PENALTY FOR INCOMPLETE E-WAY BILL

[Mr. M. GOVINDARAJAN]

E-way Bill

Rule 138 of Central Goods and Services Tax Rules, 2017 provides that every registered person who causes movement of goods of consignment value exceeding ₹ 5,000/-

• in relation to a supply; or  
•  for reasons other than supply; or
•  due to inward supply from an unregistered person, 

shall, before commencement of such movement, furnish information relating to the said goods as specified in Part A of FORM GST EWB-01, electronically, on the common portal along with such other information as may be required on the common portal and a unique number will be generated on the said portal. 

 The transporter, on an authorization received from the registered person, may furnish information in Part A of FORM GST EWB-01, electronically, on the common portal along with such other information as may be required on the common portal and a unique number will be generated on the said portal. 

Where the goods are transported by the registered person as a consignor or the recipient of supply as the consignee, whether in his own conveyance or a hired one or a public conveyance, by road, the said person shall generate the e-way bill in FORM GST EWB-01 electronically on the common portal after furnishing information in Part B of FORM GST EWB-01.

The e-way bill will be complete only if Part A and Part B are duly filled in by the appropriate parties.   Otherwise the e-way bill will not be valid and will attract consequences. 

Detention of goods

Section 129(1) of the CGST Act provides that notwithstanding anything contained in this Act, where any person transports any goods or stores any goods while they are in transit in contravention of the provisions of this Act or the rules made there under, all such goods and conveyance used as a means of transport for carrying the said goods and documents relating to such goods and conveyance shall be liable to detention or seizure and after detention or seizure. 

Section 129(3) provides that the proper officer detaining or seizing goods or conveyances shall issue a notice specifying the tax and penalty payable and thereafter, pass an order for payment of tax and penalty.

Non filling of e-way bill properly

Non filling of e-way bill also amount to contravention under the provisions of the Act and the rules.   Therefore it would attract penalty to be imposed by the proper officer.

In ‘Daily Express v. Assistant State Tax Officer, State GST Department, Kollam’ – 2019 (3) TMI 596 - KERALA HIGH COURT the writ appeal was filed by the appellant against the order of the dismissal of the writ petition by Single Judge on 29.11.2018.   The appellant is a transporting firm.  It is engaged in plying about 100 Lorries as carriers of goods.  On 15.10.2018 the appellant was transporting goods bound to Kollam with a consignment by VIP Industries to be delivered to VTWO Ventures, Kollam.  The said vehicle was intercepted by the Assistant Sales Tax Officer.  The driver of the vehicle had all documents intact and in order, with the exception that, Part B of the e-way bill was not complete.  The vehicle was detained under section 138 of the CGST Act.  Notice was issued under section 129(1) of the CGST Act.  The goods were ordered to be detained.  The tax ₹ 64,128/- was imposed and also 100% penalty ₹ 64,128/- totaling ₹ 1,28,256/-. 

The appellant filed writ petition before the Kerala High Court.  The High Court dismissed the petition holding the provisions of section 129 (1) (b) applies to the transporter as person interested  in the goods.  Therefore the High Court held that the notices of detention do not suffer from any legal infirmity calling for interference.  Against this order the appellant filed the present appeal before the Division Bench.

The appellant put forth the following arguments before the High Court-

• There is no case of tax evasion made out.
• The invoices were all in order.
• The only infraction was non filling of Part B of the e-way bill.
• According to section 126 of CGST Act, no officer shall impose penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and made without fraudulent intent or gross negligence.
• Non filling of Part B of e-way bill is only a minor breach.
• Even if there is a breach by the transporter, transporting any taxable goods without the cover of documents penalty may be imposed to the tune of ₹ 10,000/- only.
• Even if generally penalty is imposed under section 125 of the CGST Act, the penalty could be to the extent of ₹ 25,000/- only and nothing more.
• The imposition of 100% penalty is atrocious and needs to be interfered by the High Court.
• As per circular No. 76, dated 31.12.2018 it has been clarified that the ‘owner of the goods’ for the purpose of section 129(1) of the CGST Act would be either the consignor or the consignee, if the invoice or other specified document is accompanying the consignment of goods.
• In the present case, the consignment was with all accompanying documents pertaining to the sale and therefore, the transporter could not be mulcted with liability to pay tax and penalty.

The Revenue submitted the following-

• Infraction of Section 129 would be liable for penalty as stated therein irrespective of whatever is stated in any other provision in the Act, because section 129 is a self contained code by itself as the section starts with a non obstante clause. 
• This provision is applicable to ‘any person transporting any goods’ would also include a transporter.

The High Court heard both sides.  The High Court did not accept the argument of the appellant.  Section 129(1) makes it clear that any person who is interested in the goods shall be liable under section 129(1)(b).  Section 129(6) provides that where a person transporting any goods or the owner of the goods, fails to pay the amount of tax and penalty as provided in sub section (1) within fourteen days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130.  This would be applicable to the transporter also.

The High Court further observed that the non obstante clause in section 129 indicate that neither section 126 nor the general provision of penalty under section 125 or section 122 would apply in cases where section 129 is attracted.  The minor breaches as referred to in section 126 that a breach shall be considered a minor breach if the amount of tax is less than ₹ 500.  The High Court held that section 127 is not attracted in this case.

The High Court held that the Single Judge had rightly dismissed the writ petition refusing to find any infirmity in the notices issued to the appellant and therefore the High Court dismissed the writ appeal.