Pulkit Metals Private Limited Vs State Tax Officer – II (Madras High Court)
In a notable ruling, the Madras High Court has provided a path for a taxpayer to challenge a 200% penalty imposed under Section 129(3) of the Tamil Nadu Goods and Services Tax (TNGST) Act, 2017, even after the penalty amount had been paid and the detained goods released. The decision in Pulkit Metals Private Limited Vs State Tax Officer – II underscores the judiciary’s nuanced approach to e-way bill violations, particularly when intent to evade tax is not clearly established.
The case involved Pulkit Metals Private Limited, which had imported goods from Singapore. An e-way bill for transporting the consignment to the petitioner’s factory in Pondicherry was generated on January 18, 2022, valid until 5:47 p.m. the following day. However, the vehicle carrying the goods was intercepted by the State Tax Officer, Villupuram, on January 20, 2022, at 9:45 a.m., after the e-way bill’s expiry. Following the interception and seizure, a penalty equivalent to 200% of the consignment’s value was imposed under Section 129(3) of the TNGST Act. The petitioner, seeking the release of the detained goods, paid the penalty amount on January 21, 2022.
Almost nine months later, on September 26, 2022, Pulkit Metals Private Limited filed a Writ Petition before the Madras High Court, challenging the penalty. The petitioner’s action was notably inspired by a significant pronouncement from the Supreme Court of India in Assistant Commissioner (St) and others Vs. M/s. Satyam Shivam Papers Pvt. Limited & Another. In that case, the Supreme Court had strongly deprecated the conduct of tax authorities who, without any evidence of tax evasion, treated the mere expiry of an e-way bill as sufficient grounds for imposing penalties. The apex court had upheld the views of the Telangana High Court, emphasizing that there should be no blatant abuse of power in collecting tax and penalty solely based on an e-way bill’s validity lapse. This precedent became a cornerstone of Pulkit Metals’ argument, suggesting that the penalty imposed was disproportionate and lacked a foundational basis of actual tax evasion.
