Hari Rama Constructions Vs State of West Bengal & Ors. (Calcutta High Court)
Calcutta High Court, in the case of Hari Rama Constructions Vs State of West Bengal & Ors., overturned an appellate authority’s decision that had upheld a penalty imposed on Hari Rama Constructions for a GST-related violation. The petitioner, a partnership firm, was transporting its construction equipment from Manipur to Jharkhand. During transit, their vehicle was intercepted for inspection. The driver produced the e-way bill, which included a digital copy of the delivery challan, along with the purchase invoice and work order. However, a physical copy of the delivery challan could not be produced at the time of inspection. This led to the detention of goods and the imposition of a penalty under Section 129(1) and 129(3) of the CGST/WBGST Act, 2017. The adjudicating authority confirmed the penalty, and the appellate authority dismissed the petitioner’s subsequent appeal.
The High Court observed that there was no discrepancy in the goods being transported and no intention to evade tax was found. The core issue was the non-production of a physical delivery challan, despite its digital availability within the e-way bill. The court emphasized that penalty provisions should only be invoked when there is a clear intention to violate the law or evade tax. Citing previous judgments, the court stated that a “pedantic reading” of the rule, penalizing for a minor procedural lapse when taxes were paid and the e-way bill was present, was inappropriate. The court also rejected the state’s argument that paying the penalty constituted an admission of guilt, affirming that an order can be challenged in appeal even after compliance. Consequently, the High Court set aside both the appellate and adjudicating orders, directing the refund of the penalty paid by Hari Rama Constructions.
