In Writ Tax No. 44 of 2023 -ALL HC- Allahabad High Court sets aside penalty imposed on J.K. Cement Ltd for lack of E-way Bill
Justice Piyush Agrawal [28-08-2023]

Read Order: J.K. Cement Ltd v. State of U.P. and 3 Others

Chahat Varma

New Delhi, September 4, 2023: The Allahabad High Court has set aside a penalty of Rs. 1,75,236, imposed on J.K. Cement Ltd. (petitioner) for the lack of an e-way bill. The Court held that the penalty was imposed on a minor technical fault, despite the absence of any discrepancies in the documents accompanying the goods.

Briefly stated, the petitioner, engaged in the manufacturing and sale of cement, wall putty, adhesives, etc., had sent five consignments of various products. These goods were transported from Gwalior to Panna, Madhya Pradesh, passing through the state of Uttar Pradesh. During transit, the goods were intercepted in Uttar Pradesh on the grounds that the accompanying e-way bill was not with the goods. Subsequently, an order was passed under Section 129(3) of the Goods and Services Tax Act (GST Act), imposing a penalty against the petitioner. The petitioner appealed this decision, but the first appeal was dismissed.Top of Form

The petitioner's counsel argued that a notification issued on 24.04.2018 in the State of Madhya Pradesh specified that only items listed at serial numbers 1 to 11 of the said notification were required to carry an e-way bill during transportation. Based on this notification, it was contended that the goods in question, during their transit within the State of Madhya Pradesh, were not required to carry an e-way bill. Additionally, it was emphasized that the goods were accompanied by all necessary documents, including tax invoices and a G.R, and no discrepancies were identified in these documents. On the contrary, the Additional Chief Standing Counsel supported the impugned order and argued that the goods in question did not have an e-way bill, which was mandatory during transportation. Furthermore, it was pointed out that the notification referred to the State of Madhya Pradesh and not the State of U.P. Therefore, he requested the dismissal of the writ petition.

The bench of Justice Piyush Agrawal observed that both the authorities below had accepted that the goods were in transit and their final destination was Panna, Madhya Pradesh. The seizure had been made solely due to the absence of an e-way bill. Importantly, the bench emphasized that in the State of Madhya Pradesh, the goods were exempted from carrying an e-way bill at the relevant point in time.

The bench further noted that the impugned order explicitly stated that the origination as well as the termination of the goods in question was in the State of Madhya Pradesh. This indicated that the authorities were of the view that the goods were not intended to be unloaded in the State of UP, nor was there an intention to avoid tax. However, the penalty had been imposed mainly on the grounds of a small technical fault. In light of these facts, the bench concluded that the impugned orders could not be sustained in the eyes of the law.

As a result, the writ petition was allowed, and the impugned orders were set aside. Any amount already deposited by the petitioner during the pendency of the present litigation was ordered to be refunded to the petitioner within a period of 20 days.