Rajasthan HC: Imposing Heavy Penalties for E-way Bill Expired by Only 44 Minutes is Unjustified

In a case before the Rajasthan High Court, Faruk Rathore, Proprietor of M/s Hindustan Trading Company, contested the levying of a heavy penalty for a minor offence connected to a lapsed GST e-way bill during transit. The matter underscores the disproportionate penalties imposed under the Central Goods & Services Tax Act, 2017 (CGST Act, 2017).

The applicant is in the trade of iron items and bought goods worth Rs. 9,43,993 from R.K. Steels, Jaipur, dated 25.02.2021. For the transportation of these goods, an e-way bill was generated which is valid till 27.02.2021. As of the unexpected possibilities like a punctured tyre and unavailability of labour, the goods arrived late at the destination, resulting in the e-way bill expiration.

The e-way bill had expired 44 minutes before, on finding it revealed. Thereafter the goods were detained and u/s 129(3) of the CGST Act 2017 a penalty was levied. Even after the compliance of the applicant with GST regulations and the tax payments, an imposition of a higher penalty was there.

The applicant challenged the penalty claiming that the delay was above their governance and did not comprise the tax evasion. They quoted the precedents from the other High courts in which the identical matters were solved in the assessee’s favour.

The Rajasthan High Court post acknowledgment ruled in the applicant’s favor stressing that the levied penalty was not justified for a minor offense. The court witnessed that the e-way bill had lapsed and no intention of the applicant was there to evade the taxes. It considered the excessive penalty and ordered its reduction to Rs 10,000 as per section 122 of the CGST Act, 2017.

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The court in closure quashed the impugned notices along with the orders asking the council to return the taxes and penalty filed earlier via the applicant, adjusting the amount of penalty under the ruling.