FAILURE TO GENERATE PART-B OF E-WAY BILL – WHETHER ATTRACTS TAX?

[Mr. M. GOVINDARAJAN]

E-way Bill

Rule 138 provides that every registered person who causes movement of goods of consignment value exceeding R.50,000-

•  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.  A unique number will be generated on the said portal.  The unique number generated under sub-rule (1) shall be valid for a period of fifteen days for updation of Part B of FORM GST EWB-01.

Part B of GST EWB - 01

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.

Where the goods are transported by railways or by air or vessel, the e-way bill shall be generated by the registered person, being the supplier or the recipient, who shall, either before or after the commencement of movement, furnish, on the common portal, the information in Part B of FORM GST EWB-01.  Where the goods are transported by railways, the railways shall not deliver the goods unless the e-way bill required under these rules is produced at the time of delivery.  

where the goods are transported for a distance of up to 50 kilometers within the State or Union territory from the place of business of the consignor to the place of business of the transporter for further transportation, the supplier or the recipient, or as the case may be, the transporter may not furnish the details of conveyance in Part B of FORM GST EWB-01. 

The e-way bill shall not be valid for movement of goods by road unless the information in Part-B of FORM GST EWB-01 has been furnished. 

Where the goods are transferred from one conveyance to another, the  consignor or the recipient, who has provided information in Part A of the FORM GST EWB-01, or the transporter shall, before such transfer and further movement of goods, update the details of conveyance in the e-way bill on the common portal in Part B of FORM GST EWB-01. 

The consignor or the recipient, who has furnished the information in Part A of FORM GST EWB-01, or the transporter, may assign the e-way bill number to another registered or enrolled transporter for updating the information in Part B of FORM GST EWB-01 for further movement of the consignment.   After the details of the conveyance have been updated by the transporter

in Part B of FORM GST EWB-01, the consignor or recipient, as the case may be, who has furnished the information in Part A of FORM GST EWB-01 shall not be allowed to assign the e-way bill number to another transporter.

Issue

The issue to be discussed in this article is whether non updation of Part B of GST EWB – 01 attracts the payment of tax and penalty with reference to decided case law. 

Section 129 of the CGST Act provides that 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,   E-way bill is the important document for this purpose.    Such vehicle and goods may be released on payment of tax and 100% penalty payable on such goods and on production of security equivalent to the tax and penalty.

Once the tax is paid on the goods and taken for movement whether the transporter is gain liable to pay tax and also penalty.  It is not required.   In ‘Neuvera Wellness Venture private Limited v. State of Gujarat’ – 2019 (4) TMI 1448 - GUJARAT HIGH COURT the first petitioner is engaged in import and sale of dietary food products. The petitioner is required to pay customs duty as well as IGST before clearance for home consumption.  They imported consignments of Whey Protein Powder from Budapest Hungary and USA at Mundra port under four different invoices and warehousing bills of entry were filed for such imports.  The imported goods were kept in customs bonded warehouse.  Then the said goods were cleared for home consumption by filing ex-bond bills of entry.  The goods were then transported to their warehouse placed in Bhilwandi.   Part A of the four separate E-way bills was uploaded but part B was not generated by the transporter due to some technical problem.

Since the goods were of perishable nature, the petitioners did not wait for completion of E-way bill and proceeded through a truck.  On its way the truck was intercepted by the authorities.  The transporter produced all documents relating to the goods including the four bills of entry for home consumption evidencing the payment of IGST on the goods.   However the vehicle was detained on the ground that Part B of the E-way bill was not generated.  The Authority issued an order for physical verification.  Further order for detention of the vehicle was also issued.

On the receipt of the order the petitioners generated Part B of the E-way bill and approached the authorities and gave explanation.  But it was refused to release the goods on the ground of absence of Part B of E-way bills and issued notices under section 129(3) of the State Act and Central Act.  In the notice it was insisted to pay ₹ 5,93,505/- towards tax and equal penalty of the said amount.  The petitioners filed reply to the notices and requested to release the goods.  But the Authority issued an order directing the petitioner to pay the tax and penalty within 7 days of the receipt of the order otherwise the department will proceed to initiate action against the petitioners under section 130 of the Act.

Being aggrieved against the said order the petitioners filed the present writ petition before the High Court.  The petitioners submitted the following before the High Court-

• In the facts of the present case there was no supply of goods and therefore the question of payment of tax does not arise.
• Considering the fact that the goods in question are perishable in nature the Department was not justified in not releasing the goods and calling upon the petitioner to furnish security equivalent to the amount payable.
• The Department did not considered the submissions advanced by the petitioners that the petitioners had already paid IGST on the goods in question and hence, the question of again paying IGST would not arise as it would tantamount to applicability of total input tax credit on the same transaction.
• Since the impugned order is contrary to the provisions of Section 129 of the CGST Act and being a non speaking order deserves to be quashed and set aside and the department may be directed to release the goods in question subject to such conditions as the Court may deem fit.

The Department submitted the following before the High Court-

• Admittedly the goods were not accompanied by Part B of the E-way bill and hence the department was wholly justified in detaining the conveyance and goods.
• As there was a contravention of the provisions of the GST Act and the rules made there under,  the department was wholly justified in imposing tax and penalty.

The Department urged to dismiss the petition being devoid of merit.

The High Court considered the submissions of both the parties.  The High Court observed that the impugned order revealed that the basis for computing the additional tax is the IGST paid by the petitioners.  Moreover there is not even a whisper as regards the submissions advanced by the petitioners, nor have the same been dealt with in the body of the order.   No reasons have been assigned by the Department for the purpose of holding the petitioner liable to payment of tax and penalty despite the fact that IGST had already been paid on such transaction and the goods were moved from the customs warehouse to the petitioner’s own godown.  The impugned order is therefore totally bereft of any reasoning. 

The High Court held that reasons are the heart and soul of an order passed by a judicial/quasi judicial order, without which it is difficult to pronounce one way or other as regards the validity of such order.  In the absence of any reasons in support of the tax and penalty levied by the Department the impugned order stands vitiated as being an unreasoned order and as such cannot be sustained.   However the High Court remanded the matter to the Department to consider the case afresh in accordance with the law by passing a speaking order after duly considering the submissions advanced by the petitioners.  Since the goods are perishable in nature, the High Court directed to release the vehicle and goods on production of ₹ 12 lakhs by the petitioners as security.