appellant’s intent and technical difficulties in updating the E-way bill.Detailed Analysis:1. Legality of Tax and Penalty Imposition under Section 129(3) of the CGST/HPGST Act, 2017:The appellant contested the order passed by the Assistant Commissioner State Taxes & Excise (ACST&E), which imposed a tax and penalty of Rs. 1,43,432 under Section 129(3) of the CGST/HPGST Act, 2017. The appellant argued that the penalty was unjust as it was imposed for a minor mistake in updating the vehicle number in the E-way bill due to weak internet connectivity. The appellant cited the Supreme Court’s principles in Hindustan Steel Ltd. Vs. State of Orissa, emphasizing that penalties should not be imposed for technical or venial breaches of the law.2. Applicability of Section 126 for Minor Procedural Lapses:The appellant argued that the minor mistake in updating the vehicle number should attract a lesser penalty under Section 126 of the CGST Act, which deals with omissions or mistakes in documentation that are easily rectifiable. The appellant maintained that the error was due to a breakdown of the original vehicle and subsequent weak internet connectivity, which prevented the timely update of the E-way bill.3. Justification for Imposing a Lesser Penalty as per Circular No. 64/38/2018-GST:The appellant referred to Circular No. 64/38/2018-GST, which prescribes a lesser penalty for minor procedural mistakes that are easily rectifiable. The appellant contended that the order imposing a tax and penalty equal to 100% of the tax payable on the goods was contrary to the guidelines provided in the circular.4. Consideration of the Appellant’s Intent and Technical Difficulties in Updating the E-way Bill:The appellant emphasized that there was no fraudulent intention or malice in not updating the vehicle number in the E-way bill. The delay was due to weak internet connectivity, and the vehicle number was eventually updated before the issuance of the show cause notice. The appellant argued that the proper officer should have considered these facts and taken a lenient view.Respondent’s Arguments:The respondent argued that the vehicle was intercepted, and the driver initially failed to produce the E-way bill. Upon production, the vehicle number on the E-way bill did not match the vehicle carrying the goods. The respondent dismissed the appellant's claim of weak internet connectivity, stating that other vehicles were checked without such issues. The respondent maintained that the appellant's actions constituted a breach of Section 129(1) of the Act, and the penalty was justified.Judgment:After hearing both parties, the appellate authority noted that the appellant had declared the consignment on 05.11.2018, indicating no intention to evade tax. The proper officer acted hastily by imposing the tax and penalty without giving the appellant a proper opportunity to be heard, as required under Section 129(4). The authority found that the appellant had updated the E-way bill with the new vehicle number, and the only mistake was the delay in updating it due to technical difficulties.The appellate authority concluded that the tax and penalty imposed under Section 129(3) were unsustainable. However, acknowledging the procedural lapse, the authority imposed a minor penalty of Rs. 10,000 under Section 122(xiv) of the Act. The order dated 06.11.2018 was set aside, and the tax and penalty deposited by the appellant were ordered to be refunded.Conclusion:The appeal was accepted, and the order imposing a tax and penalty of Rs. 1,43,432 was set aside. A minor penalty of Rs. 10,000 was imposed on the appellant for the procedural lapse. The judgment emphasized the importance of considering technical difficulties and the intent of the appellant in such cases.