TaxTMI 
TaxTMI 
2025 (11) TMI 2074
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....on the ground that Part - B of E-Way bill is not updated by issuing a Writ of Mandamus; C. Consequently, set aside order of the Respondent No. 2 vide bearing de G57. A.P. No. 300/23-24 order dated 18.03.2024 under Section 107(11) of the KGST and CGST Act, 2017 to the extent of levy of penalty of Rs. 25,000/- at Annexure K by issuing a Writ of Certiorari; D. Grant any other relief in favour of the Petitioner as this Hon'ble Court deems fit in the facts and circumstances of the above case, in the interest of justice and equity. 2. Heard learned counsel for the petitioner and learned AGA for the respondents and perused the material on record. 3. A perusal of the material on record will indicate that the petitioner is a transport service provider which was transporting the subject goods from Chennai to Bangalore in the subject vehicle bearing Registration No.TN-12 AK-8272, when the subject conveyance and goods were intercepted on 14.11.2023 by the respondents who conducted inspection on 15.11.2023 and passed an order of detention on 16.11.2023 and issued a notice under Section 129(3) the KGST Act, proposing to levy penalty on the ground that Part-B of the e-....
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....jections and contested the petition. 8. A perusal of the material on record including the orders passed by respondents 1 to 3 referred to supra, will indicate that the 3rd respondent has set aside the order passed by the appellate authority on the ground that non-filling of the registration number of the subject vehicle in Part-B of the e-way bill would entail imposition of penalty under Section 129 of the KGST Act and not general penalty under Section 125 of the KGST Act as held by the appellate authority. In this context, it is pertinent to note that in the case of Kamal Envirotech Private Limited vs. Commissioner of GST - W.P(C) 12142/2022 Dated 17.01.2025, the Division Bench of the Delhi High Court as under:- "1. The writ petitioners have approached this Court aggrieved by the demands raised by the respondents in purported application of the provisions enshrined in Section 129 of the Central Goods & Services Tax Act, 20171 and which have subsequently come to be Affirmed by the appellate authorities. The Order-in-Original which is impugned by Kamal Envirotech Pvt. Ltd. is dated 26 September 2020 and which ultimately came to be Affirmed by the appellate authority in t....
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....oner that it was compelled to get the goods released by submitting a bond under protest on 05 October 2020 whereafter the goods came to be handed over on the next day. Aggrieved by the order in terms of which a tax liability stood created, the petitioner instituted an appeal which came to be dismissed and led to the institution of the present writ petition. xxxxxx 17. We, at the outset, note that the penalties that are spoken of in Sections 122 and 124 are those which would be attracted in case of infractions of statutory obligations and conditions imposed by the Act. However, Sections 122 and 124 in unequivocal terms couple the levy of penalty to tax evaded, tax not deducted, failure to establish reasonable cause or the wilful furnishing of false information. The penalty which is contemplated under Section 123 is one which would be attracted as a consequence of a failure to respond to a notice that may be issued by the proper officer. Section 125 then speaks of the imposition of a penalty if a person were to contravene any of the provisions of the Act or the Rules made thereunder. 18. The submission of Mr. Aggarwal that Section 129 being a provision crea....
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....rutiny of sub-sections (5), (6) and (9) of Section 86, those provisions envisage the levy of penalties consequent to a failure on the part of a registered dealer to discharge certain obligations or a failure on the part of an assessee to comply with statutory duties as imposed. In such situations, the Act envisages penalty to be imposed as a necessary corollary. The aforenoted provisions do not vest the Assessing Officer with any discretion in the matter of imposition of a penalty. 24. In contrast to the above, sub-sections (10), (14) & (15), and which as we had an occasion to note hereinbefore, envisage the levy of a penalty only in case an assessee is charged with "false, misleading or deceptive" conduct. The concept of penalty being founded on mens rea and misleading conduct is no longer a principle which can brook of any doubt. This is evident from the following passage as appearing in the decision of the Supreme Court in Hindustan Steel Ltd. and which the Tribunal itself had an occasion to notice: "8. ..... But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry ou....
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.... provisions enshrined in Chapter XIX of the Act and which have been noticed in some detail in the preceding parts of this decision. It becomes pertinent at the outset to note that Sections 122, 123, 124, 125 and the other provisions which are placed in Chapter XIX create distinct provisions insofar as the impositions of penalties are concerned. For instance, Section 122(1) prescribes in absolute terms "a penalty of ten thousand rupees or an amount equivalent to the tax evaded" as being leviable in case a taxable person is found to have infracted any of the conditions which are spoken of in clauses (i) to (xxi) of that provision. Similar is the position which obtains under Section 122(1A). xxxxxx 25. The Explanation which stands placed at the end of Section 126(1) fortifies our opinion in this respect with the Legislature clarifying that a minor breach would be one where the amount of tax involved is less than INR 5,000/-and that an omission or mistake shall be considered to be "easily rectifiable" if the same be an error apparent on the face of the record. We also bear in consideration that Section 126 stands placed in Chapter XIX and is titled "General discipline....
