GST Vidhi | GST Case Law

Expiry of E-Way Bill Without Malicious Intent Does Not Justify Penalty under GST: High Court’s Strong Reaffirmation

Summary of the Case

In a significant decision delivered on 27 November 2024, the Allahabad High Court ruled that mere expiry of an e-way bill during transit, without any intention to evade tax, does not warrant penalty under Section 129 of the CGST Act. The case of M/s Parle Biscuits Private Ltd. vs. State of U.P. and Others revolved around a consignment delayed due to a vehicle breakdown, causing the e-way bill to expire before the goods could reach their destination. Despite no discrepancy in the goods or documentation, authorities imposed penalties, which the Court found to be unjustified. This ruling reinforces the principle that penalty proceedings require clear proof of tax evasion intent, and that genuine business difficulties during transit must be accommodated under GST law.

1. Case Overview

• Case Name: M/s Parle Biscuits Private Ltd. vs. State of U.P. and Others
• Case Number: Writ Tax No. 731 of 2020
• Neutral Citation: 2024:AHC:185804
• Date of Judgment: 27 November 2024
• Court: High Court of Judicature at Allahabad

2. Background and Facts

M/s Parle Biscuits Private Ltd., a renowned manufacturer of food products, was transporting goods under the GST regime.

Details of the Incident:

• Consignment: Goods (biscuits, toffees, mango bites, etc.) transported from Allahabad to Chitrakoot.
• Transport Mode: Vehicle No. UP73A0353.
• Documentation:
• Proper tax invoice,
• Valid bilty (transport document), and
• E-way bill issued on 01.12.2018.

Problem Arises:

• On 03.12.2018, the goods were intercepted by Mobile Squad Unit-3, Prayagraj.
• Authorities found that the validity of the e-way bill had expired by the time of interception.
• Seizure proceedings were initiated and penalty imposed.
• Petitioner contended that the vehicle broke down, causing unavoidable delay beyond e-way bill validity.

Thus, the matter landed before the High Court after appellate authorities upheld the penalty.

3. Legal Issues Raised

The case presented several key legal issues:

1.    Whether expiration of the e-way bill during genuine transit due to unforeseen circumstances justifies seizure and penalty under GST law?

2.    Whether proof of mens rea (intention to evade tax) is mandatory before imposing penalties under Section 129?

3.    Whether authorities erred by mechanically imposing penalty without considering the real cause of delay?

4. Submissions by the Petitioner

The petitioner, through counsels Mr. Chetan Prakash and Ms. Shachi Srivastava, argued:

• Goods were accompanied by all requisite documents at the time of interception.
• Delay occurred due to vehicle breakdown, a fact within the knowledge of the authorities.
• No discrepancy was found in:
• Quantity,
• Quality, or
• Nature of goods.
• The e-way bill had been valid at the time of dispatch, fulfilling legal requirements.
• No intention to evade tax was ever alleged or found.
• Cited several High Court precedents, including:
• M/s Globe Panel Industries India Pvt. Ltd. vs. State of U.P.
• M/s Falguni Steels vs. State of U.P.
• S/S Banaras Industries vs. Union of India
• M/s Creative Lab vs. State of U.P.
• M/s Vishal Pipes Limited vs. State of U.P.

Each judgment emphasized absence of tax evasion intent nullifies penalty even if minor technical breaches occur.

5. Submissions by the Respondent

The State, through Additional Chief Standing Counsel Mr. Ravi Shanker Pandey, countered:

• The e-way bill had expired, thus violating GST transport provisions.
• It was the duty of the transporter to extend the e-way bill if the journey was delayed.
• Cited judgments supporting strict compliance, such as:
• M/s Ghata Mehandipur Balaji Grinding Works Pvt. Ltd.
• Vardan Associates Pvt. Ltd. vs. Assistant Commissioner of State Tax.

However, the respondent did not contest the fact that all documents were present and that no intention to evade tax was established.

6. Relevant Legal Framework

Section 129 of CGST Act, 2017

• Pertains to detention, seizure, and penalty for goods transported:
• Without proper documentation, or
• With intention to evade tax.

Key Principle:

• Mens rea (intent to evade tax) is essential for sustaining penalties.
• Mechanical or technical errors alone, without intent, cannot attract Section 129 penalties.

7. Court’s Analysis and Findings

Justice Piyush Agrawal made important findings:

• Goods were accompanied by all valid documents.
• Only lapse was expiry of the e-way bill due to vehicle breakdown.
• No discrepancy was found regarding nature, quantity, or value of goods.
• No finding of intent to evade tax recorded by authorities at any stage.
• Mere expiry of e-way bill, without mala fide intent, does not warrant penalty under GST law.

Citing the judgment in M/s Falguni Steels, the Court noted:

“In the absence of any ground with regard to intention to evade payment of tax, the penalty proceedings cannot be justified.”

Further distinguishing the cases cited by the State:

• Vardan Associates Pvt. Ltd. was distinguishable because there, the delay was prolonged and no reasons were provided.
• M/s Ghata Mehandipur Balaji Grinding Works Pvt. Ltd. was irrelevant because, in that case, no documents were produced at all during interception.

8. Judgment and Final Order

Based on the above reasoning, the Court ruled:

• Penalty order dated 06.12.2018 and Appellate order dated 04.02.2020 are quashed.
• The writ petition is allowed.
• The State authorities are directed to refund any amount deposited by the petitioner within four weeks from the date of production of a certified copy of the judgment.

Thus, full relief was granted to M/s Parle Biscuits Private Ltd..

9. Conclusion

This ruling strengthens important principles under GST:

• Genuine delays during transit, caused by unforeseen events (like vehicle breakdown), must not be penalized mechanically.
• Substantial compliance and bona fide conduct shield taxpayers from harsh penalties.
• Authorities must prove intent to evade tax before imposing punitive actions under Section 129.
• Procedural compliance must not override substantive justice.

This case marks a progressive interpretation of GST law, balancing regulatory objectives with business realities.

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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