The Himachal Pradesh High Court has quashed the penalty imposed on M/s Kunal Aluminum Company for transporting goods without an e-way bill, ruling that there was no intent to evade tax.
The Bench of Justice Tarlok Singh Chauhan and Justice Sushil Kukreja, set aside the orders passed by the GST authorities and the Appellate Authority. The Court directed the release of the bank guarantee furnished under protest by the company, along with applicable interest, within four weeks.
The controversy arose when a truck carrying aluminum scrap was intercepted in Solan district on November 5, 2020. The vehicle was found without an e-way bill, prompting authorities to detain the goods under Section 129 of the CGST Act. Despite the company furnishing documents showing payment of customs duty and IGST amounting to ₹4,09,144, the department imposed a tax and penalty of ₹3,56,183 each.
Though the company generated the e-way bill post-detention and explained it as a technical lapse, the appeal filed before the Appellate Authority was dismissed on August 22, 2024.
The Court emphasized that mere technical lapses such as non-generation of an e-way bill, without proof of fraudulent intent, do not warrant imposition of penalties under the GST law. It cited several precedents, including CST v. Satyam Shivam Papers Pvt. Ltd. and Patanjali Ayurved Ltd. v. Union of India, to reinforce the requirement of mens rea (guilty intent) in such matters.
“The essence of any penal imposition is intrinsically linked to the presence of mens rea, a facet conspicuously absent in the present case,” the bench held. It also criticized the authorities for adopting a disproportionate punitive approach despite all taxes being paid and valid invoices being present.
Case Details
Case Title: M/s Kunal Aluminum Company Versus State of Himachal Pradesh
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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