GST | Truck Moving Slowly Due To Fault In Engine, Not Extending E-Way Bill Technical Breach: Allahabad HC Quashes Penalty U/S 129

The Allahabad High Court has held that when the GPS tracking system showed slow movement of the truck due to mechanical issues in the engine, penalty under Section 129 of the Goods and Service Tax Act, 2017 could not have been imposed for not extending time-period in e-way bill. The Court held that not extending time period in such case was a technical breach.

At the time of interception of Petitioner's goods, the e-way bill had been expired for four days. Counsel for petitioner argued that due to overheating of the engine of the truck, the driver was driving slowly and intermittently stopping. Reliance was placed on the GPS of the truck to show that it was travelling on the original route.

However, counsel for respondent urged that since there was violation of rules regarding e-way bill, penalty was liable to be imposed on the petitioner.

Relying on its earlier decisions in M/s Hindustan Herbal Cosmetics v. State of U.P. and Others and M/s Falguni Steels v. State of U.P. and Others, the Court held that intention to evade tax is necessary for imposition of penalty under Section 129 of the GST Act. Since there was no intention to evade tax, the Court held that penalty could be sustained in this case.

“The goods were accompanied by the relevant documents and the explanation of the petitioner with regard to slow movement of the goods coupled with GPS tracking system clearly indicate that the truck was moving slowly due to mechanical fault in the engine of the

vehicle. This factual aspect should be considered by the authorities below. The breach committed by the petitioner with respect to not extending time period of the e-way bill is only a technical breach and it cannot be the sole ground for penalty order being passed under Section 129(3) of Act,” held Justice Shekhar B. Saraf.

Accordingly, the writ petition was allowed.

Case Title: M/S Riadi Steels Llp vs. State Of U.P. And 4 Others 2024 LiveLaw (AB) 135 [WRIT TAX No. - 974 of 2022]

Case citation: 2024 LiveLaw (AB) 135

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