E-way bill penalty quashed due to lack of fraudulent intent in 4:30 hour delay case under Section 126

The MP HC set aside a penalty imposed for transportation with an invalid/expired E-way bill. The court held that authorities failed to establish tax evasion, fraudulent intent, or negligence against the petitioner. The 4:30 hour delay in E-way bill expiry was deemed bonafide. The court emphasized that Section 126(1)(3) incorporates natural justice principles and proportionality doctrine, requiring punishment to be commensurate with the breach. Without proving fraudulent intent or negligence, the penalty order was invalid and consequently quashed.

---

---

Issues:
1. Challenge to notice and order regarding E-Way Bill violation and penalty imposition.

Analysis:
The petitioner, a registered Government contractor, challenged a notice and order related to the expiration of an E-Way Bill during the transportation of goods. The petitioner received a work order for construction and placed an order for TMT bars. The supplier raised an invoice and generated an E-Way Bill for the goods' movement. However, the vehicle carrying the goods faced mechanical issues, resulting in a delay. The Assistant Commissioner stopped the vehicle, claiming the E-Way Bill had expired, leading to the detention of the goods.

The petitioner contended that the penalty imposed was disproportionate and unwarranted, highlighting the absence of fraudulent intent or negligence. Citing a Telangana High Court judgment, the petitioner argued that the mere lapse of time on the E-Way Bill does not justify penalty imposition. Additionally, a Calcutta High Court judgment and a circular were referenced to support the argument against penalty for clerical errors.

The Department defended the notice and penalty, acknowledging the E-Way Bill's expiry as the sole deficiency in the documents provided. However, the Department's action was deemed justifiable under the relevant provisions.

After considering the arguments, the Court found that there was no evidence of tax evasion, fraudulent intent, or negligence on the petitioner's part. Referring to precedents, the Court emphasized the importance of proportionality in penalties and set aside the penalty imposed, directing the refund of the deposited amount to the petitioner.

In conclusion, the Court allowed the writ petition, ruling in favor of the petitioner and ordering the refund of the penalty amount. The judgment emphasized the need for proportionate penalties and the absence of fraudulent intent or negligence in the case at hand.

---