The Indore Bench of the Madhya Pradesh High Court has upheld the order of the GST Appellate Authority against Gati Kintetsu Express Private Ltd (Gati KWE). This is the first judgment by any High Court upholding such penalty.

The matter is related to not filing part B of the e-Way bill and consequent imposition of tax and penalty equivalent to the value of goods. The company approached the High Court after the GST Appellate Authority decided to go with the order of the Assessing Officer, but did not get any relief. In an e-mail response, the company said: “Gati KWE has already filed an appeal i.e. SLP (Special Leave Petition) before the Supreme Court challenging the impugned order of MP High Court.”

According to experts, there are two key takeaways from the judgment. Firstly, this would empower State authorities across the States to impose penalties for non-adherence to the e-Way bill norms, leading to better compliance. Secondly, this would discourage the companies from treating the e-Way bills as merely a ‘procedural’ requirement as the penalties imposed are pegged to the tax payable on the concerned goods.

Anita Rastogi, Partner (Indirect Taxes) with PwC, said clearly the message is that all mandatory formalities need to be adhered to. “Companies should look at automating the e-Way bill generation process and not leave it to manual punching. This will ensure accuracy and completeness of the e-Way bill,” she said.

GST rules say the company is required to carry an e-Way bill with details duly filled in Part A and Part B of Form GST EWB-01. However, the petitioner did not fill the details of the conveyance in Part B of the e-Way bill. The GST authorities in Madhya Pradesh intercepted the vehicle to verify the e-Way bill. Since the petitioner failed to provide the exact details, the authorities slapped a penalty of ₹1.32 crore on the company.

Fails to get relief

The company approached the Appellate Authority but failed to get any relief. Subsequently, it moved the High Court, to get the orders of the GST Appellate Authority and the State tax officials quashed. Citing an earlier judgment of Allahabad High Court in the case of VSL Alloys (India) Pvt Ltd vs State of UP, the counsel for Gati KWE argued the court had quashed the order in an identical circumstance.

However, the Indore Bench of MP High Court observed that in the cited case (VSL Alloys Vs State of UP) the distance was within 50 km and, therefore, the petitioner therein was not under any obligation to fill the Part-B of the e-Way bill and, thus, the Bench was right in quashing the order.

In the present case, the distance was more than 1,200-1,300 km and it is mandatory for the petitioner to file the Part-B of the e-Way bill giving all the details including the vehicle number before the goods are loaded on to the vehicle, the court observed. Thus, “he admittedly violated the provisions of the Rules and Act of 2017 and, the Authority rightly imposed the penalty and directed the petitioner to pay the same,” the Indore Bench said while dismissing the plea.

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