2022 (4) TMI 241 - HC - GST

Technical Breach in E-way Bill Does Not Warrant Penalty Under Section 129(3) of CGST Act When No Tax Evasion Intent Exists

M/s. Smart Roofing Private Limited Versus The State Tax Officer (Int), Madurai

The HC quashed a penalty order under Section 129(3) of CGST Act, 2017, finding the breach was merely technical. The petitioner had consigned goods from ... Levy of penalty u/s 129(3) of the CGST Act, 2017 - petitioner has generated E-way bill by declaring the consignee as its additional place of business - intent to evade tax, present or not - HELD THAT:- No doubt, the authorities acting under the Act were justified in detaining the goods inasmuch as there is a wrong declaration in the E-way bill. However, the facts indicate that the consignor and the consignee are one and the same entity, namely, Head Office and the Branch Office. In this case, the petitioner has a new place of business, but had not altered the GST Registration. However, steps have been taken to ex post facto include the new place of business altering the GST Registration. The registration certificate has also been amended. Considering the fact that there is only a technical breach committed by the petitioner and there is no intention to evade tax, the impugned order is quashed and this writ petition is allowed by directing the respondent to release the vehicle and the consignment to the petitioner, if the same has not been released already. Petition disposed off. Issues:Challenge to impugned order under Section 129(3) of the CGST Act, 2017 for penalty imposition.Analysis:The petitioner challenged the impugned order dated 25.03.2022 seeking to impose a penalty under CGST and SGST each, totaling a significant amount under Section 129(3) of the CGST Act, 2017. The petitioner had consigned goods from its main place of business to an additional place of business, which was not originally registered. Despite declaring the consignee differently in the E-way bill and delivery Challan, the consignment was meant for the new place of business. The consignment was detained, leading to a show cause notice and subsequent reply from the petitioner.Analysis:The petitioner argued that there was no intention to evade tax, as they had generated an E-way bill declaring the consignee as the additional place of business. They had also taken steps to amend the registration to include the new place of business. The imposition of penalties under Section 129(3) of the CGST and SGST was deemed unwarranted by the petitioner. On the other hand, the respondent argued that the petitioner had an alternate remedy under Section 107 of the CGST Act, 2017/SGST Act, 2017, making the writ petition meritless.Analysis:Upon considering the arguments, the court acknowledged that the authorities were justified in detaining the goods due to the incorrect declaration in the E-way bill. However, it was noted that the consignor and consignee were the same entity, with the petitioner having a new place of business that was not initially reflected in the GST Registration. Steps were taken ex post facto to include the new place of business in the registration, and the certificate was amended accordingly.Analysis:Given that the breach was technical in nature and there was no intention to evade tax, the court decided to quash the impugned order and allowed the writ petition. The respondent was directed to release the vehicle and consignment to the petitioner, if not already done. The writ petition was disposed of with no costs, and the connected miscellaneous petition was closed as a result.