2025 (4) TMI 1052 - HC - GST

Challenge to penalty order - person in charge of the conveyance is required to carry a physical copy of the tax invoice under the West Bengal Goods and Service Tax Rules 2017 or not - HELD THAT - Section 68 of the 2017 Act deals with inspection of goods in movement. Sub-section 3 of Section 68 empowers the intercepting officials to require the person in charge of the conveyance to produce the documents prescribed and upon being required to do so the said person shall be liable to produce the documents and devices and also allow the inspection of the goods. It is not the case of the petitioner that the tax invoice was produced electronically. Therefore the person in-charge of the conveyance was under a statutory obligation to carry the physical copy of the tax invoice. For such reason this Court is not inclined to accept the contention of the learned Advocate for the petitioner that displaying the image of the tax invoice from the mobile set of the person in-charge of the conveyance amounts to sufficient compliance of the requirements under Rule 138A (1) (a) of 2017 Rules. This Court holds that mere change of route or even if the conveyance is intercepted at a location which may not be en route geographically as per the declaration made in the e-way bill cannot be a ground for invocation of the provisions of Section 129 of the 2017 Act as no interference can be drawn in such cases that there was intention to evade taxes - The appellate authority in its order dated January 16 2025 has not returned any finding that there was any intention on the part of the petitioner to evade the payment of taxes. Though the petitioner may not have produced the tax invoices either before the adjudicating authority or before the appellate authority but the fact remains that a copy of such tax invoice has been annexed to this writ petition. It is also not the case of the revenue that there has been any default or short payment in payment of taxes duty. The veracity of the tax invoice which is annexed to this writ petition has also not been questioned by the revenue in course of hearing of this writ petition. The Hon ble Division Bench in Ashok Sharma 2025 (2) TMI 1002 - CALCUTTA HIGH COURT held that in case there is no dispute as to the quantity or quality of the goods and also that there is no intention to evade payment of tax the provision under Section 129 of the 2017 Act could not have been invoked. The said decision shall squarely apply to the facts of the case on hand. Conclusion - i) Without evidence of an intention to evade tax the invocation of Section 129 is unjustified. ii) The penalty order and its affirmation by the appellate authority are set aside and the petitioner was entitled to a refund of the penalty paid. The order passed by the appellate authority dated November 14 2024 affirming the penalty order passed by the original authority dated May 22 2024 are set aside. The writ petition stands allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The primary issues considered in this judgment include:

• Whether the person in charge of the conveyance is required to carry a physical copy of the tax invoice under the West Bengal Goods and Service Tax Rules, 2017.
• Whether a deviation from the declared route in the e-way bill can justify the imposition of a penalty under Section 129 of the West Bengal Goods and Service Tax Act, 2017.
• Whether the authorities were justified in invoking Section 129 of the 2017 Act in the absence of an intention to evade tax.

ISSUE-WISE DETAILED ANALYSIS

1. Requirement to Carry Physical Copy of Tax Invoice

• Relevant Legal Framework and Precedents: Section 138A of the West Bengal Goods and Service Tax Rules, 2017 requires the person in charge of a conveyance to carry the invoice or bill of supply. Sub-Rule 2 of Rule 138A allows for electronic production of the invoice in certain cases.
• Court's Interpretation and Reasoning: The Court interpreted that the person in charge must carry the physical copy of the tax invoice unless the invoice is issued in a manner prescribed under Sub-Rule (4) of Rule 48, which allows for electronic verification.
• Application of Law to Facts: The Court found that the petitioner did not produce the tax invoice electronically, thus was obligated to carry a physical copy.
• Treatment of Competing Arguments: The petitioner argued that displaying an image of the invoice on a mobile device sufficed, but the Court rejected this, citing the statutory requirement for a physical copy.
• Conclusions: The Court concluded that the petitioner failed to comply with the requirement to carry a physical copy of the tax invoice.

2. Deviation from Declared Route in E-Way Bill

• Relevant Legal Framework and Precedents: The 2017 Act and Rules do not explicitly require the declaration of a route for transportation of goods. Precedents from other High Courts, such as the Allahabad and Karnataka High Courts, were considered.
• Court's Interpretation and Reasoning: The Court noted the absence of any statutory requirement to declare a route and referenced previous judgments indicating that a mere change of route does not imply an intention to evade taxes.
• Key Evidence and Findings: The e-way bill was produced at inspection, and there was no discrepancy in the goods' quality or quantity.
• Application of Law to Facts: The Court held that the deviation from the route could not justify the imposition of a penalty under Section 129.
• Treatment of Competing Arguments: The State's argument for the necessity of route declaration was unsupported by statutory provisions.
• Conclusions: The Court determined that deviation from the declared route is not a valid ground for penalty under Section 129.

3. Justification for Invocation of Section 129

• Relevant Legal Framework and Precedents: Section 129 of the 2017 Act deals with the detention, seizure, and release of goods and conveyances in transit.
• Court's Interpretation and Reasoning: The Court emphasized the necessity of an intention to evade tax for invoking Section 129.
• Key Evidence and Findings: The appellate authority did not find any intention to evade tax, and the tax invoice annexed to the writ petition was not disputed by the revenue.
• Application of Law to Facts: The Court concluded that the absence of tax evasion intent invalidated the invocation of Section 129.
• Conclusions: The Court found no justification for invoking Section 129 in this case.

SIGNIFICANT HOLDINGS

• The Court held that the statutory obligation to carry a physical copy of the tax invoice was not met by merely displaying an image on a mobile device.
• The Court established that deviation from a declared route in an e-way bill does not constitute grounds for penalty under Section 129, absent any statutory requirement for route declaration.
• The Court concluded that without evidence of an intention to evade tax, the invocation of Section 129 was unjustified.
• The penalty order and its affirmation by the appellate authority were set aside, and the petitioner was entitled to a refund of the penalty paid.