2025 (4) TMI 1052 - HC - GST

Physical tax invoices required for goods transport but Section 129 penalties need proof of tax evasion intent

Shekhar Kumar @ Shekhar Bagaria Versus The State of West Bengal & Ors.

Shekhar Kumar @ Shekhar Bagaria Versus The State of West Bengal & Ors. - TMI ISSUES PRESENTED and CONSIDEREDThe primary issues considered in this judgment include:Whether the person in charge of the conveyance is required to carry a physical copy of the tax invoice under the West Bengal Goods and Service Tax Rules, 2017.Whether a deviation from the declared route in the e-way bill can justify the imposition of a penalty under Section 129 of the West Bengal Goods and Service Tax Act, 2017.Whether the authorities were justified in invoking Section 129 of the 2017 Act in the absence of an intention to evade tax.ISSUE-WISE DETAILED ANALYSIS1. Requirement to Carry Physical Copy of Tax InvoiceRelevant Legal Framework and Precedents: Section 138A of the West Bengal Goods and Service Tax Rules, 2017 requires the person in charge of a conveyance to carry the invoice or bill of supply. Sub-Rule 2 of Rule 138A allows for electronic production of the invoice in certain cases.Court's Interpretation and Reasoning: The Court interpreted that the person in charge must carry the physical copy of the tax invoice unless the invoice is issued in a manner prescribed under Sub-Rule (4) of Rule 48, which allows for electronic verification.Application of Law to Facts: The Court found that the petitioner did not produce the tax invoice electronically, thus was obligated to carry a physical copy.Treatment of Competing Arguments: The petitioner argued that displaying an image of the invoice on a mobile device sufficed, but the Court rejected this, citing the statutory requirement for a physical copy.Conclusions: The Court concluded that the petitioner failed to comply with the requirement to carry a physical copy of the tax invoice.2. Deviation from Declared Route in E-Way BillRelevant Legal Framework and Precedents: The 2017 Act and Rules do not explicitly require the declaration of a route for transportation of goods. Precedents from other High Courts, such as the Allahabad and Karnataka High Courts, were considered.Court's Interpretation and Reasoning: The Court noted the absence of any statutory requirement to declare a route and referenced previous judgments indicating that a mere change of route does not imply an intention to evade taxes.Key Evidence and Findings: The e-way bill was produced at inspection, and there was no discrepancy in the goods' quality or quantity.Application of Law to Facts: The Court held that the deviation from the route could not justify the imposition of a penalty under Section 129.Treatment of Competing Arguments: The State's argument for the necessity of route declaration was unsupported by statutory provisions.Conclusions: The Court determined that deviation from the declared route is not a valid ground for penalty under Section 129.3. Justification for Invocation of Section 129Relevant Legal Framework and Precedents: Section 129 of the 2017 Act deals with the detention, seizure, and release of goods and conveyances in transit.Court's Interpretation and Reasoning: The Court emphasized the necessity of an intention to evade tax for invoking Section 129.Key Evidence and Findings: The appellate authority did not find any intention to evade tax, and the tax invoice annexed to the writ petition was not disputed by the revenue.Application of Law to Facts: The Court concluded that the absence of tax evasion intent invalidated the invocation of Section 129.Conclusions: The Court found no justification for invoking Section 129 in this case.SIGNIFICANT HOLDINGSThe Court held that the statutory obligation to carry a physical copy of the tax invoice was not met by merely displaying an image on a mobile device.The Court established that deviation from a declared route in an e-way bill does not constitute grounds for penalty under Section 129, absent any statutory requirement for route declaration.The Court concluded that without evidence of an intention to evade tax, the invocation of Section 129 was unjustified.The penalty order and its affirmation by the appellate authority were set aside, and the petitioner was entitled to a refund of the penalty paid.