Quick Answer: The Rajasthan High Court held that an e-way bill expiry penalty under Section 129(3) of the CGST Act is unjustified where the bill lapsed in transit for bona fide reasons and all tax was paid. Only a general penalty of Rs. 10,000 under Section 122 could be levied, and the balance deposited must be refunded.
In Faruk Rathore, Proprietor of M/s Hindustan Trading Company v. Deputy Commissioner, Central Goods and Service Tax, Division-F, Bikaner, the Rajasthan High Court held that the expiry of an existing e-way bill during transit is a minor offence, not a case of tax evasion (paras 10–11). A Division Bench of Dr. Justice Pushpendra Singh Bhati and Justice Munnuri Laxman partly allowed the writ petition and quashed the Section 129(3) notice, order and appellate order (paras 12–13). The tax and penalty deposited for release of the goods must be refunded within three months, after deducting Rs. 10,000 under Section 122 (para 12).
Headnote: E-Way Bill Expiry Penalty
CGST Act, 2017 – Sections 68(3), 122, 129(1) and 129(3) – CGST Rules, 2017 – Rule 138A – E-way bill expired during transit – Detention of goods – Penalty – Intent to evade tax – Proportionality – Article 226
Held: (i) Where an e-way bill expires in transit owing to a tyre puncture, with no intent to evade tax, a Section 129(3) penalty is unjustified (para 10).
(ii) The lapse of an existing e-way bill is a minor offence, not the absence of one (para 11).
(iii) With all taxes paid, the appropriate penalty is Rs. 10,000 under Section 122 (para 11).
(iv) The Section 129(3) notice, order and appellate order were quashed (para 12).
(v) Amounts deposited must be refunded, less Rs. 10,000, within three months (para 12).
(paras 7–13)
Case Details: Faruk Rathore v. Dy. Commissioner CGST
Final Outcome: Writ petition partly allowed; Section 129(3) notice and orders quashed; tax and penalty to be refunded after adjusting Rs. 10,000 penalty under Section 122 (paras 12–13).
Case: Faruk Rathore, Proprietor of M/s Hindustan Trading Company v. Deputy Commissioner, Central Goods and Service Tax, Division-F, Bikaner
Neutral Citation: Not available in the copy of the judgment reviewed
Case No.: D.B. Civil Writ Petition No. 13473/2022
Court: Rajasthan High Court, Jodhpur (Division Bench)
Date of Decision: 15 April 2024
Bench: Dr. Justice Pushpendra Singh Bhati (author) and Justice Munnuri Laxman
Relevant Acts & Sections: CGST Act, 2017 – Sections 68(3), 122(1)(xiv), 129(1) and 129(3); CGST Rules, 2017 – Rule 138A; Constitution of India – Article 226
Impugned Order: Notice in Form MOV-07 and order dated 01.03.2021 under Section 129(3) by the Deputy Commissioner, CGST, Division-F, Bikaner; appellate order dated 24.05.2022 of the Additional Commissioner (Appeals), GST, in Appeal No. GST/BK/16/IV/2021
Counsel: Mr. Shafi Mohammad Chouhan with Mr. V.R. Choudhary for the petitioner; Mr. Mukesh Rajpurohit, Dy. S.G., for the respondent.
Source: Rajasthan High Court (official website)
Key Holdings of the Rajasthan High Court
- An e-way bill expiring 44 minutes before inspection due to a tyre puncture does not show intent to evade tax (para 10).
- A Section 129(3) penalty is "completely unjustified" where an existing e-way bill expires in transit (para 11).
- The proper penalty for this minor offence is Rs. 10,000 under Section 122 (para 11).
- The Court followed Satyam Shivam Papers (SC) and High Court rulings on bona fide expiry (paras 7–9).
- Amounts deposited for release must be refunded, less Rs. 10,000, within three months (para 12).
Brief Facts of the Case
The petitioner is a registered dealer in iron items at Deshnok, District Bikaner. On 25.02.2021, he bought iron channels, beams and angles worth Rs. 9,43,993 from R.K. Steels, Jaipur (para 2). An e-way bill was generated at 05:03 a.m. that day, valid up to 27.02.2021 (para 2).
The goods travelled on a truck with goods of another buyer, Mahaveer Iron Store. A tyre punctured on the way, and the truck reached Bikaner late at night on 26.02.2021 (paras 2–2.1). Unloading at Mahaveer Iron Store was delayed for want of labour until 6 p.m. on 27.02.2021, so the driver stayed overnight (para 2.1).
At about 12:44 a.m. on 28.02.2021, a CGST Inspector found the e-way bill had expired and detained the goods under Section 68(3) (para 2.2). The Court recorded that the bill had expired 44 minutes before inspection (para 6.1).
A Form MOV-07 notice under Section 129(3) was issued on 01.03.2021. The petitioner deposited tax and penalty, and the goods were released the same day (para 2.3). The judgment does not state the amount paid. [Amount to be verified from the record/certified copy]
The appeal, No. GST/BK/16/IV/2021, was dismissed on 24.05.2022, and the writ petition followed (paras 1, 2.3).
