High Court Quashes Rs. 18 Lakh Penalty for 15-Hour E-Way Bill Expiry

The petitioner, Balkrishna Industries Limited, challenged an order imposing a heavy penalty under Section 129(3) of the CGST Act. The company’s goods were being transported when the conveyance suffered a breakdown, causing a delay in transit. Thereafter, the E-Way bill expired at 08:00 hours on March 22, 2025.

Although the transporter had the option to extend the validity by 08:00 hours on March 23, 2025, they failed to do so. The vehicle was intercepted by GST authorities at 15:22 hours on March 23, 2025, merely 15 hours after the extension window closed. The authorities seized the goods and imposed a penalty of Rs. 18,00,140, alleging a violation of transit rules.

Issue Raised: Whether the imposition of a harsh penalty under Section 129 is sustainable when the expiry of the E-Way bill was due to an involuntary breakdown of the vehicle and where there was no intent to evade tax.

HC Ruled: The Hon’ble High Court quashed the penalty and ruled in favor of the petitioner. The Bench observed that the facts of the breakdown were undisputed and the delay was a marginal 15 hours.

The Court held that the management was unaware of the expiry during transit and that there was no “mens rea” (guilty intent) to evade tax. Relying on Macrowagon Retail Pvt. Ltd., the Court declared the penalty “uncalled for” and beyond the scope of Section 129(1)(a). The respondents were directed to refund the amount of Rs. 18,00,140 along with applicable interest to the petitioner within the prescribed timeframe.

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