Subject: Validity of E-Way Bill and Legal Standing of Penalty Under Section 129
In this case, SunStar Plastotech Pvt Ltd raised e-invoices on May 31, 2023, and generated corresponding E-Way Bills on June 1, 2023. However, due to a vehicle breakdown, the goods movement began only on June 5, and the vehicle was intercepted on June 9 by Gujarat State GST authorities.
The tax officer imposed a penalty under Section 129 of the CGST Act, citing:
- Expired E-Way Bill
- Mismatch in delivery address
- Mismatch in vehicle number
A penalty of ₹1,33,102 (CGST + SGST) was collected from the company’s director using temporary registration.
Key Legal Analysis:
- As per Rule 138(10) of CGST Rules, the validity of an E-Way Bill is time-bound and can be extended within 8 hours of expiry.
- No specific provision exists for delayed delivery beyond the E-Way Bill validity. However, High Courts have consistently ruled that mere expiry or clerical errors do not indicate tax evasion.
- Cited cases (e.g., ORSON HOLDINGS, Tirthamoyee Aluminum, M.R. Traders) have ruled that inadvertent errors in E-Way Bills do not warrant detention or heavy penalties.
- Penalty under CGST and SGST was incorrectly applied in this interstate transaction. IGST should have been levied, as declared in the invoice.
Conclusion:
The penalty levied under Section 129 for expired E-Way Bill appears legally unsustainable, as there was no intent to evade tax and the delay was due to genuine reasons. Also, imposing CGST/SGST instead of IGST contradicts applicable legal precedent.
