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 31 May 2023 and generated the corresponding e-way bills on 1 June 2023. Due to a vehicle breakdown, the movement of goods began only on 5 June, and the vehicle was intercepted on 9 June 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 the 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 (for example Orson Holdings, Tirthamoyee Aluminum and M.R. Traders) have held that inadvertent errors in e-way bills do not warrant detention or heavy penalties.
- The penalty under CGST and SGST was incorrectly applied in this inter-state transaction. IGST should have been levied, as declared in the invoice.
Conclusion
The penalty levied under Section 129 for an expired e-way bill appears legally unsustainable, as there was no intent to evade tax and the delay was due to genuine reasons. Imposing CGST/SGST instead of IGST also contradicts applicable legal precedent.