2020 (10) TMI 1128 - Commissioner - GST

Appeal Success: E-way Bill Errors Lead to Minor Penalty, No Fraudulent Intent Found

The appeal challenged the additional demand created under Rule 138 of HPGST & CGST Rules, 2017, due to a procedural lapse and vehicle number ... Detention of goods and vehicle - validity of EWB - the vehicle no. in the Part B of the EWB not updated - contravention of Rule 138(5) of CGST/SGST Rules, 2017 - Circular No. 64/38/2018, dated 14-9-2018 - HELD THAT:- It appears that there is no dispute regarding quantity of goods and further all concerns documents were placed before the proper officer. It is a fact that the E-way Bill for the material in question was generated at 05:52 pm on 1-11-2018 and further updated on 5-11-2018 at 06:38 pm in which all relevant detail were entered. Due to break down of material carrying vehicle the material were transhipped to another vehicle. The E-way Bill of the consignment which was produced before the proper officer pertains to the previous vehicle. The only mistake the E-way Bill part-B was that the number of the vehicle in which the material was transhipped 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 at 11:52 am dated 6-11-2018. Despite the updation of the part-B of EWB the Ld. Respondent detained the vehicle and imposed tax/penalty to the tune of ₹ 16,28,23,728/-. 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 transshipment, 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 8 of EWB before resuming his journey further. So keeping in view the above facts the appellant is liable to pay minor penalty. The tax and penalty deposited by the appellant under Section 129(3) may be refunded and a penalty of Rs. Ten Thousand only is imposed on the taxpayer under Section 122(xiv) of the Act - appeal allowed. Issues Involved:1. Validity of the additional demand created under Rule 138 of HPGST & CGST Rules, 2017.2. Procedural lapse and vehicle number discrepancy in the E-way Bill.3. Imposition of tax and penalty under Section 129(3) of the CGST/HPGST Act, 2017.4. Determination of fraudulent intent or gross negligence.5. Applicability of minor breach provisions under Section 126 of the CGST Act.6. Correctness of the penalty imposed by the Assistant Commissioner.Issue-wise Detailed Analysis:1. Validity of the Additional Demand:The appeal was filed against the order dated 9-11-2018, which created an additional demand of Rs. 16,28,237/- under Rule 138 of HPGST & CGST Rules, 2017. The appellant, a trader in Earth Moving machinery, argued that all necessary documents, including the E-way Bill and tax invoice, were generated and available at the time of interception. The change in vehicle due to breakdown was the primary reason for the discrepancy in the E-way Bill.2. Procedural Lapse and Vehicle Number Discrepancy:The appellant's vehicle broke down, necessitating a change to another vehicle, which was not updated in the E-way Bill due to weak internet connectivity. The appellant contended that this was a minor and technical error without any intention to evade tax. The original and updated E-way Bills were presented, showing the same machine and engine numbers, thus establishing no intent of tax evasion.3. Imposition of Tax and Penalty:The proper officer detained the vehicle and imposed a tax/penalty amounting to Rs. 16,28,237/-. The appellant updated the E-way Bill within two hours of the vehicle's detention, but the officer proceeded with the penalty without giving a proper opportunity for the appellant to be heard, violating Section 129(4) of the CGST/HPGST Act, 2017.4. Determination of Fraudulent Intent or Gross Negligence:The judgment emphasized that there was no fraudulent intent or gross negligence on the appellant's part. The tax was paid in full, and all relevant documents were generated well before the interception. The procedural lapse was due to the vehicle breakdown, which was beyond the appellant's control.5. Applicability of Minor Breach Provisions:Section 126 of the CGST Act states that no penalty shall be imposed for minor breaches or easily rectifiable mistakes made without fraudulent intent or gross negligence. The discrepancy in the vehicle number was deemed a minor error, which did not warrant a penalty. The case was compared to similar judgments where minor discrepancies did not lead to penalties.6. Correctness of the Penalty Imposed:The judgment concluded that the Assistant Commissioner acted in haste and imposed the penalty mechanically without considering the updated E-way Bill. The penalty of Rs. 16,28,237/- was found unsustainable. However, the appellant was found liable for a minor penalty under Section 122(xiv) of the CGST/HPGST Act for not updating the E-way Bill before resuming the journey. A penalty of Rs. 10,000/- was imposed instead.Conclusion:The appeal was accepted, and the order dated 9-11-2018 was set aside. The tax and penalty deposited by the appellant were ordered to be refunded, and a minor penalty of Rs. 10,000/- was imposed. The judgment emphasized the importance of procedural compliance and the lack of fraudulent intent in the appellant's actions.