Expiry of E-way bill does not create any scope for evasion; Absent evasion, there can be no revenue loss: HC

In this matter the E-Way bill expired due to following reasons:

a) break down of the truck carrying consignment, repair and consequent delay;
b) portal being blocked without access to renew E-way bill though four more hours to do so was available at the time of interception of truck.

High Court noted that their was no doubt that there would have been no revenue loss to the respondent / State if the truck had reached the destination without being intercepted.

Attention of this Court is drawn to a ‘circular dated 31.05.2019 being Circular No.10/2019,Q1/17253/2019’ [hereinafter ‘said circular’ for the sake of brevity, convenience and clarity] which pertains to enforcement of G & ST and what has been described as ‘a new approach’ to be followed with effect from 01.06.2019.

12. Paragraph 10 of the said circular is relevant for case on hand and the same reads as follows:

’10.CIRCUMSTANCES WHERE PENALTY UPTO Rs.5000/- PER ACT SHALL BE LEVIED:

Where the movement of goods is accompanied by any one of the basic documents such as invoice or bill of supply or delivery challan or E-way bill as prescribed in Rule 55 A and 138 A of the TNGST Rules 2018, and in such cases where at least one of the basic documents, manifestly showing sufferance of tax in the particular transaction is available, a penalty of upto Rs.5000/- per act shall be levied so as to deter the recurrence of offence.

The following are examples in this context:

Example 1: Vehicles meant for a vehicle distributor are delivered at the stock yard/ godown/ branch; the transporter possesses the necessary tax invoice, but the E-way bill was generated for principal place of business/different place of business.

In this case the CGST /SGST /IGST (if interstate supply) would have been suffered at the hands of manufacturer or distributor. Mere delivery of the goods at a place other than those mentioned in the documents would not render the transaction as an evasion or abetment of evasion. Being a B 2 B transaction, trail of transaction would now be available in GSTR1 for the department.

Example 2: A conveyance carrying the goods from a factory of fertilizers is delivering the same at various locations as directed by the department of Agriculture. The goods are accompanied by invoice or invoice with delivery challan and E- way bill. The E-way bill has expired due to delay in making delivery at various locations. The expiry of E-way bill does not create any scope for evasion. In cases as in the examples, penalty of upto Rs.5000/- per Act shall be levied.’

In the instant case, from the narrative thus far, it comes closest to Example 2. It is reiterated and clearly articulated in Example 2 that the expiry of E-way bill does not create any scope for evasion. Absent evasion, there can be no revenue loss. It has been made clear that in cases of such nature penalty upto Rs.5,000/- per act shall be levied. This may have to be read with Section 125 of C-G & ST Act, which is residuary in nature qua penalties which do not find a place in the adumbration of (xxi) categories in sub-section (1) of Section 122.

In the light of the narrative, discussion and dispositive reasoning thus far, on a demurrer, assuming there was no breakdown and assuming the portal was active, the maximum penalty would be Rs.5,000/- qua paragraph 10 of said Circular and therefore as a sequitur, the following order is passed:

(i) The present impugned order dated 08.12.2022 bearing reference GDN No.4554/2022-23 made by the second respondent is set aside;

(ii) The impugned proceedings dated 02.12.2022 is set aside albeit with a directive that the writ petitioner shall pay a penalty of Rs.5,000/- (Rupees Five Thousand only) as per paragraph 10 of said Circular dated 31.05.2019 latest by tomorrow;

(iii) On payment of penalty in the aforesaid manner latest by tomorrow, the second respondent shall release the truck bearing Registration No.TN28-AQ-9203 forthwith with the consignment.

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