Order Date: 17 August 2022

Facts-

• The Petitioner, Sanskruthi Motors is an entity engaged in the transportation of goods. It has an agreement with Tata Motors Limited for transportation of commercial and passenger vehicles and chassis, which are driven to various destinations as required by that Company.
• On the request of M/s. Tata Motors Limited, the petitioner transported a new tipper lorry. The said vehicle was intercepted and detained by the Assistant State Tax Officer, and a show cause notice was issued. It was found that the e-way bill had expired, since the vehicle was detained, the petitioner moved this Court and the lorry was directed to be released on production of bank guarantee. 
• Following the directions of this Court, the notice was adjudicated and order was issued, imposing a penalty on the petitioner along with a demand for IGST.
• The petitioner’s appeal has been returned, stating that the appeal cannot be entertained as the petitioner had not paid any admitted tax, and there is no pre-deposit of 10% of the disputed tax. It was also pointed out that stamp paper equivalent to 1% of the disputed tax is not remitted towards the legal benefit fund.
• The petitioner contended that where there is only a technical breach and no intention to evade tax, there is no justification for imposing a heavy penalty under the GST laws.
• While noting Ranjilal Damodaran v. Asst. State Tax Officer and another the respondent contended that the petitioner could not have been allowed to continue the transport without extending the validity of the e-way bill as provided under Rule 138(10) of the CGST Rules.

Issue-

• Whether the imposition of a major penalty along with a demand for IGST was justified for the reason that the e-way bill had expired?

Order-

• The Single Bench of Hon’ble High Court observed that while determining the issue of the demand for tax and the imposition of a major penalty the reason for invoking Section 129 of the CGST laws in this case, is only one that the e-way bill has expired.
• Further, “It has to be borne in mind that Section 129 forms part of the machinery provisions under the Act to check evasion of tax and a detention can be justified only if there is a contravention of the provisions of the Act in relation to transportation of goods or their storage while in transit”.
• The Court while allowing the petition held that, as noticed by the Division Bench of the Telangana High Court, the officer was duty bound to consider the explanation offered by the petitioner for the expiry of the e-way bill.
• Hence, the matter will stand remanded to the joint commissioner who shall consider the amount of penalty to be imposed on the petitioner taking note of the findings in this Judgment and after affording an opportunity of hearing to the petitioner.
• The writ petition is allowed and order passed by the state tax officer will stand quashed.