In WPA 532 of 2023 -CAL HC- Calcutta High Court rules imposition of tax and penalty based on expired e-way bill unjustified if there was no wilful attempt to evade tax; grants refund of penalty to M/s. Perfect Enterprise
Justice Krishna Rao [15-06-2023]

Read Order: M/s. Perfect Enterprise v. State of West Bengal & Ors

Chahat Varma

New Delhi, June 23, 2023: The Jalpaiguri Bench of the Calcutta High Court has granted a favourable ruling to M/s. Perfect Enterprise (petitioner), stating that the petitioner was entitled to apply for a refund of the penalty paid. The court acknowledged that there was no lack of bona fide on the part of the petitioner to state that there was wilful misconduct committed by the petitioner and found that the imposition of tax and penalty by the authorities was unjustified in relation to the transportation of goods.

In the said case, goods were being transported from Kandla Port, Gujarat to Siliguri. The e-way bill for the transportation was valid until May 2, 2022. The vehicle reached Siliguri on May 2, 2022, before the e-way bill expiration. However, upon arrival, the stockyard where the goods were supposed to be unloaded was closed. Subsequently, the next working day, the stockyard was again closed, due to the Ed-Ul-Fitr festival. Thereafter, the goods and the vehicle were detained by the authorities based on the vehicle being found in transit with an expired e-way bill. Thereafter, a show cause notice was issued, proposing a penalty each under Central Goods and Services Tax Act/West Bengal Goods and Services Tax Act.  By an order dated May 12, 2022, demand of tax and penalty was served upon the driver of the vehicle claiming penalty of Rs. 4,96,390. On protest, the petitioner paid the penalty and the goods were released to them.

The single-judge bench of Justice Krishna Rao referred to Hanuman Ganga Hydro Projects Private Limited vs. Joint Commissioner, State Tax Authority, Silliguri Circle and Another [LQ//2022/1844], wherein the issue of imposing tax and penalty based on the expired e-way bill was considered by the Coordinate Bench of the Court. In the said case, the court had held that if there was no willful attempt to evade tax on the part of the petitioner, the orders passed by the Appellate Authority and the penalty should be set aside and quashed.

The bench noted that in the present case the e-way bill was valid up to May 2, 2022 and the vehicle of the petitioner reached Silliguri on May 2, 2022 before the expiry of e-way bill but due to national holiday on May 3, 2022, the stockyard was closed and in the early morning on May 4, 2022, the vehicle was intercepted at Bakuabari which was about 16/17 kilometres from the destination and that there was no other allegation against the petitioner.

“In view of the above facts and circumstances of the case, the order of the Appellate Authority dated January 31, 2023 and the order passed by the adjudicating authority dated May 12, 2022 are set aside and quashed,” held the court.