Introduction
The imposition of substantial penalties by GST authorities for procedural lapses concerning e-way bills remains a contentious issue. Hon’ble Calcutta High Court, in the case of Truth Udyog Metal and Steel Pvt. Ltd. & Anr. (2025-TIOL-160-HC-KOL-GST), examined the validity of imposition of 200% penalty under Section 129(1)(a) of the Act, solely for the non-disclosure of the first supplier’s name and full address in an e-way bill generated for Bill-to-Ship-to transaction. Said judgment is succinctly analysed to elucidate the relevant legal provisions.
Facts of the Case
Taxpayer/Petitioner purchased goods from M/s Shova International (“first supplier”) and subsequently facilitated the movement of goods from the first supplier’s premises to the recipient (end customer). Taxpayer, acting as an intermediary supplier, issued a tax invoice and generated an e-way bill before the initiation of the movement of goods under the Bill-to-Ship-to model. In accordance with the dispatch arrangement, the e-way bill mentioned the first supplier’s location as the “dispatch from” address and recipient details in “ship to” address. While the full address of the recipient was disclosed under the “ship to” details, the name of the first supplier was not explicitly mentioned. Further, e-way bill contained only abbreviated dispatch details, indicating “dispatch from” details as “West Bengal, 713212.” The invoice and the e-way bill correctly reflected the vehicle details.
Upon interception of the consignment, the tax authorities imposed a penalty of 200% of the tax amount, invoking Section 129(1)(a) of the CGST Act, for non-disclosure of the first supplier’s name in the e-way bill. The first appellate authority upheld the penalty order. Aggrieved by this decision, the petitioner filed a writ petition before the Single Bench of Hon’ble Calcutta High Court, which declined interim relief but directed the exchange of affidavits. The petitioner thereafter preferred an intra-court appeal before the Division Bench.
Contentions of the Revenue
The Revenue argued that the name of the first supplier, from whose premises the goods were dispatched, was not disclosed in the e-way bill, thereby constituting a violation warranting penal action under Section 129(1)(a).
Arguments of the Petitioner
Taxpayer argued that in transactions where goods are dispatched directly from the first supplier to the ultimate recipient, it is a well-recognized trade practice to mention only abbreviated details of place of dispatch rather than the complete details of the first supplier to maintain business confidentiality. Taxpayer further asserted that the omission of the first supplier’s name/full address did not indicate any intent to evade tax, particularly when all other details, including the abbreviated place of dispatch, vehicle details, and recipient information, were correctly disclosed.
Observations and Ruling of the Court
The Hon’ble Calcutta High Court observed that merely because the taxpayer did not disclose the name and the full particulars of first supplier, cannot be stated to be a ground that the appellants had intention to evade the payment of tax. Court concurred with taxpayers’ argument that in present case penalty order levying 200% penalty for violation of Section 129 (1) (a) of the Act could not have been invoked. Consequently, the orders passed by the adjudicating and appellate authorities were set aside, and the petitioner’s appeal for the refund of the penalty amount was allowed.
Our Comments
Numerous judicial precedents have provided relief to taxpayers in cases where the Revenue has failed to conclusively establish an intent to evade tax in e-way bill-related disputes. Further aforesaid judgment validates prevalent trade practise of disclosing only abbreviated details of the first supplier in Bill-to-Ship-to E-way bill to maintain trade confidentiality.
It is pertinent to note that the Ministry of Finance, through a Press Release dated 23rd April 2018, clarified the e-way bill requirements for Bill-to-Ship-to transactions. Recognizing industry concerns, the Press Release explicitly permitted the generation of a single e-way bill for such transactions, even where two distinct supplies were involved. Additionally, it clarified that either the first supplier or the intermediary supplier could generate the e-way bill. Despite such clarifications, tax authorities have frequently disregarded these guidelines during interception proceedings, leading to undue penal consequences for taxpayers.
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CA Jignesh Kansara, Founder Partner | DAKSM & Co. LLP, Chartered Accountants
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