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...., the non-obstante clause in Section 129 cannot possibly be interpreted as being intended to override what had been specifically provided in Section 126 or annihilate the rules of guidance which stood embodied therein. xxxxxx 32. As was explained by the Supreme Court in R.S. Raghunath, while examining the scope and extent of a non-obstante clause, one would have to bear in mind that the usage of the expression "notwithstanding anything contained..." cannot be interpreted so as to scuttle down or abrogate other provisions forming part of that enactment and which may not necessarily be in conflict with the provision in which that clause appears. In R.S. Raghunath, the Supreme Court pertinently observed that the usage of the expression "notwithstanding anything contained..." could on a holistic examination of the statutory scheme be found to have been possibly placed by way of abundant caution as opposed to limiting the ambit and scope of the special rules. It was in this context that it held that absent a patent conflict or inconsistency between two competing sets of statutory provisions, the non-obstante clause would not be liable to be construed as obliterating al....
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....Board of Indirect Taxes and Customs12 had understood Section 129 as being tempered by the limits that the statute itself imposes while seeking to moderate the power to levy a penalty. xxxxxx 43. In our considered opinion, the law on the subject has been correctly enunciated in Synergy Fertichem and where Pardiwala J. [as his Lordship then was] rightly observed that non-obstante clauses are not always liable to be regarded as intended to repeal or completely supersede all the other provisions of the law. His Lordship explained the purpose of such a clause as essentially intended to remove obstructions which may otherwise arise in the implementation of the enacting provision to which the non-obstante clause is attached. However, and as has been consistently held by courts, the extent of its application is to be discerned from the context in which it is employed and if worded in broad and sweeping terms to be construed strictly. Ultimately, as the decisions noticed by us explain, one would have to ascertain the extent to which the Legislature intended it to apply. 44. As was noticed by us in the preceding parts of this decision, Section 129 is principally co....
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....as a fixed percentage. This is further reflective of the Legislature seeking to distinguish between discretionary penalties and those that are predetermined. By excluding fixed penalties from the scope of this section, the law ensures clarity and consistency in its application, underscoring the principle that certain penalties are non-negotiable and uniformly applicable irrespective of the circumstances of the breach. 47. It would also be pertinent to note that in Synergy Fertichem, the Gujarat High Court emphasized that authorities must distinguish between trivial breaches and serious contraventions under the Act. The High Court clarified that confiscation is penal in nature and should only apply in cases of a clear intent to evade tax as opposed to mere procedural lapses such as an incomplete EWB when other valid documents are present. Further, issuing confiscation notices under Section 130 at the initial stage, without proper grounds or evidence of an intent to evade tax, the High Court held would be unjustified and would render Section 129 ineffective. The Court ultimately came to conclude that a reasoned and fair approach is essential to avoid an unnecessary detention....
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.... The reason why we are saying so is that for the purpose of release of the goods and conveyance detained while in transit for the contravention of the provisions of the Act or the rules, the section provides for release of such goods and conveyance on payment of the applicable tax and penalty or upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) to clause (1) of section 129. Section 129(2) also provides that the provisions of sub-section (6) of section 67 shall mutatis mutandis apply for detention and seizure of goods and conveyances. We quote section 67(6) as under : "67(6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be." 100. Section 129 further provides that the proper officer, detaining or seizing the goods or conveyances, is obliged to issue a notice, specifying the tax and penalty payable and, thereafter, pass an order for payment of such tax and penalty. Clause (4) provides th....
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....7 is concerned. The authenticity of the delivery challan is also not doubted. In such a situation, it would be too much for the authorities to straightway jump to the conclusion that the case is one of confiscation, i. e, the case is of intent to evade payment of tax. 103. We take notice of the fact that practically in all cases, after the detention and seizure of the goods and the conveyance, straightway notice is issued under section 130, and in the said notice, one would find a parrot like chantation "as the goods were being transported without any valid documents, it is presumed that the goods were being transported for the purposes of evading the tax". We have also come across notices of confiscation, wherein it has been stated that the driver of the conveyance is presumed to have contravened the provisions of the Act or the Rules with an intent to evade payment of tax. This, in our opinion, is not justified. The resultant effect of such issue of confiscation notice at the very threshold, without any application of mind or without there being any foundation for the same, renders section 129 of the Act practically otiose. We take cognizance of the fact that once the no....
