TaxTMI 
TaxTMI 
2026 (10) TMI 369
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....This appeal raises a question about an express exception in the Rules governing the movement of goods and the legality of the penalty. We therefore exercise our discretion to hear and decide it on merits. 3. The Appellant is a registered taxpayer engaged in manufacturing and supplying adhesives, wood finishes, thinners, fertilizers and other products. It has a manufacturing unit at Bhartiagram, Amroha, and an additional place of business at Khasra No. 468, Village Bairangpur, Nai Basti, Tehsil Dadri, District Gautam Buddha Nagar, Uttar Pradesh. We refer to this additional place of business as the Dadri Depot. 4. On 21 May 2024, goods were sent from the Dadri Depot under four tax invoices with a total value of Rs. 5,67,560. This dispute concerns Invoice No. UPD240003682 for Rs. 51,336 and Invoice No. UPD240003683 for Rs. 54,903, issued for supplies to M/s Amit Plywood, Saharanpur. The related electronic reference numbers are 451443492319 and 451443492321. 5. The Appellant states that vehicle No. UP14NT-4793, operated through Parnami Logistics, was carrying the goods from the Dadri Depot to the transporter's local premises at Rajkamal Warehouse, Ghaziabad. The distance was l....
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....disputed demand. 11. Section 68 permits verification of the prescribed documents and inspection of goods in transit. Rule 138 governs the furnishing of consignment information before movement and the generation of an e-way bill. Rule 138A requires the goods to be accompanied by the applicable invoice, bill of supply or delivery challan, and the e-way bill or its electronic number in the prescribed manner. These provisions must be read together with the exceptions stated in Rule 138. 12. The third proviso to Rule 138(3), directly relied upon by the Appellant, provides: "Provided also that where the goods are transported for a distance of upto fifty kilometers within the State or Union territory from the place of business of the consignor to the place of business of the transporter for further transportation, the supplier or the recipient, or as the case may be, the transporter may not furnish the details of conveyance in Part B of FORM GST EWB-01". 13. This proviso allows vehicle details to be left unfilled during a specified initial stage of transport. It applies only when the conditions concerning the consignor's premises, the transporter's receiving premises, fu....
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....the owner of the goods comes forward for payment of such penalty; ... (3) The proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1). (4) No penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard." Thus, where the owner comes forward, clause (a) prescribes a penalty of 200 per cent of the tax payable on taxable goods. Sub-sections (3) and (4) require notice, determination and a hearing. But the rate of penalty becomes relevant only after an actual breach of the Act or Rules has been established. 18. An omission expressly permitted by the Rules cannot be treated as a breach of those Rules. The opening words of Section 129, which give it overriding effect, do not remove the exceptions in the Rules against which the alleged breach must be examined. Application to the movement in this appeal 19. The facts recorded ab....
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..... This is the starting point in criminal law. The decision does not mean that guilty intention must be separately proved in every civil regulatory proceeding. 25. In Hindustan Steel Ltd. v. State of Orissa, (1969) 2 SCC 627, the Supreme Court held that discretion to impose a penalty must be exercised judicially. A technical or minor breach, or an honest belief about the legal obligation, is relevant to that exercise. This principle must be applied in the context of the particular penalty provision. It cannot override a different or later law that makes civil liability mandatory. 26. In Chairman, SEBI v. Shriram Mutual Fund, (2006) 5 SCC 361, the Supreme Court held that means rea was not required for the civil statutory breaches before it. Once the prescribed breach was proved, the absence of guilty intention did not remove the liability. The Court also explained why Hindustan Steel did not govern that situation. 27. Guljag Industries v. Commercial Taxes Officer, (2007) 7 SCC 269, particularly paragraphs 22 and 27, is relevant to goods in transit. While interpreting Section 78 of the Rajasthan Sales Tax Act, the Supreme Court held that means rea was not an essential element....
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....and made without fraudulent intent or gross negligence. Explanation.-For the purpose of this sub-section,- (a) a breach shall be considered a 'minor breach' if the amount of tax involved is less than five thousand rupees; (b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of record. (2) The penalty imposed under this Act shall depend on the facts and circumstances of each case and shall be commeansurate with the degree and severity of the breach. (3) No penalty shall be imposed on any person without giving him an opportunity of being heard. (4) The officer under this Act shall while imposing penalty in an order for a breach of any law, regulation or procedural requirement, specify the nature of the breach and the applicable law, regulation or procedure under which the amount of penalty for the breach has been specified. (5) When a person voluntarily discloses to an officer under this Act the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the breach by the officer under this Act, th....
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....sdictional High Court support the need to examine the actual documents and circumstances. Their factual findings, including the availability of vehicle details in other documents, cannot be assumed in another case. Our main finding rests on the express exception for the initial journey and the facts recorded in this appeal. These decisions provide further support against automatically inferring evasion from an unfilled Part B. Circular and remaining procedural grounds 38. Paragraph 3 of CBIC Circular No. 64/38/2018-GST dated 14 September 2018 recognises the prescribed short-distance exception for movement to or from a transporter's place of business. Paragraphs 5 and 6 deal separately with specified minor errors and the limited penalties for them. An error in one or two characters of a vehicle number is different from leaving Part B completely unfilled. The circular does not treat every blank Part B as one of the listed minor errors. 39. The circular confirms the difference between a permitted omission and a defect in documents. Our decision rests on the Rule itself. It does not depend on treating the CBIC circular as independently binding on every State officer. Since the....