Penalty under Section 129(3) of GST Act set aside for delay in e-way bill re-validation due to vehicle breakdown

The HC set aside the penalty imposed under Section 129(3) of the WBGST/CGST Act for failure to re-validate the e-way bill within 8 hours, where the petitioners claimed vehicle breakdown caused the delay. The court noted the absence of wilful misconduct and accepted the petitioners' explanation despite lack of supporting documents, given the short 15-hour delay and attempts to repair en route. Both the original and appellate orders imposing the penalty were quashed, and the petitioners were permitted to seek a refund of the penalty paid, with authorities directed to decide the refund application within two weeks. The petition was disposed of accordingly.

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ISSUES:

Whether penalty under Section 129(3) of the WBGST/CGST Act, 2017 can be imposed for failure to re-validate an e-way bill within the prescribed time when delay is caused by a vehicle breakdown.Whether the appellate authority is required to consider the defence of bona fide breakdown and absence of mens rea before imposing penalty under the said Act.Whether the absence of documentary evidence supporting the defence of vehicle breakdown justifies dismissal of such defence.The scope of judicial review regarding imposition of penalty under Section 129(3) in light of established precedents concerning bona fide defence.

RULINGS / HOLDINGS:

The Court held that "having regard to the peculiar facts" and the petitioners' case of vehicle breakdown causing delay, "and there being no allegation or material on record to show that the petitioners were involved in wilful misconduct," the penalty under Section 129(3) ought not to have been imposed.The appellate authority erred in "brushing aside such contention by recording that the petitioners has failed to file any supporting documents," as "by a mechanic ordinary, documents may not be available" in such circumstances.The Court emphasized that "ordinarily, when a defence is set up the concerned authorities are required to take note of such defence," and failure to consider bona fide defence amounts to an error.The Court set aside the orders imposing penalty and directed refund of the penalty paid, holding that the imposition of penalty "cannot be sustained" where bona fide defence is established.

RATIONALE:

The Court applied the legal framework under Sections 107 and 129 of the WBGST/CGST Act, 2017, which govern e-way bills and penalties for non-compliance.The Court relied on precedent judgments, including Asian Switchgear Private Limited v. State Tax Officer and M/s Maa Amba Builders & Anr. v. The Assistant Commissioner of Revenue, which establish that "when a defence is set up the concerned authorities are required to take note of such defence."The Court noted a Division Bench's interference with the earlier judgment in Pushpa Devi Jain, clarifying that "as there was no lack of bona fide of the appellant the authority could not impose penalty on the appellant."The Court recognized that the absence of documentary evidence is not determinative where the nature of the defence (vehicle breakdown and repair delay) inherently precludes formal documentation.The decision reflects a doctrinal emphasis on the requirement of bona fide and absence of wilful misconduct as prerequisites for penalty imposition under Section 129(3), marking a careful judicial scrutiny of penalty orders in GST enforcement.

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