In a recent decision by the Calcutta High Court dated September 9, 2025, the case of Hindusthan Biri Leaves & Anr. v. Assistant Commissioner of State Tax, Bureau of Investigation, Durgapur Zone & Ors. was addressed, focusing on the imposition of penalties under the GST Act. The petitioner, a trader in biri leaves, faced a penalty after their e-way bill expired during transit due to a traffic blockage. Despite having a valid invoice and e-way bill upon purchase, the vehicle was intercepted shortly after the e-way bill expired, and no discrepancies in the goods or documentation were found.
The petitioner argued that the delay was unavoidable and due to circumstances beyond their control, specifically a traffic blockage. They cited previous cases, such as those involving Satyam Shivam Papers and Progressive Metals Pvt. Ltd., where the courts held that mere expiry of an e-way bill without evidence of tax evasion does not justify a penalty. The central issue was whether the expiry of an e-way bill alone, without any intent of tax evasion, warranted a 200% penalty under Section 129 of the GST Act.
The Court ruled that the penalty was arbitrarily imposed and disproportionate to the situation, especially since the delay was bona fide and uncontested by the Department. It was determined that without evidence of tax evasion or malicious intent, such harsh penalties were unjustified. Consequently, the orders of the original and appellate authorities were quashed, and the Department was instructed to refund the penalty within eight weeks of the application.
Order date: 09 Sept 2025
Parties: Hindusthan Biri Leaves & Anr. v. Assistant Commissioner of State Tax, Bureau of Investigation, Durgapur Zone & Ors.
Facts –
- The petitioner, a firm trading in biri (kendu) leaves, purchased 329 bags from Chhattisgarh under valid invoice and e-way bill, which expired at midnight on 27 July 2022.
- On 29 July 2022, at 1:05 a.m., the vehicle was intercepted; the only allegation was expiry of the e-way bill. No discrepancy in goods or documents was found.
- The petitioner explained delay due to traffic blockage and, since the goods were perishable, paid penalty under protest to secure release.
- Reliance was placed on Satyam Shivam Papers (SC) and Progressive Metals Pvt. Ltd. (Calcutta HC), holding that expiry alone does not justify penalty.
Issue –
- Whether mere expiry of an e-way bill, without evidence of tax evasion, is sufficient ground for imposition of 200% penalty under Section 129 of the GST Act?
Order –
- The Court held that the delay was bona fide, caused by traffic blockage, and not disputed by the Department. No intent of tax evasion was shown.
- Mechanical imposition of 200% penalty was held arbitrary and disproportionate.
- Expiry of an e-way bill, without mala fide intent, cannot attract harsh penalties.
- Orders of the original and appellate authorities were quashed, and the Department was directed to refund the penalty within 8 weeks of application.
