GST Dept not Empowered to Compute Penalty Amount on Higher Value than Invoice Value without Proper Evidence: Calcutta HC [Read Order]

The Calcutta High Court held that the GST Department is not empowered to compute penalty amount on higher value than invoice value without proper evidence.

The writ petition was filed challenging an order passed by the appellate authority under the provisions of the West Bengal Goods and Services Tax Act, 2017 dismissing the appeal filed by the appellant challenging the order passed by the adjudicating authority imposing penalty on the appellant on the ground that the e-way bill which was generated by the appellant had expired and at the time when the vehicle was intercepted four days had lapsed.

The writ court was of the view that the appellant though contended that the vehicle suffered a breakdown did not annexe supporting documents in the writ petition and merely contending that he had no intention to evade tax is not sufficient and if such contention is accepted transporting without a valid e-way bill will remain a piece of paper and a mere idle formality. Hence the present appeal is filed.

The question which falls for consideration in this case is whether penalty in terms of Section 129 of the WBGST Act could be imposed without considering as to whether there was an intention to evade the payment of taxes. This contention was raised by the appellant before the appellate authority and several decisions in support of their contention were relied on for the proposition that “mens rea” is essential for imposition of penalty.

A Division Bench of Chief Justice TS Sivagnanam and Justice Hiryanmay Bhattacharyya observed that “In the instant case, prior to the movement of the goods e-way bill was generated in which the tax invoice number was duly incorporated proof of payment of tax has also been established and e-way bill was valid till 05.09.2022 and mistake committed by the appellant is not extending the e-way bill after the expiry despite such liberty being granted under the Rules. The appellate authority in fact has accepted the contention of the appellant that the penalty amount has been computed on a higher value than the invoice value without proper evidence and reason. To this extent the appellant succeeded before the appellate authority.”

“Thus, considering the peculiarity of the facts, the appellant is liable to pay Rs. 1,00,000/-. This amount be retained from and out of the total amount paid by the appellant and balance shall be refunded to the appellant within three months from the date of the receipt of the server copy of this order. However, the appellant shall not be entitled for any interest on the said amount so directed to be refunded” the Court directed.

To Read the full text of the Order CLICK HERE

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