The Calcutta High Court has held that imposition of a 200% penalty under Section 129 of the West Bengal Goods and Services Tax Act, 2017 merely due to expiry of an e-way bill by about 50 minutes was excessively harsh in the absence of any intention to evade tax.
The bench of Justice Kausik Chanda has observed that the statutory framework itself provides “certain latitude” to transporters and therefore authorities are required to examine the conduct of the transporter before imposing harsh penalties.
The dispute arose after the petitioners, engaged in the retail business of transmission shafts, pumps, electric motors and related goods, transported goods to the Durgapur Steel Plant of Steel Authority of India Limited (SAIL) on May 7, 2022. The goods were accompanied by a valid e-way bill generated at 1:09 PM on May 7, 2022, which remained valid up to 11:59 PM on May 8, 2022.
During transit, the vehicle was intercepted by the State Tax authorities at a petrol pump in Durgapur on May 9, 2022 at around 8:50 AM, approximately 10 kilometres from the destination. At the time of interception, the e-way bill had expired.
Following interception, proceedings under Section 129(1) of the WBGST Act were initiated. The authorities assessed the total value of goods at ₹4,38,983 and imposed a penalty of ₹1,58,034, equivalent to 200% of the tax payable. The penalty order dated May 12, 2022 was later affirmed by the Appellate Authority on November 11, 2024.
Before the High Court, the petitioners argued that there was no intention to evade tax and the only allegation against them was expiry of the e-way bill before completion of transportation. They submitted that the vehicle had suffered a “technical snag” during transit, resulting in a temporary halt for approximately three hours for routine maintenance.
The petitioners relied upon earlier Division Bench judgments of the Calcutta High Court in Progressive Metals Pvt. Limited and Hindusthan Biri Leaves, where similar 200% penalties imposed due to delay in renewal of e-way bills were interfered with by the Court.
The High Court examined Section 129 of the WBGST Act dealing with detention, seizure and release of goods in transit. The Court also analysed Rule 138(10) relating to validity of e-way bills. The Court noted that the second proviso permits extension of e-way bill validity in exceptional circumstances, including trans-shipment, while the third proviso allows such extension within eight hours from expiry of the e-way bill.
The Court specifically noted that in the present case the petitioners could have extended the e-way bill validity till 8:00 AM on May 9, 2022, whereas the interception took place at 8:50 AM. Thus, the delay in renewal was only around 50 minutes.
The Revenue relied upon the Division Bench judgment in Ashish Kumar Sharma vs. Deputy Commissioner, State Tax, where the Court had observed that although the statute permits a rigid 200% penalty, authorities must examine whether there was any intention to evade payment of tax. The Division Bench had also held that where there is no allegation of tax evasion, imposition of such harsh penalty may cause grave prejudice.
Taking note of the facts of the present case, the High Court concluded that the petitioners could not be completely exonerated for failure to renew the e-way bill within time, but at the same time, imposition of 200% penalty was disproportionate and excessive.
The Court set aside both the original adjudication order dated May 12, 2022 and the appellate order dated November 11, 2024. The petitioners were directed to pay only ₹10,000 as token fine, and the authorities were ordered to refund the balance amount already deposited towards penalty after adjustment of the token amount.
Case Details
Case Title: Industrial Pumps & Motors Agencies & Anr. -vs- The State of West Bengal & Ors.
Citation: JURISHOUR-1448-HC-2026(CAL)
Case No.: WPA 28356 of 2024
Date: 16.04.2026
Counsel For Petitioner: Bijay Kumar Sharma
Counsel For Respondent: Tanoy Chakraborty
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