The Hon'ble High Court of Gujarat in Landmark Cars (P.) Ltd. v. Union of India R/SPECIAL CIVIL APPLICATION NO. 1487 OF 2020 dated June 14, 2024 set aside the tax and penalty demand under Section 129 against the assessee, a Mercedes Benz distributor, due to a vehicle number mismatch on the e-way bill and actual replacement truck used after a breakdown. The Court deemed this discrepancy a minor error per Circular No. 64/38/18, warranting only a penalty of Rs. 500 under Section 125 of the GST Act and Rs. 1000 under the IGST Act.
Facts of the Case:
Landmark Cars (P.) Ltd., the petitioner, is an authorized distributor of Mercedes-Benz cars. The company purchases cars from manufacturers and sells them. Its head office is in Ahmedabad, with branches in Maharashtra and Madhya Pradesh.
On December 9, 2019, the petitioner purchased a car from Mercedes-Benz India Pvt. Ltd. The Maharashtra branch requested delivery of this car for further sales. The petitioner generated a stock transfer invoice and an e-way bill based on this invoice and the lorry receipt provided by the transporter.
On January 10, 2020, the car was loaded onto the truck mentioned in the e-way bill. However, this truck broke down during transit. The transporter sent a replacement truck as an emergency measure, instructing the driver to inquire midway about the original truck's repair status.
On January 11, 2020, authorities stopped the replacement truck for verification. The driver explained the situation and produced the stock transfer invoice and e-way bill. Despite finding no discrepancy in the transported car and its documents, the authority issued a detention order solely due to the mismatch between the vehicle number on the e-way bill and the actual vehicle.
The authority issued a show cause notice on the same day, asking why tax and penalty should not be demanded under Section 129 for releasing the goods and vehicle. The petitioner replied on January 12, 2020, explaining the circumstances and providing supporting documents.
On January 15, 2020, the petitioner cited a circular dated September 14, 2018, stating that minor e-way bill errors should result in only a token penalty under Section 125, not proceedings under Section 129. However, the authority responded that they had already passed an order demanding tax and penalty under Section 129, claiming the circular's benefit was not applicable in this case.
Held by the Court:
The High Court observed that the e-way bill accompanying the goods referred to the chassis number of the car being transported.
The Court noted that the only error found by the respondent authority in the e-way bill was that the correct number of the vehicle was not mentioned in part-B of the e-way bill.
The High Court emphasized that there was no intention of the petitioner to transfer the goods without being accounted for, which is the main intention of Section 129 of the GST Act.
The Court referred to Circular No. 64/38/18, stating that minor errors, as exemplified in paragraph 5 of the circular, should be dealt with by imposing a penalty of Rs. 500 under Section 125 of the GST Act and Rs. 1,000 under the IGST Act.
The High Court noted that the respondent had not disputed that the chassis number of the vehicle mentioned in the invoice and e-way bill was correct.
The Court cited its previous decision in Shree Govind Alloys Pvt. Ltd. v. State of Gujarat, which held that seizure of a vehicle and goods is not permissible under law merely due to the expiry of an e-way bill in transit.
The High Court concluded that the impugned order demanding tax and penalty in Form GST MOV-09 was without jurisdiction, as the respondent could not have detained the vehicle on the ground of an invalid e-way bill.
The Court quashed and set aside the impugned order dated January 14, 2020, which demanded a total tax of Rs. 18,74,972 and an equal amount as penalty under Section 129(1)(a) of the GST Act.
The High Court ordered that any amount deposited by the petitioner should be refunded forthwith.
Relevant Sections:
- "Section 129" of the Central Goods and Services Tax Act, 2017
- "Section 125" of the Central Goods and Services Tax Act, 2017
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