Marcowagon Retail Pvt. Ltd. & Anr. Vs Union of India & Ors. (Gujarat High Court
Gujarat High Court Curbs Penalty on Expired E-Way Bill for Zero-Rated Exports: A Landmark Judgement
In a significant ruling, the Gujarat High Court, in the case of MARCOWAGON RETAIL PVT. LTD. & ANR. Vs. UNION OF INDIA & ORS. (R/SPECIAL CIVIL APPLICATION No. 2234 of 2025 With R/SPECIAL CIVIL APPLICATION No. 2236 of 2025 dated 24.04.2025), has reinforced that zero-rated exports cannot be subjected to penalties based on a tax component when no tax is actually payable. This judgment distinguishes between procedural non-compliance and tax evasion, ensuring fair treatment for businesses.
Case Background
The case involved a petitioner engaged in export business, transporting goods from Gurugram to Mundra Port for export to the UAE. This was a zero-rated supply under Section 16(1)(a) of the IGST Act, with the export opted without payment of IGST under a Letter of Undertaking (LUT). Although an E-invoice and e-way bill were generated, the e-way bill expired before the goods reached the check post.
The vehicle was intercepted by State GST authorities, leading to the issuance of Form MOV-1 and MOV-2, followed by a show cause notice in MOV-7 for contravention under Section 129(1). Subsequently, an order in Form MOV-9 dated November 19, 2024, imposed a 200% penalty on “tax payable”.
