Penalty under Section 129 shall not be imposed for sole reason that E-way has expired

Case Name: Neelmetal Products Ltd. SIDCUL Pantnagar vs Commissioner State Tax

Appeal Number: 72/2020

Date of Judgement/Order: 16/08/2024

Related Assessment Year: 2020-21

Uttarakhand GST Appellate authority sets aside penalty order under section 129 for expiration of the E way Bill without any intention to evade tax. It was at a distance of about 2-3 Kms from the factory, when the vehicle was intercepted for at Rudrapur on 19.10.2020 at 10:10 am. Joint Commissioner (Appeal), State-Tax, Haldwani, in light of decision of Hon’ble High Court of Calcutta in the matter of M/s Hindustan Herbal Cosmetics v. State of U.P. wherein it was held that “mens rea to evade tax is essential for Imposition of penalty”and the decision of Hob’ble Supreme Court in the matter of Assistant Commissioner (ST) & ors. vs. M/s Satyam Shivam Papers Pvt. Ltd. where it was held that “on account of non-extension of the validity of the e-way bill by petitioner or the auto trolley driver, no presumption can be drawn that there was an intention to evade tax”,quashed the order of State tax officer, Uttarakhand demanding integrated tax and Penalty of Rs 5,48,391 each under section 129 on the Appellant. The Hon’ble Authority has also commanded that the decision passed by the Hon’ble Supreme Court in the matter of M/s Vardan Associates Pvt. Ltd. vs. Assistant Commissioner of State tax is not applicable in the present case. The Hon’ble Authority made the following major observations in this regard:

1)    Technical violation by itself without any intention to evade tax cannot lead to imposition of penalty under Section 129(3) of GST Act.

2)    An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation.

3)    Power to impose the penalty is a discretionary power of the authority and shall be exercised judicially considering the relevant facts.