Tax Penalty Overturned: Taxpayer Granted Right to Explain E-Way Bill Delay Under CGST Act Section 126 with Fair Hearing Principles

HC allowed a writ petition challenging a tax penalty for an expired e-way bill. The court set aside the original order and remanded the case, directing the Appellate Authority to provide the petitioner an opportunity to explain the delay and present evidence under CGST Act Section 126. The decision emphasizes procedural fairness in handling documentation-related transportation violations.

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Issues:
Challenge to order sustaining tax and penalty demand based on expired e-way bill.

Analysis:
The High Court heard arguments on a writ petition challenging an order passed by the Office of Appellate Authority regarding a tax and penalty demand. The demand was upheld due to an expired e-way bill when the goods were intercepted during transportation from Guwahati to New Delhi. The e-way bill had expired by the time of interception, leading to the imposition of a 100% penalty. The petitioner did not request an extension for the journey's completion, resulting in the expired e-way bill issue. A show-cause notice was issued under Section 129(3) of the CGST Act, citing "goods not covered by valid documents" as the reason. The petitioner paid the demanded amount promptly to ensure timely delivery of goods, without contesting the expiry of the e-way bill. The Court noted that the tax was paid for the goods, and the demand was solely due to the invalid e-way bill at interception, not indicating tax evasion.

The Court found that the petitioner should be given another opportunity to explain the delay in goods reaching the destination before the e-way bill expiry. The impugned order was set aside, and the matter was remanded to the Appellate Authority for a fresh decision. The petitioner is to be given a chance to present evidence supporting genuine reasons for the delay. The Authority was directed to consider Section 126 of the CGST Act regarding rectifiable omissions or mistakes in documentation. A written notice will be issued to the petitioner for a hearing to present their case. The writ petition was disposed of with these directions.

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