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Court Quashes Penalty for Expired E-way Bill, Citing Lack of Tax Evasion Intent
Court Quashes Penalty for Expired E-way Bill, Citing Lack of Tax Evasion Intent
M/S Raghuveer Ispat Private Limited took the State of U.P. and two others to court over a penalty they received for having an expired e-way bill. The Allahabad High Court ended up siding with the company, saying that a simple technical violation without any intention to evade taxes doesn't warrant such a harsh penalty. The court ordered the authorities to refund the tax and penalty amount that the company had paid. Pretty cool outcome for the company, right?
Get the full picture - access the original judgement of the court order here
Case Name:
M/S Raghuveer Ispat Private Limited vs. State Of U.P. And 2 Others (High Court of Allahabad)
Writ Tax No. 222 of 2021
Date: 29 May 2024
Key Takeaways:
1. A mere technical violation, like an expired e-way bill, doesn't justify a penalty under Section 129(3) of the UP GST Act if there's no intention to evade taxes.
2. The court emphasized the importance of considering the reasons behind such violations before imposing penalties.
3. This judgment aligns with previous rulings, reinforcing the principle that penalties should be proportionate to the offense.
4. It highlights the need for tax authorities to be more lenient in cases of genuine mistakes or unavoidable circumstances.
Issue:
The main question here is: Should a penalty be imposed under Section 129(3) of the UP GST Act for an expired e-way bill when there's no evidence of tax evasion or repeated misuse?
Facts:
Alright, let's break down what happened:
1. M/S Raghuveer Ispat Private Limited was transporting some goods.
2. During a check, it was found that their e-way bill had expired.
3. The company explained that the vehicle's engine had failed, causing the delay and the e-way bill to expire.
4. Despite this explanation, the authorities imposed a penalty under Section 129(3) of the UP GST Act.
5. The company appealed, but the Additional Commissioner (Appeal) upheld the penalty.
6. Frustrated, the company then took the matter to the Allahabad High Court.
Arguments:
The company's lawyer argued:
1. The only issue was the expired e-way bill; all other documents were in order.
2. They had a valid reason for the delay - the vehicle's engine failure.
3. The goods matched the description on the invoice.
4. Similar cases in the past have been decided in favor of the taxpayers.
The state's lawyer probably argued (though not explicitly mentioned) that the law requires valid e-way bills, and penalties are in place to ensure compliance.
Key Legal Precedents:
The court referred to two important cases:
1. "M/s Axpress Logistics India Pvt. Ltd. Vs. Union of India and others" (Writ Tax No.602 of 2018, decided on 9.4.2018)
2. "M/s Globe Panel Industries India Pvt. Ltd. v. State of U.P. and others" (Writ Tax No.141 of 2023 dated February 5, 2024)
These cases established that technical violations without the intention to evade tax shouldn't lead to penalties under Section 129(3) of the Act.
Judgement:
The court sided with M/S Raghuveer Ispat Private Limited. Here's what they decided:
1. They quashed (cancelled) the penalty order from December 9, 2017, and the appeal order from May 8, 2019.
2. They ordered the authorities to refund the tax and penalty amount within four weeks.
3. The court emphasized that a technical violation without the intention to evade tax doesn't justify a penalty under Section 129(3) of the Act.
FAQs:
Q1: What is an e-way bill?
A1: It's an electronic document required for transporting goods above a certain value in India.
Q2: Can I be penalized for an expired e-way bill even if I have a valid reason?
A2: This judgment suggests that if you have a genuine reason and no intention to evade tax, you shouldn't be penalized.
Q3: Does this judgment apply to all cases of expired e-way bills?
A3: While it sets a precedent, each case might be judged on its own merits. It's always best to keep your e-way bills up to date.
Q4: What should I do if my vehicle breaks down and my e-way bill expires?
A4 You have 8 hours to take this 5 minutes step and save yourself from penalty. Right click on me and find out.
Q5:Does this mean I don't need to worry about e-way bill expiry?
A5: Not at all! You should always try to comply with the rules. This judgment just provides some protection in genuine cases of unavoidable delay.
1. Heard Mr. Vishwjit, learned counsel appearing on behalf of the petitioner and Sri Ravi Shankar Pandey, learned Additional Chief Standing Counsel appearing on behalf of the State.
2. This is a petition under Article 226 of the Constitution of India, wherein the writ petitioner is aggrieved by penalty order dated December 9, 2017 passed under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 (hereinafter referred to as the 'Act') and the order in appeal dated May 8, 2019 passed under Section 107 of the Act by the Additional Commissioner Grade-2 (Appeal), State Tax, Kanpur.
3. Learned counsel appearing on behalf of the petitioner submits that the only discrepancy found by the authorities was that the eway bill had expired. He further submits that there was no other discrepancy apart from the expiry of e-way bill. He further submits that the goods were accompanied by relevant documents and also matched the description as per invoice. He also submits that the reason for the expiry of e-way bill has been explained to the authorities, indicating that engine of the vehicle got failed and after being repaired, it was moved for its onward journey. It is also to be noted that the interception had taken place prior to April, 2018, accordingly, the judgement in M/s Axpress Logistics India Pvt. Ltd. Vs. Union of India and others (Writ Tax No.602 of 2018, decided on 9.4.2018) would apply in this particular case.
Furthermore, one may take reference to the judgment of this Court in M/s Globe Panel Industries India Pvt. Ltd. v. State of U.P. and others (Writ Tax No.141 of 2023 dated February 5, 2024) passed by this Court, wherein this Court had dealt with the similar issue and held as follows :-
"Indubitably, there is a technical violation that has been committed by the petitioner. However, the authorities have not been able to indicate in any manner that the E-Way Bill had been used repeatedly nor have they made out any case with regard to an intention to evade tax by the petitioner.
Accordingly, this Court is of the view that such a technical violation by itself without any intention to evade tax cannot lead to imposition of penalty under Section 129(3) of the Act. This view is fortified by a catena of judgments as indicated above."
4. In light of the same, this Court is unable to agree with the findings of the authorities, and accordingly, the impugned orders dated December 9, 2017 and May 8, 2019 are quashed and set aside.
5. This Court directs the respondents to refund the amount of tax and penalty deposited by the petitioner within a period of four weeks from date.
6. The instant writ petition is allowed in aforesaid terms. There shall be no order as to the costs.
Order Date :- 29.5.2024
Kuldeep
(Shekhar B. Saraf,J.)
