Karnataka High Court Quashes Penalty on Transport Firm for E-Way Bill Oversight

Court Emphasizes the Procedural Nature of E-Way Bill Lapses and Moderation in Penalties

In a significant ruling, the Karnataka High Court has set aside a penalty imposed on M/s BVM Trans Solutions Private Limited for an oversight in filling out the E-Way Bill, highlighting the procedural nature of the lapse and underscoring the importance of moderation in the imposition of penalties. The court's decision brings clarity to the handling of procedural errors under the Karnataka Goods and Services Tax Act, 2017.

The case involved the transport of goods from Chennai to Bangalore, during which the conveyance was intercepted because the vehicle registration number was not filled in Part-B of the E-Way Bill. Despite the oversight, all other documents were in order, and there was no intention to evade taxes. Initially, a penalty was levied under Section 129 of the KGST Act. However, the Karnataka High Court ruled that the omission was a procedural lapse rather than an intention to evade taxes.

Justice S.R. Krishna Kumar, presiding over the case, emphasized that such omissions are curable defects and should not attract harsh penalties in the absence of malafide intent. The court restored the previous order by the appellate authority, which had reduced the penalty to a general amount of Rs. 25,000 under Section 125 of the KGST Act, and directed the refund of the excess penalty amount paid by the petitioner.

This ruling aligns with similar judgments from other high courts, reinforcing the principle that penalties should be proportionate to the severity of the breach and should consider the absence of fraudulent intent. The court further directed the respondents to refund the amount paid, excluding the Rs. 25,000 general penalty, and return the bank guarantee to the petitioner within four weeks.

The judgment highlights the judicial approach towards procedural lapses in taxation, advocating for a fair and reasoned application of penalties that align with legislative intent and the principles of justice and equity.

Bottom Line:

Goods and Services Tax (GST) - Non-filling of Part-B of the E-Way Bill merely due to oversight or inadvertence, without malafide intention or intent to evade tax, is a curable defect and does not warrant penalty under Section 129 of the KGST Act, especially when all other documents are in order.

Statutory provision(s): Karnataka Goods and Services Tax Act, 2017 Sections 125, 126, 129

M/s BVM Trans Solutions Private Limited v. Commercial Tax Officer (Enforcement)-55, (Karnataka) : Law Finder Doc Id # 2821790