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....of the law takes place and the provisions of section 129 and section 130 of the CGST Act are invocable. Further, it may be noted that the non-furnishing of information in Part B of FORM GST EWB-01 amounts to the e-way bill becoming not a valid document for the movement of goods by road as per Explanation (2) to rule 138(3) of the CGST Rules, except in the case where the goods are transported for a distance of upto fifty kilometres within the State or Union territory to or from the place of business of the transporter to the place of business of the consignor or the consignee, as the case may be. 4. Whereas, section 129 of the CGST Act provides for detention and seizure of goods and conveyances and their release on the payment of requisite tax and penalty in cases where such goods are transported in contravention of the provisions of the CGST Act or the rules made thereunder. It has been informed that proceedings under section 129 of the CGST Act are being initiated for every mistake in the documents Mentioned in para 3 above. It is clarified that in case a consignment of goods is accompanied by an invoice or any other specified document and not an e-way bill, proceedings u....
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....alties under the Act must be guided by the salutary principles which stand embodied in Section 126. That statutory provision is undoubtedly an embodiment of the legislative intent of levy of penalties being guided by principles of moderation, restraint and reasonableness. 52. Consequently, and for all the aforesaid reasons, we allow the present writ petitions and quash the impugned orders dated 15 January 2022 and 15 February 2022. The demand of tax and penalty thereunder are consequently set aside. The petitioners shall be entitled to all consequential reliefs." 9. So also, the Division Bench of the Himachal Pradesh High Court in the case of Kunal Aluminium Company vs. State of Himachal Pradesh - CMPMO No.40/2025 Dated 26.06.2025, held as under:- "17. In Modern Traders v. State of U.P. MANU/UP/2594/2018, the Allahabad High Court was dealing with a case wherein the vehicle carrying the goods was intercepted solely on the ground that there was no e-way bill accompanying the goods. The e-way bill in the said case was generated as soon as information about interception of the vehicle was received. Accordingly, the Court concluded that once e-way bill has been prod....
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....on a foundationless ground since there is no intention to evade tax, which could sustain the impugned order(s). There is no reason whatsoever recorded by respondent No.3 for imposing tax as well as penalty. 22. Surprisingly, the appellate authority, merely on the basis of observations made by the Hon'ble Supreme Court in para 8 of Satyam Shivam Papers's case (supra) upheld the order passed by respondent No.3 by observing as under:- In the recent case, Hon'ble Apex Court in the case of M/s Satyam Shivam Papers Pvt. Ltd. Vs. Assistant Commissioner State & Others held that:- "In our considered opinion, there was no material before the 2nd respondent to Come to the conclusion that there was evasion of tax by the petitioner merely on account of lapsing of time mentioned in the e-way bill because even the 2nd respondent does not say that there any evidence of attempt to sell the goods to somebody else on 06.01.2020. On account of extension of the validity of the e-way bill by petitioner or the auto trolley driver, no presumption can be drawn that there was an intention to evade tax", So, in view of the facts & Judgment by the Hon'ble Su....
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.... errors. The legal foundation for this principle lies in the recognition that taxation statutes are not designed to punish inadvertent mistakes but rather deliberate acts of non-compliance. The burden of proof, therefore, rests on tax authorities to establish the actual intent to evade tax before imposing penalties on taxpayers. This safeguards individuals and entities from punitive measures arising from honest mistakes, administrative errors, or technical discrepancies that lack any malicious intent. 27. The authorities need to meticulously examine the facts and circumstances surrounding each case to establish the presence or absence of intentional tax evasion. 28. The requirement of intent to evade tax for the imposition of penalties is a fundamental principle that underpins the fairness and integrity of taxation systems. Recognizing the distinction between technical errors and intentional evasion is essential for maintaining a balanced and equitable approach to tax enforcement (see : Falguni Steels vs State of U.P. and others, MANU/UP/0204/2024 : 2024 AHC 11990). 29. In view of aforesaid discussions, we find merit in the instant petition and the same i....
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.... omitting to state / mention the vehicle number has been held to be a curable defect and the same would not invalidate or render illegal the e-way bill, especially when the other documents viz., Invoice etc., tally with the subject goods and vehicles at the time of interception, inspection and detention. In the instant case, it is an undisputed fact that there are no discrepancies, errors or lacunae in all the documents and the subject goods and vehicle tally with the documents and merely because the petitioner did not mention / state the registration number of the subject vehicle in Part-B of the e-way bill, in the absence of any material to establish that the said non-filling of the registration number in Part-B of the e-way bill was with any mala fide intention or with an intent to evade payment of tax by the petitioner, it cannot be said that the petitioner would be liable to pay penalty under Section 129 of the KGST Act, particularly when the petitioner had offered reasonable and satisfactory explanation in his detailed objections to the notice issued by the respondents. It is also significant to note that the first appellate authority had correctly, properly and meticulously ....