Mere 17 Hours Expiry of E-Way Bill Cannot Justify 200% GST Penalty without Malafide Intent: Calcutta HC Orders Refund [Read Order]
The Calcutta High Court held that a mere 17-hour expiry of an e-way bill without malafide intent cannot justify a 200% GST penalty and ordered a refund to the petitioner.
Eway - bill - Taxscan
Eway - bill - Taxscan
In a recent ruling, the Calcutta High Court held that a mere 17-hour expiry of an e-way bill without proof of malafide intent to evade tax cannot justify the imposition of a 200% GST penalty.
Hindusthan Biri Leaves & Anr., the appellants, filed a writ petition challenging the order passed by the Senior Joint Commissioner, State Tax, Berhampore Circle, under Section 129 of the West Bengal Goods and Services Tax Act, 2017 read with the relevant provisions of the CGST and IGST Acts.
The goods in question were 329 bags of kendu leaves transported from Chhattisgarh to West Bengal under an e-way bill valid up to 27 July 2022. The vehicle was intercepted on 29 July 2022 at about 1:05 a.m., after the expiry of the e-way bill.
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The appellants’ counsel argued that the only discrepancy was the expiry of the e-way bill, which had lapsed by 17 hours after allowing the statutory 8-hour grace period. They further argued that the delay was caused by traffic blockage, a fact not disputed by the department, and that there was no intention to evade tax.
The department counsel relied solely on the expiry of the e-way bill to impose a penalty at 200% of the tax amount.
The Division Bench comprising Chief Justice T.S. Sivagnanam and Justice Chaitali Chatterjee observed that there was no allegation of any other discrepancy or evidence of tax evasion. The court explained that the distance between the place of interception and the destination was 200 kilometres, which could have been covered in less than four hours, and pointed out that imposition of a 200% penalty in such circumstances was mechanical and unjustified.
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The court referred to earlier decisions, including Progressive Metals Pvt. Ltd. v. Deputy Commissioner, State Tax and Assistant Commissioner (ST) v. Satyam Shivam Papers (P.) Ltd., which held that expiry of an e-way bill alone cannot be the basis for harsh penalty.
The court held that the 200% penalty imposed was unsustainable in law. It quashed the orders of the original and appellate authorities and directed the appropriate authority to refund the penalty recovered from the appellants, upon an application being filed, within eight weeks. The writ petition and the appeal were accordingly allowed, with no order as to costs.
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