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28 July 2021

Levy of penalty on expiration of the E-way bill without the fault of the taxpayer.

Introduction: As we know that whenever there is any movement of goods from one place to another place and having value in excess of the prescribed amount, in that case the person either supplier/recipient is required to issue E Way bill under the provisions of CGST Act, 2017. E-way  bill  is basically an  electronic  document  generated on  the GST portal evidencing  movement  of  goods.

Validity of E-Way bill: - As per Rule 138 of the CGST Rules, 2017, any E-Way bill generated for the movement of goods from one place to another shall have the validity as stated in below table:

Penalty for the violation of E-Way Bills: - There could be number of possibilities that a person supplying goods may not issue E-Way bill or even he has issued E-Way Bill, but the same got expired before goods reaches the destination for multiple reasons.

In case the E-Way Bill get expired before the goods reaches the destination then as per the provisions of Section 129 of the CGST Act, 2017, higher of the following amount shall be levied in the form of penalty:

  • INR 10,000 or
  • The tax amount applicable

What if the E-Way bill get expired during the course of Inception by Authorities: The E-Way may get expire for number of reason such as breakage of vehicle on the way, heavy traffic etc. However, there is one unique case where the E-Way Bill get expire in the course of interception by the inspecting authorities and penalty under the GST provision is levied for the release of vehicle.

If we examine the case we will find there is no fault at the end of supplier or receiver or the transporter. Also even the penalty levied by the authorities for the violation of the E-Way Bill provision is unjustified. Apparently, it seem a case where the tax payer is being harassed and levying penalty without any fault of the concerned person is against the principle of natural justice. A tax payer no has control over the intercepting period by the authorities.

A similar case has been heard and disposed of in favor of appellant tax payer by the Hon’ble Allahabad high court in the case of Timexo Fasteners India (P) Ltd. vs. State of U.P. [2018] 100 taxmann.com 277 (Allahabad) [22-11-2018]

Excerpt of the Judgement:

FACTS OF THE CASE:-

  • Petitioner is a registered dealer in Kanpur.
  • He purchased fencing wire on 5.11.2018 from Sharp Engineers Delhi to be delivered in Kanpur.
  • The goods were dispatched from Delhi through transport on 5.11.2018 along with e-way bill which was valid upto 12 p.m. of 10.11.2018.
  • Vehicle reached Kanpur well within time limit by 8 p.m. of 10.11.2018 along with all the documents including E-way bill.
  • The vehicle and the goods were intercepted at Kanpur during the intervening night of 10/11.11.2018 and after the statement of the person in charge of the vehicle were recorded at 11:36 a.m.
  • Seizure order under Section 129 (1) of the Goods and Service Tax Act, 2017 was passed solely on the ground that the e-way bill accompanying the goods had expired. Further resulting into the order of release of goods subject to the payment of penalty and tax under Clause (a) and (b) of Sub-section (1) of Section 129 of the Act.
CONTENTION BY THE PETITIONER:-
  • Petitioner contended that the very reason of seizure of goods on the basis of delay in transportation of goods (thereby resulting into ending of validity of the e-way bill) is incorrect.
  • He further contended that at the time of interception e-way bill was very much valid and due to delay in issue of memo by the authority time limit was lapsed and E-way bill stand declared invalid.
OBSERVTION BY THE HON’BLE HIGH COURT:-
  • The time was given to Respondents Counsel to seek instructions when did the vehicle entered in Kanpur and actually intercepted irrespective of whatever was mentioned in the memo.
 
  • The details as collected by the respondents counsel from the Learned Assistant Commissioner (Commercial Tax) are-
    • E-way bill accompanying the goods was valid upto mid night of 10.11.2018.
    • Vehicle was checked at 12:30 in the night of 10/11.11.2018 at Jarib Chowki, Kanpur by which time the e-way bill had expired.
    • The vehicle was brought to the office at 1:30 a.m. on 11.11.2018 whereupon memo of seizure was issued at 11:30 a.m., on 11.11.2018 itself. The release order were issued on 12.11.2018.
 
  • The details as provided by the Assistant Commissioner to the Respondents Counsel contradicts with the documents as issued to the Petitioner by the Assistant commissioner himself. The documents issued by the Assistant Commissioner shows the vehicle was intercepted at 8:23 am on 11.11.2018 at Jarib Chowki Kanpur.
 
  • Since, instructions as obtained by the respondents counsel does not clearly mentions anywhere when the vehicle was entered in Kanpur. It only states the time of interception. Since entry time of the vehicle was not countered or reviewed by the department, statement of Petitioner cannot be declared false regarding the entry time of vehicle which was by 8 p.m. on 10-11-2018.
 
  • Further, The Act and the Rules do not provide any time period within which a seizure memo of the intercepted goods and the vehicle is to be issued by the Tax Authorities. This is in result leaves ample time in the hands of the Officers not to enter the actual time of interception and to prepare the seizure memo at leisure thereby delaying the entry of vehicle.
  Held by the High Court:
  • Based upon the facts as stated above, it was held that;
 
  • The timing of seizure memo of the intercepted good and vehicle is contradicting with the time mentioned in the statement collected from the Assistant Commissioner by the Counsel and the documents issued by the Assistant Commissioner to the Petitioner.
 
  • The submission of the Petitioner, that the vehicle entered Kanpur much before the time of expiry of E-Way Bill is not challenged by the Respondent Counsel. Since, there is no provisions for timings of issuing seizure memo, this gives ample handle to the officers not to enter the actual time of interception and to issue the seizure memo at his own sweet will making the dealer to suffer including the transport whose vehicle is seized.
 
  • The seizure of the goods on the ground that accompanying e-way bill had expired is not justified rather it was allowed to expire after the detention of the goods by incorrectly recording the time of interception i.e. after 30 minutes of the expiry of the time.
 
  • The order of seizure was quashed and directed to release the goods and vehicle.
 
  • Hence the writ was disposed of in the favor of the petitioner.