2024 (2) TMI 189 - SC - GST

Supreme Court reduces GST penalty by 50% for expired e-way bill violation under Section 129 WBGST Act 2017

Vardan Associates Pvt. Ltd. Versus Assistant Commissioner Of State Tax Central Section & Ors.

SC upheld tax levy of Rs.54,00,000/- under s.129 WBGST Act, 2017 for expired e-way bill during June 2019. Though appellant violated legal requirement to ... Levy of penalty u/s 129 of the WBGST Act, 2017 - e-way bill in question had expired its validity - period of 1st June, 2019 to 30th June, 2019 - violation of principles of natural justice or not - HELD THAT:- It is not in doubt that stricto sensu, the appellant cannot shirk from its responsibility of complying with the requirement in law to generate a fresh E-way bill, if for any reason the consignment had not been transported. However, viewing the factual scenario, which is not disputed, i.e., the appellant is the owner of the consignment and was using it in connection with its contractual obligations in Uttar Pradesh and then having a similar contract in West Bengal and no evidence has been placed on record that shows that the consignment was to be sold/used for any other purpose in respect of any other party, this Court is persuaded to interference. The appellant has been saddled with the tax amount of ₹54,00,000/-. The law also provides for imposition of penalty. Ordinarily, it is refrained from interfering, but because there was an E-way bill that was generated and in view of the discussions made hereinabove, it is inclined to vary the orders passed by the High Court. The ends of justice would be served if the penalty amount is reduced to 50% of the penalty imposed, i.e., ₹27,00,000/-. Therefore, ₹54,00,000/- being the tax imposed, is upheld and penalty would now be ₹27,00,000/-, totalling to ₹81,00,000/-, which shall be paid by the appellant. The said amount, subject to payment(s) already made, shall be deposited with the concerned Authority on or before 29th February, 2024. Upon the same being done, the transportation vehicle as also the consignment shall be released to their rightful owners expeditiously. At the same time, the appellant is cautioned to be vigilant in future. The appeal stands disposed of. 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 RegulationsThe 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 ImposedThe 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 PenaltyThe 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.