The Calcutta High Court has ruled that levying a 200% penalty under Section 129 of the West Bengal Goods and Services Tax Act, 2017, only because of a lapse of an e-way bill by nearly 50 minutes was unnecessarily severe, with no tax evasion motive
The bench of Justice Kausik Chanda mentioned that the statutory framework furnishes “certain latitude” to transporters and thus authorities must analyse the conduct of the transporter before levying penalties.
The issue emerges when the applicants conducted a retail business of transmission shafts, pumps, electric motors and related goods, and transported goods to the Durgapur Steel Plant of Steel Authority of India Limited (SAIL) on May 7, 2022.
At the time of transit, State Tax authorities intercepted the vehicle at a petrol pump in Durgapur on May 9, 2022, at around 8:50 AM, approximately 10 kilometres from the destination. The e-way bill had expired during interception.
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Post-interception, the proceedings under section 129(1) of the WBGST Act were begun. The authorities evaluated the total value of goods at ₹4,38,983 and levied a penalty of ₹1,58,034, equivalent to 200% of the tax payable. Thereafter, the Appellate Authority on November 11, 2024, confirmed the penalty order dated May 12, 2022.
The applicants before the High Court said that they do not have any intention to evade tax and the only allegation against them was a lapse in the e-way bill before completion of transportation. They added that the vehicle had encountered a technical snag in transit, and because of that, it took 3 hours for routine maintenance.
The applicants put reliance upon earlier Division Bench judgments of the Calcutta High Court in Progressive Metals Pvt. Limited and Hindusthan Biri Leaves, where a similar 200% penalty was levied because of the late renewal of e-way bills, were interfered with by the Court.
The High Court reviewed Section 129 of the WBGST Act concerning the detention, seizure, and release of goods during transport. The Court examined Rule 138(10) concerning the validity of e-way bills.
The Court observed that the second proviso allows the extension of validity of an e-way bill in specific situations, along with trans-shipment, whereas the third proviso authorises such extension within 8 hours from the lapse of the e-way bill.
The Court observed that in the matter, the applicants could have extended the validity of the e-way bill till 8:00 AM on May 9, 2022, while the interception took place at 8:50 AM. Therefore, the renewal was delayed only by approximately 50 minutes.
The Revenue put reliance on the ruling of the Division Bench in Ashish Kumar Sharma vs. Deputy Commissioner, State Tax, where the Court had noted that although the law allows a 200% penalty, authorities should analyse whether any intent was there to evade tax payment. The Division Bench ruled that imposing severe penalties without any claims of tax fraud could result in significant harm.
Considering the facts of the case, the High Court determined that the petitioners could not be fully exonerated for failing to renew the e-way bill on time. However, it also found that the levying of a 200% penalty was disproportionate and excessive.
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As a result, the Court set aside both the original adjudication order dated May 12, 2022, and the appellate order dated November 11, 2024. The petitioners were instructed to pay only ₹10,000 as a token fine. The authorities were also ordered to refund the balance amount already deposited for the penalty after deducting the token fine.
| Case Title | Industrial Pumps & Motors Agencies Vs State of West Bengal |
| Case Number | WPA 28356 of 2024 |
| For the Petitioner | Mr Bijay Kumar Sharma |
| For the Respondents | Mr Tanoy Chakraborty, Mr Saptak Sanyal |
| Calcutta High Court | Read Order |
