Facts of the Case

The petitioner, M/s. Nezone Tubes Limited, a Kolkata-based manufacturer of electric welded steel tubes, dispatched 20.010 MT of MSPB RHS/SHS to M/s. Bhalotia Auto Products Private Limited, Purba Singhbhum, under Invoice No. TCGF/02193/22 and e-way bill no. 8111 8796 5282, loaded in truck no. JH05AG2092. On 6 November 2021, the truck was intercepted by the Inspector, Anti-Evasion, CGST & CX, Jamshedpur, and it was found that the e-way bill had expired the previous day. After a detention order in Form GST MOV-06 and show cause notice in Form GST MOV-07, a hearing was fixed for the same evening, and an order imposing tax and penalty of Rs.5,18,660/- under Section 129(3) of the CGST Act was passed that day in Form GST MOV-09. The petitioner paid the amount to secure release of the truck and later filed a departmental appeal, which was dismissed on 26.05.2022. The High Court of Jharkhand at Ranchi decided the matter on 11 December 2023.

Issues Involved

  1. Whether mere expiry of an otherwise genuine e-Way Bill by a short margin during transit, without any intention to evade tax, attracts Section 129 of the CGST Act read with Rule 138 of the CGST Rules.
  2. Whether the demand and appellate orders were sustainable given the vehicle was intercepted close to its destination and the delay was attributable to festival-related entry restrictions.
  3. Whether the petitioner was entitled to a refund of the tax and penalty already paid.

Petitioner's Arguments

  • Mere expiration of the e-Way Bill by a few hours during transportation would not attract Section 129 of the CGST Act and Rule 138 of the CGST Rules, 2017.
  • Only the proper officer under the CGST Act could invoke jurisdiction in relation to an inter-state transaction, read with Section 20 of the IGST Act, and the tax officer was not justified in imposing liability solely because the e-way bill had lost validity.
  • There was no intention to evade tax, since all other documents prescribed under the Act, including the e-way bill itself, were genuine and consistent, and its expiry alone should not fall within the contravention contemplated by Section 129.

Respondent's Arguments

  • The petitioner was extended an opportunity of personal hearing vide the notice in Form GST MOV-07 dated 08.11.2021, and its authorised representative appeared but neither submitted any written objection nor gave any reasonable ground for the e-way bill's expiry.
  • The authorised representative requested expeditious release of the vehicle and goods, and the petitioner voluntarily deposited the tax and penalty via Form GST DRC-03, so the order in Form GST MOV-09 was validly issued under Section 129 with due opportunity of hearing.

Court Order/Findings

  • Relying on the Allahabad High Court's ruling (2022 VIL 340 All, affirmed by the Supreme Court in 2023 VIL 62 SC), the Calcutta High Court's ruling (2023 VIL 370 Cal), and its own decision in Rivigo Services Private Limited v. State of Jharkhand (W.P.(T) No.4654 of 2019), the Court held that where there is no intention to evade tax and valid documents accompany the goods, mere technical expiry of an e-way bill — here, due to denial of entry into the Adityapur Industrial Area during Diwali, with the truck intercepted barely a kilometre from the destination — does not attract Section 129 of the CGST Act.
  • The impugned demand order dated 08.11.2021 and the appellate order dated 26.05.2022 were quashed and set aside.
  • Since the petitioner had already paid the penalty, it was permitted to apply for refund, which the competent authority was directed to consider within 8 weeks of such application, absent any other legal impediment.
  • The writ application was allowed and disposed of.

Important Clarification

  • Section 129 of the CGST Act is not attracted merely because an e-Way Bill's validity technically lapses by a short margin during transit, so long as there is no intention to evade tax and all other accompanying documents are genuine and consistent with the goods in transit.
  • Bona fide, external reasons for delay — such as festival-related entry restrictions — coupled with interception close to the destination, weigh against a finding of tax evasion.
  • Where tax and penalty were paid to secure release of detained goods and the order is later quashed, the assessee is entitled to seek a refund within a time-bound period.

Sections Involved

  • Section 129 of the CGST Act, 2017 — governs detention, seizure and release of goods and conveyances in transit for contravention of the Act or Rules.
  • Rule 138 of the CGST Rules, 2017 — prescribes the e-Way Bill requirements for movement of goods.
  • Section 20 of the IGST Act, 2017 — applies CGST Act provisions, including on proper officer jurisdiction, to inter-state transactions under the IGST Act.

Decision – In Favour of

The decision was in favour of the Assessee: the demand order and the appellate order confirming tax and penalty were quashed, and the petitioner was held entitled to seek a refund of the amount already paid.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Jharkhand at Ranchi
  • Case No.: W.P.(T) No.4370 of 2022
  • CNR: Not available on record
  • Coram: Justice Rongon Mukhopadhyay and Justice Deepak Roshan
  • Decision Date: 11 December 2023
  • Disposal Nature: Allowed - orders quashed, petitioner entitled to claim refund of penalty

Link to Download the Order

Download the full judgment (PDF)

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.