Issues Before the High Court
No issues were framed separately; the questions were (paras 1, 5):
- Whether a Section 129(3) penalty could be imposed where the e-way bill expired in transit for reasons beyond the petitioner's control, with no intent to evade tax.
- Whether the notice and order dated 01.03.2021, and the appellate order dated 24.05.2022, were liable to be quashed.
- What relief, including refund and any lesser penalty, the petitioner was entitled to.
Court's Findings and Reasoning
Petitioner's case (paras 3–3.4): The petitioner claimed compliance with Rule 138A, noting that 331 km of the 361 km journey was covered before expiry (para 3). The 44-minute delay was beyond his and the driver's control (para 3.2). As GST was already paid, there was no revenue loss; he relied on Shree Govind Alloys (paras 3.2, 3.4).
Revenue's case (paras 4–4.3): The Revenue argued that Raisar to Bikaner is about 20 km, yet the truck took over 12 hours (para 4). The petitioner should have extended the e-way bill or parked the truck at the firm's premises (para 4.1). An expired e-way bill did not satisfy Rule 138A (para 4.2).
Factual findings (paras 6–6.1): The Court accepted the account of the tyre puncture and the lack of skilled labour at night in Deshnok (paras 6–6.1).
Supreme Court in Satyam Shivam Papers (para 7): The Court reproduced the Supreme Court's order dated 12.01.2022. It endorsed the view that no intent to evade arises where delay is beyond the dealer's control (para 7).
Gujarat and Madhya Pradesh rulings (paras 8–9): In Shree Govind Alloys, the e-way bill had expired 41 hours earlier, yet the Section 129(3) notice was quashed (para 8). In Daya Shaker Singh, a delay of about 4½ hours without fraudulent intent was held bona fide (para 9).
No intent to evade tax (para 10): The only fault was that the e-way bill expired 44 minutes before inspection, owing to the tyre puncture (para 10). No intention to evade tax or fraudulent intention could be attributed. It was undisputed that all CGST and SGST was paid (para 10).
Section 122 is the correct measure (paras 10.1–11): The Court noted Section 122(1)(xiv), which penalises transport of taxable goods without specified documents (para 10.1). It held the Section 129(3) notice and order "completely unjustified in the eye of law" (para 11). The issue was the expiry of an existing e-way bill, not its absence (para 11).
Application to facts (paras 11–13): A heavy penalty for a minor offence was unacceptable; Rs. 10,000 under Section 122 was the proper penalty (para 11). The Revenue's travel-time arguments were not accepted as proof of evasion. The petition was only partly allowed because the Section 122 penalty was retained (paras 11–13).
Final Outcome and Directions
- The Section 129(3) notice and impugned orders were quashed (para 12).
- Para 12 dates the orders "01.03.2021 and 24.05.2021"; paras 1(iii), 2.3 and 6.1 give 24.05.2022. [Date to be verified from certified copy]
- Tax and penalty paid are to be returned, less Rs. 10,000 under Section 122, within three months of receipt of a certified copy (para 12).
- The writ petition was partly allowed; pending applications disposed of (para 13).
- The judgment is silent on interest on the refund and on costs.
Legal Principle Laid Down
Where an e-way bill lapses in transit for bona fide reasons and all tax is paid, the lapse is a minor default that does not, without more, show intent to evade. A Section 129(3) penalty is then unjustified. At most, Rs. 10,000 under Section 122 may be levied and any excess refunded (paras 10–12).
Precedents Relied Upon
- Assistant Commissioner (ST) & Ors. v. Satyam Shivam Papers Pvt. Ltd. & Anr., SLP (C) No. 21132/2021, decided on 12.01.2022; (2022) 7 GSTJ Online 16 (SC) – Relied upon – No inference of intent to evade tax where goods could not reach in time for reasons beyond the transporter's control. Discussed at paras 7 and 9.
- Shree Govind Alloys Pvt. Ltd. v. State of Gujarat, R/Special Civil Application No. 23835 of 2022, decided on 01.12.2022 (Gujarat High Court) – Relied upon – Expiry of e-way bill in transit is no ground for detention; Section 129(3) notice quashed. Discussed at paras 3.4 and 8.
- M/s Daya Shaker Singh v. State of Madhya Pradesh, Writ Petition No. 12324 of 2022, decided on 10.08.2022 (Madhya Pradesh High Court) – Relied upon – A 4½-hour delay without fraudulent intent does not justify a Section 129 order. Discussed at paras 8–9.
- Satyam Shivam Papers Pvt. Ltd. v. Asst. Commissioner, ST & Ors., (2021) 5 GSTJ Online 174 (TG); Ashok Kumar Sureka v. Asst. Commissioner, State Tax, Durgapur Range, (2022) 7 GSTJ Online 78 (Cal); Govind Tobacco Manufacturing Co. v. State of U.P., [2022] 140 taxmann.com 383 (All) – Referred (within the quoted extracts) – Bona fide expiry in transit does not justify detention. Discussed at paras 8–9.
