GST Vidhi | GST Case Law

M/s Maa Amba Builders & Anr. vs. Assistant Commissioner of Revenue (WPA 842 of 2024 - Calcutta High Court) 

By Yogesh Verma (CS/LLB) / 2 min read / GST Case Law

Introduction
The judgment delivered by the Calcutta High Court, Circuit Bench at Jalpaiguri, in M/s Maa Amba Builders & Anr. vs. Assistant Commissioner of Revenue, discusses the procedural aspects and legal interpretation of penalties imposed under Section 129 of the CGST Act, 2017. This case highlights the critical issue of e-way bill expiry during transit and its implications on tax liability and penalties.

Case Details

• Court: Calcutta High Court, Circuit Bench at Jalpaiguri
• Judge: Hon’ble Justice Raja Basu Chowdhury
• Case Number: WPA 842 of 2024
• Judgment Date: May 2, 2024
• Parties:
• Petitioner: M/s Maa Amba Builders & Anr.
• Respondent: Assistant Commissioner of Revenue, Bureau of Investigation, North Bengal HQ

Background of the Case

M/s Maa Amba Builders was contracted to supply 32.200 MT of TMT bars to M/s City Developers Private Limited in Siliguri. The goods were procured from M/s N.N. Ispat Private Limited in Burdwan, West Bengal. A tax invoice and e-way bill were generated for the transportation of goods.

Key Events

1.     E-way Bill Validity:

o    The e-way bill was valid until May 12, 2023, 11:59 PM.

o    Before delivery, the e-way bill expired, and the goods were intercepted on May 13, 2023.

2.     Detention and Show Cause Notice:

o    The goods were detained, and a show cause notice under Section 129(1) was issued, citing “goods not covered by valid documents” as the reason for detention.

3.     Release of Goods:

o    The petitioner paid the penalty under Section 129(1)(b) and secured the release of goods.

4.     Appeals:

o    The petitioner filed an appeal under Section 107, which was dismissed on September 14, 2023, upholding the penalty.

o    Aggrieved, the petitioner approached the Calcutta High Court.

Legal Framework

Section 129 of the CGST Act

This section deals with the detention, seizure, and release of goods and vehicles during transit for non-compliance with GST provisions. Key provisions include:

1.     Section 129(1): Provides conditions for detention, including missing or invalid documents.

2.     Section 129(1)(b): Allows the release of goods upon payment of applicable tax and penalties.

3.     Section 129(3): Requires an order to be passed after considering the taxpayer's response to the show cause notice.

Issues Raised

1.     Whether the mere expiry of an e-way bill justifies detention and penalty under Section 129.

2.     Whether the absence of mens rea (intent to evade tax) absolves the petitioner of penalties.

3.     Whether the appellate authority erred in dismissing the appeal without considering the petitioner’s grounds of defense.

Submissions by the Parties

Petitioner’s Submissions

1.     No Intent to Evade Tax:

o    The petitioner argued that the goods were accompanied by valid invoices and the e-way bill. The only lapse was the non-extension of the e-way bill’s validity.

2.     Procedural Lapse:

o    It was contended that the penalty imposed was disproportionate, given the absence of any willful misconduct.

3.     Judicial Precedents:

o    The petitioner relied on judgments like Hindustan Steel and Cement N.H. Karimbilangadi vs. Assistant State Tax Officer, which held that penalties should not be imposed in the absence of willful default.

Respondent’s Submissions

1.     Statutory Compliance:

o    The respondents argued that Section 129 mandates the imposition of penalties for non-compliance with e-way bill requirements, irrespective of intent.

2.     Reliance on Precedents:

o    The respondents cited cases like Asian Switchgear Pvt. Ltd. vs. State Tax Officer, emphasizing that penalties under tax statutes are civil obligations and do not require proof of mens rea.

Findings of the Court

1.     On Expiry of E-Way Bill:

o    The court held that the mere expiry of an e-way bill does not automatically imply tax evasion.

2.     On Mens Rea:

o    It was observed that penalties under Section 129 are not contingent upon intent to evade tax. However, the adjudicating and appellate authorities must consider the absence of mens rea when deciding the quantum of penalties.

3.     On Appellate Authority’s Decision:

o    The court criticized the appellate authority for failing to address the petitioner’s grounds of appeal, particularly the absence of intent to evade tax.

4.     On Judicial Precedents:

o    The court noted that several precedents, including Pushpa Devi Jain vs. Assistant Commissioner of Revenue, emphasize the importance of proportionality in penalties and the need for adjudicating authorities to consider the peculiar facts of each case.

Judgment

The Calcutta High Court set aside the orders of the adjudicating and appellate authorities, stating that:

1.     The penalty imposed was disproportionate, given the lack of intent to evade tax.

2.     The petitioner’s grounds of appeal were not adequately considered.

3.     The proceedings under Section 129 must balance compliance with fairness and proportionality.

Analysis

Reinforcement of Procedural Fairness

The judgment underscores the importance of considering all grounds of appeal and ensuring that decisions are reasoned and proportional.

Mens Rea in Tax Penalties

While the court acknowledged that tax penalties are civil liabilities, it emphasized that the absence of intent to evade tax should influence the quantum of penalties.

Balancing Compliance and Fairness

The judgment strikes a balance between enforcing compliance and ensuring that penalties do not become punitive in cases of genuine procedural lapses.

Conclusion

The decision in M/s Maa Amba Builders vs. Assistant Commissioner of Revenue serves as a reminder for both taxpayers and authorities to adhere to procedural fairness and proportionality in GST disputes. It reinforces the principle that penalties must align with the severity of the non-compliance, ensuring a fair and just tax administration system.

Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.

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