Penalty under WBGST Act section 129 cut to 50% where own goods moved without sale diversion evidence

SC held that while the appellant was strictly bound to generate a fresh e-way bill under the WBGST Act, 2017, the undisputed facts showed that the consignment was owned by the appellant and moved solely for execution of its own contracts in different States, with no evidence of diversion or sale to third parties. Upholding the tax demand of Rs. 54,00,000, SC exercised limited interference to reduce the penalty under section 129 to 50%, i.e., Rs. 27,00,000, making a total liability of Rs. 81,00,000. On payment (after adjusting sums already deposited), the detained vehicle and consignment were directed to be released.

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Issues Involved:
1. Validity of E-way bill and compliance with GST regulations.
2. Justification of tax and penalty imposed.
3. Consideration of quantum of penalty.

Summary:

Issue 1: Validity of E-way Bill and Compliance with GST Regulations
The appellant, a company engaged in horizontal directional drilling, transported a machine from Uttar Pradesh to West Bengal. The E-way bill generated on 30th May 2019 expired on 9th June 2019. The consignment was intercepted on 17th June 2019, leading to its detention under Section 129(1) of the CGST Act and WBGST Act. The appellant argued that the delay was due to unavailability of a vehicle by the transporter, HFC, and that a fresh E-way bill could not be generated due to factors beyond their control.

Issue 2: Justification of Tax and Penalty Imposed
The respondents contended that the absence of a valid E-way bill justified the imposition of GST and penalty. They emphasized that the appellant, being in the business of such transactions, should have been aware of the necessity to generate a fresh E-way bill. The High Court directed the appellant to pay the entire GST amount and 50% of the penalty in cash, with the remaining 50% by bank guarantee.

Issue 3: Consideration of Quantum of Penalty
The Supreme Court confined its consideration to the quantum of penalty. It acknowledged that the appellant was the owner of the consignment and was using it for its contractual obligations, with no evidence of sale to another party. The Court noted that while the appellant should have generated a fresh E-way bill, the existence of the original E-way bill warranted some leniency.

Directions:
The Supreme Court upheld the tax amount of Rs. 54,00,000 but reduced the penalty to 50% of the original amount, i.e., Rs. 27,00,000, making the total payable Rs. 81,00,000. This amount must be deposited by 29th February 2024, after which the consignment and vehicle will be released. The Court cautioned the appellant to be vigilant in the future and clarified that this order, passed under Article 142 of the Constitution of India, should not be treated as a precedent.

The appeal was disposed of in these terms, with pending applications also disposed of.

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