Important Paragraphs of the Judgment
Verbatim extracts from the judgment. For the full text, refer to the judgment PDF below.
Para 10 (no intent to evade): "This Court further observes that the only fault lying with the petitioner was that the e-way bill with regard to the goods that were being transported had expired 44 minutes before the inspection took place due to the delay caused resulting from the tyre puncture for no fault of either of the petitioner or the driver of the truck, thus it cannot be said that there existed an intention to evade tax or any fraudulent intention on part of the petitioner; the only issue lied with expiry of the e-way bill and not renewing the same. It is not in dispute that all taxes under the regime of CGST/ SGST were paid for."
Para 11 (Section 122 penalty): "This Court further observes that the impugned notice was issued and the impugned order dated 01.03.2021 was passed under Section 129 (3) of the CGST Act, 2017, the same being completely unjustified in the eye of law as the issue was not one of there not being an e-way bill, but one of the existing e-way bill having expired during transit, thus imposition of such a heavy penalty for a minor offence is unacceptable and the penalty imposed should have been as per Section 122 of the CGST Act, 2017 of Rs.10,000/-, as there is no apparent case of tax evasion."
Para 12 (directions): "Thus, in light of the aforesaid observations and looking into the factual matrix of the present case as well as the afore-quoted precedent laws, this Court is of the opinion that the impugned notice and the impugned orders dated 01.03.2021 and 24.05.2021 deserve to be quashed and set aside and the same are hereby quashed and set aside. This Court is also conscious of the fact that the petitioner has already paid tax so also the penalty for release of detained goods, thus the same be returned to the petitioner, while adjusting/deducting the penalty of Rs.10,000/- under Section 122 of CGST Act, 2017, within a period of three months from the date of receipt of a certified copy of this judgment."
Para 13: "The instant writ petition accordingly stands partly allowed in the above terms. All pending applications stand disposed of."
Practical Impact of the Ruling
- For taxpayers and transporters: A short lapse with a credible cause, such as a tyre puncture, is a strong ground to resist a Section 129 penalty. Record the cause of delay at the time (paras 2.1, 10).
- For businesses that have already paid: Paying to release goods does not bar a later challenge or refund (paras 2.3, 12).
- For the department: Evidence of intent to evade is needed before invoking Section 129(3); travel-time arguments alone did not suffice (paras 4, 10–11).
- For proper officers on quantum: Where only the e-way bill has lapsed, the penalty is Rs. 10,000 under Section 122 (para 11).
- For litigants: Even after a failed appeal, the Court examined the merits under Article 226 (paras 1, 12).
FAQs on E-Way Bill Expiry Penalty
1. What did the Rajasthan High Court hold in Faruk Rathore v. Dy. Commissioner CGST?
The Court held that a Section 129(3) penalty was unjustified where the e-way bill expired 44 minutes before inspection due to a tyre puncture. There was no intent to evade tax and all taxes were paid, so only a Rs. 10,000 penalty under Section 122 was leviable (paras 10–12).
2. Can goods be detained and penalised under Section 129 if the e-way bill expired during transit?
Not where the expiry is bona fide and there is no evidence of intent to evade tax. The issue was an expired e-way bill, not the absence of one, so a heavy Section 129 penalty for this minor offence was unacceptable (paras 10–11).
3. What penalty applies when an e-way bill has lapsed but tax is fully paid?
The Court held that the penalty should have been Rs. 10,000 under Section 122 of the CGST Act. This sum is to be adjusted from the refund of the tax and penalty already paid (paras 11–12).
4. Can a taxpayer who paid the penalty to release goods still get a refund?
Yes. The petitioner had deposited tax and penalty to release the goods, and his appeal was dismissed. The High Court still quashed the orders and directed refund within three months, less Rs. 10,000 (paras 2.3, 12).
5. Which precedents did the Rajasthan High Court follow on expired e-way bills?
It relied on the Supreme Court's order in Satyam Shivam Papers (SLP (C) No. 21132/2021). It also relied on Shree Govind Alloys (Gujarat High Court) and Daya Shaker Singh (Madhya Pradesh High Court) (paras 7–9).
Keywords: e-way bill expiry penalty, Faruk Rathore v. Dy. Commissioner CGST, Hindustan Trading Company, D.B. Civil Writ Petition No. 13473/2022, Section 129(3) CGST Act, Section 122 CGST Act, Rule 138A CGST Rules, detention of goods in transit, intent to evade tax, Satyam Shivam Papers, tax litigation lawyer, Rajasthan High Court, Justice Pushpendra Singh Bhati
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Download Judgment PDF – Faruk Rathore v. Dy. Commissioner CGST, Bikaner
Judgment PDF: Faruk Rathore, Proprietor of M/s Hindustan Trading Company v. Deputy Commissioner, Central Goods and Service Tax, Division-F, Bikaner (D.B. Civil Writ Petition No. 13473/2022) – The judgment PDF will be uploaded here shortly.
Source: Rajasthan High Court (official website).
Read more: Rajasthan High Court · GST · E-Way Bill and Detention of Goods · Indirect Tax
