The Himachal Pradesh High Court held that the absence of an e-way bill does not, by itself, justify the imposition of tax and penalty under Section 129 of the CGST Act.
The bench of Justice Tarlok Singh Chauhan and Justice Sushil Kukreja has emphasized that a penalty must be backed by proof of intent to evade tax, and mere procedural non-compliance is insufficient for punitive measures.
The bench quashed tax and penalty demands against a registered importer whose goods were detained in 2020 for not being accompanied by an e-way bill—despite all applicable duties having already been paid.
“The imposition of penalties without a clear indication of intent has resulted in an arbitrary exercise of authority, undermining the principles of justice,” the Court observed.
The department had intercepted a vehicle transporting aluminum scrap in Solan district in November 2020 and detained the goods under Section 129 of the CGST Act due to the absence of an e-way bill. Although the petitioner submitted that customs and IGST dues had already been paid, and later furnished an e-way bill, the department levied a tax and penalty of over Rs. 7 lakh combined.
Despite the appeal being dismissed in 2024, the High Court noted that all supporting documents were available with the vehicle and that the procedural lapse did not imply malafide intent.
The Court found that no mens rea (guilty mind) or malafide intent to evade tax had been established by the authorities. The e-way bill was generated post-detention, and all essential documents were present with the vehicle. Relying on judgments from the Supreme Court and Allahabad High Court, the bench reiterated that penalties under Section 129 must be read with Section 130, which requires proof of intent to evade tax.
Case Details
Case No.: CMPMO No. 40/2025
Date: 26/06/2025
Counsel For Petitioner: Ajay Vaidya, Advocate
Counsel For Respondent: Anup Rattan, A.G.
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