The Goods and Services Tax Appellate Tribunal (GSTAT), Raipur, has held that the department need not establish an intention to evade tax before imposing a penalty under Section 129 of the GST law for transporting goods in contravention of the statutory requirements.

The bench of Pradeep Kumar Vyas (Judicial Member) and Chandra Bhushan Singh (Technical Member) upheld penalties of ₹1,81,208 and ₹2,47,680, totalling ₹4,28,888, for transporting goods with e-way bills that had expired six days before interception. 

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The bench found that the company had neither substantiated its explanation of vehicle breakdowns nor explained why the e-way bills were not extended.

The dispute arose from the interception of two vehicles by State Tax officials at Banaras Road, Songara, on September 20, 2024. The e-way bills accompanying the consignments had expired on September 14, 2024.

The authorities imposed penalties equal to 200% of the tax payable on the goods. The company paid the penalties to secure release of the vehicles and consignments, and subsequently challenged the demands. After the first appellate authority dismissed its appeals, it approached the tribunal.

The company maintained that the goods were moving between its units in Rajasthan and Chhattisgarh on a stock-transfer basis. It argued that the drivers had produced GST invoices and e-way bills, and that expiry of the documents resulted from vehicle breakdowns rather than any attempt to evade tax.

It also challenged the proceedings on procedural grounds, alleging inadequate opportunity of hearing, non-supply of prescribed forms and failure to properly address its submissions.

The principal legal question before the tribunal was whether evidence or circumstances establishing an intention to evade tax were necessary to invoke Section 129(1)(a).

Reading the statutory language, the bench observed that Section 129 applies where goods are transported or stored during transit in contravention of the GST Act or Rules. It does not expressly make an intention to evade tax a prerequisite for imposing a penalty.

The tribunal contrasted this with Section 130, which expressly refers to an intention to evade tax in specified circumstances.

Relying on the Calcutta High Court’s decision in Asian Switchgear (P) Ltd. v. STO and authorities concerning penalties for breaches of civil obligations, the tribunal treated the liability as civil in nature. It consequently held that mens rea, or guilty intention, need not be established for invoking Section 129 in the circumstances before it.

The bench found that the company had produced no repair bills or other supporting material to establish the alleged mechanical failures. It had also failed to explain the nature of the defects that prevented the vehicles from completing their journeys.

The tribunal noted that neither the supplier, recipient nor transporter had attempted to extend the e-way bills during the six-day period following expiry. It referred to Rule 138(10), which provides for extension within eight hours from the time of expiry.

The explanation that the drivers lacked knowledge of the extension procedure was rejected. The bench observed that compliance could have been undertaken by the supplier, recipient or transporter.

It further held that interstate stock transfers and the availability of e-invoices did not excuse the failure to maintain valid e-way bills during transportation.

The company relied on decisions including Satyam Shivam Papers, Maa Amba Builders, T.P. Metals and Roofings and Podaran Foods India.

The tribunal distinguished those authorities on their facts. It noted that the cited cases involved circumstances such as traffic disruption, interception shortly after expiry, subsequent extension of an e-way bill, or disputes unrelated to expired e-way bills. Here, the vehicles were intercepted six days after expiry, without supporting evidence for the delay.

The bench also rejected reliance on CBIC Circular No. 64/38/2018-GST dated September 14, 2018. It held that the specified minor discrepancies covered by the circular did not extend to transportation under expired e-way bills in this case.

Addressing the procedural objections, the tribunal relied on the opportunity available before it to produce explanations and documentary evidence. It drew an adverse inference from the failure to furnish material supporting the breakdown plea.

Finding no satisfactory explanation for the prolonged expiry or failure to use the extension mechanism, the tribunal dismissed both appeals and left the penalties undisturbed. No costs were awarded.

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