Gas Supplier Wins Challenge Against Tax Penalty for Technical E-Way Bill and Delivery Note Discrepancies Under CGST Act

Industrial gas supplier challenged penalty proceedings under CGST Act for goods transportation. SC found technical discrepancies in E-Way bill and delivery notes did not constitute tax evasion. Following precedent from prior case, court quashed penalty order, directing authorities to recalculate penalty under Section 122 and refund/adjust previously collected amounts.

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Issues:
1. Proceedings initiated under Section 129 of the CGST/SGST Acts against the petitioner.
2. Appeal against the order imposing penalty dismissed by the First Appellate Authority.
3. Petitioner seeking various reliefs through a writ petition under Article 226 of the Constitution of India.
4. Dispute regarding the coverage of goods by delivery notes and E-Way bill.
5. Interpretation of Rule 55 of the CGST Rules in relation to the supply of Acetylene Gas.
6. Application of the judgment in W.P (C) No.26645/2021 to the present case.

The petitioner, a supplier of industrial gas to Cochin Shipyard, challenged proceedings initiated against them under Section 129 of the CGST/SGST Acts, resulting in a penalty of Rs.1,97,023 imposed by an order dated 06-08-2022 (Ext.P17). Despite the goods being covered by 3 delivery notes and an E-Way bill, the penalty was upheld in the appeal (Ext.P19) before the First Appellate Authority. As the Tribunal was not constituted for a second appeal, the petitioner filed a writ petition seeking various reliefs, including setting aside the orders, refund of the penalty amount, and compensation for the seizure and detention of goods/truck. The E-Way bill mentioned only one delivery note due to technical difficulties, but all three notes were detailed in the transportation section. The value of goods and tax amounts were correctly specified in the documents, with no evidence of tax evasion. The court noted that the petitioner's belief in the applicability of Rule 55 of the CGST Rules to industrial gas supply was incorrect, as Rule 55 applies to specific circumstances not relevant to Acetylene Gas supply, requiring a tax invoice instead.

The judgment in W.P (C) No.26645/2021 favored the petitioner on a similar issue, leading to the allowance of the present writ petition based on the same reasoning. Consequently, the proceedings of Ext.P17 and Ext.P19 were quashed. Given the necessity for a tax invoice due to the inapplicability of Rule 55 (a) of the CGST Rules, the competent authority was directed to treat the case under Section 122 of the CGST/SGST Acts and impose a suitable penalty. Any amount collected from the petitioner based on Ext.P17 should be refunded or adjusted against future tax liabilities by crediting the petitioner's electronic cash register. The writ petition was disposed of accordingly.

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