Facts of the Case: The petitioner, proprietor of Chakkappan Automobiles, Thrissur, had purchased a CNG kit from a supplier in New Delhi, dispatched by rail from New Delhi Railway Station to Poonkunnam, Thrissur. On 29.11.2021 at 4:00 PM, the goods were intercepted and detained by the GST Squad at Ernakulam Railway Station. An e-way bill was generated the same day at 5:39 PM, after the interception. The department issued a notice under Form GST MOV-07 and, alleging violation of Rule 138 of the CGST Rules, 2017, the third respondent imposed a penalty under Section 129(3) of the CGST Act, 2017 by order dated 01.02.2022. The petitioner challenged this penalty order by way of the present writ petition.

Issues Involved

  1. Whether the e-way bill, generated after the goods were intercepted, was validly generated under the proviso to Rule 138(2A) applicable to transportation by special carriers such as railways.
  2. Whether the question of the actual mode of transportation and compliance with Rule 138(14)(b) could be adjudicated in writ jurisdiction, or involved disputed questions of fact.

Petitioner's Arguments

  • Under Rule 138, goods can be transported without a pre-generated e-way bill in certain circumstances, including where transported by railways or airways, in which case the e-way bill may be generated subsequent to transportation.
  • Since the goods were intercepted at a railway station, it was evident that they were transported by rail, and the e-way bill generated shortly after interception was legally permissible, involving no irregularity.

Respondent's Arguments

  • The Government Pleader submitted that the case involved disputed questions of fact, particularly whether an e-way bill as contemplated under Rule 138(14) had in fact been complied with, making the writ jurisdiction under Article 226 an inappropriate forum.
  • The assessing officer had found irregularities even in the e-way bill eventually produced, further indicating a factual dispute.

Court Order / Findings

  • The Court noted that under Rule 138(2A), where transportation is through special carriers like railways or airways, the e-way bill must be generated either before or after commencement of movement, but must be produced at the time of delivery as per the proviso.
  • However, whether the transportation was solely by railway, or involved another mode of conveyance — including the alleged movement from "Alipur" to New Delhi Railway Station by a non-motorised conveyance under Rule 138(14)(b) — was held to be a question of disputed fact, compounded by irregularities the assessing officer had found even in the e-way bill submitted.
  • The Court held that the petitioner ought to pursue the available statutory remedies rather than invoke the extraordinary jurisdiction under Article 226 to resolve such factual disputes.
  • The writ petition was dismissed, with liberty reserved to the petitioner to pursue statutory remedies in accordance with law; the Court did not adjudicate the merits of the penalty.

Important Clarification

  • The exemption under Rule 138(2A)/(14)(b) permitting e-way bill generation after commencement of movement for railway or non-motorised transport is fact-sensitive; where the mode and continuity of transportation is disputed, and irregularities are found even in the e-way bill eventually produced, a writ court will decline to adjudicate and relegate the assessee to the statutory appellate remedy.

Sections Involved

  • Section 129, CGST Act, 2017 — detention, seizure and release of goods and conveyances in transit in contravention of the Act.
  • Rule 138, CGST Rules, 2017 — e-way bill requirements, including sub-rule (2A) governing generation before/after commencement of movement for special carriers and sub-rule (14) exemptions.

Decision – In Favour of

The writ petition was dismissed without adjudication of the merits of the penalty, on the ground that the underlying factual dispute over the mode and timing of transportation was not amenable to writ jurisdiction; liberty was reserved to the assessee to pursue the statutory appellate remedy. The outcome does not amount to a merits finding in favour of either side, though the immediate relief sought by the assessee was declined.

Related Case Laws

Case Details

  • Court: High Court of Kerala at Ernakulam
  • Case No.: WP(C) No. 6554 of 2022
  • CNR: Not indicated on the order
  • Coram: Hon'ble Mr. Justice Bechu Kurian Thomas
  • Date of Judgment: 28.02.2022

Link to Download the Order

https://mytaxexpert.co.in/uploads/1787077027_4639compressed.pdf

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