GSTAT Karnataka: Goods Transported Without Proper E-Way Bill Face Penalty Even If Bill Is Created After Inspection

The Karnataka GST Appellate Tribunal has dismissed an appeal filed by M/s. Heramb Enterprises, upholding the penalty imposed under Section 129 of the CGST/KGST Act for transportation and unloading of goods without the requisite tax invoice and e-way bill at the time of interception. The Tribunal also held that the revisional proceedings under Section 108 were not barred by limitation in view of the Supreme Court's COVID-related extension of limitation.

Background of the Case

The case arose when a conveyance bearing registration number MH24 AB9709 was intercepted on 6 October 2020 at Udayambag, Belagavi while plywood was being unloaded at REC Flow Technology LLP, Belagavi.

At the time of interception, the vehicle was carrying a tax invoice and e-way bill covering transportation of the goods from Intercon Wood Industries, Perumbavoor, Kerala to Heramb Enterprises, Belagavi. However, there was no tax invoice or e-way bill covering the actual unloading of the goods at REC Flow Technology LLP.

The proper officer therefore initiated proceedings under Section 129(1) and passed an order confirming the demand of tax and penalty.

Appellate Authority Reduced the Penalty

The Appellate Authority subsequently allowed the appeal and reduced the penalty to ₹500 each under the CGST and KGST Acts.

It observed that the goods had reached the destination within the validity period of the e-way bill and that tax invoices and e-way bills were subsequently issued. The authority also noted that all dealers involved in the transaction were registered and found an absence of intention to evade payment of tax.

The Appellate Authority relied upon the Gujarat High Court's decision in Synergy Fertichem Pvt. Ltd. v. State of Gujarat.

Revisional Authority Reversed the Relief

The Revisional Authority initiated proceedings under Section 108 and reversed the Appellate Authority's order.

According to the Revisional Authority, the documents produced at the time of interception did not cover movement of the goods from the supplier to REC Flow Technology LLP. Significantly, the e-way bill relied upon by the appellant had been generated at 1:33 PM on 6 October 2020, after the goods had already been intercepted.

The Revisional Authority therefore treated the subsequent generation of the e-way bill as an attempt to cover the contravention after interception and restored the original order passed under Section 129.

Appellant's Defence: Technical Glitch and Genuine Transaction

Before the Tribunal, the appellant argued that invocation of Section 129 was unjustified because the supplier, transporter and recipient were registered dealers and the transaction was genuine and recorded in the books of accounts.

It was further contended that the e-way bill could not be generated because of a technical glitch and that the lapse was merely procedural.

The appellant relied upon decisions including Assistant State Tax Officer v. Satyam Shivam Papers Pvt. Ltd. and Podaran Foods India Pvt. Ltd. v. State of Kerala.

Limitation Under Section 108: Tribunal Examines COVID Extension

The appellant also raised a separate challenge based on limitation.

Under Section 108(2)(b), the revisional authority is restricted from exercising its power after three years from the date of the order sought to be revised. Since the Appellate Authority's order was dated 25 March 2021, the appellant argued that the revision order dated 31 August 2024 was beyond the statutory period.

The Tribunal examined the Supreme Court's directions in Cognizance for Extension of Limitation, under which the period from 15 March 2020 to 28 February 2022 was directed to be excluded for computing limitation in judicial and quasi-judicial proceedings.

Applying this exclusion, the Tribunal observed that approximately 11 months falling within the relevant limitation period would have to be excluded. On that calculation, the revisional authority could exercise its power up to 26 February 2025.

The Tribunal also considered the subsequent Supreme Court decision in G.R. Infra Projects Ltd. v. State of Madhya Pradesh, which addressed the application of the COVID-related exclusion to departmental proceedings.

Based on that decision, the Tribunal held that the proceedings of the Revisional Authority were not barred by limitation.

Section 129: Documents Must Be Available During Movement

The Tribunal then examined whether the penalty under Section 129 was legally sustainable.

It noted that Section 68(1) requires the person in charge of a conveyance to carry the e-way bill and other prescribed documents. Further, Section 129(1) applies where goods are transported or stored while in transit in contravention of the Act or Rules.

The Tribunal also referred to Rule 138(1) of the CGST Rules, which requires Part A of Form GST EWB-01 to be generated before commencement of movement of goods.

Subsequent Generation of E-Way Bill Did Not Cure the Contravention

A crucial finding of the Tribunal was that the relevant documents were not available when the goods were intercepted.

Although an e-way bill and tax invoice existed for transportation from the original supplier to Heramb Enterprises, the documents did not cover the unloading of the goods at REC Flow Technology LLP.

The Tribunal found that the appellant generated the new e-way bill and tax invoice only after becoming aware of the detention. It also noted that no evidence was produced to substantiate the claim of a technical glitch.

On these facts, the Tribunal concluded that the subsequent generation of the e-way bill could not cure the contravention that had already occurred at the time of interception.

Reliance on Synergy Fertichem Held Misplaced

The Tribunal also examined the reliance placed on Synergy Fertichem Pvt. Ltd. v. State of Gujarat.

The Gujarat High Court had emphasized that authorities should distinguish between serious and substantive violations and minor or procedural violations. It had also observed that the nature of the contravention and the question of intention to evade tax must be examined based on the facts of each case.

However, the Tribunal found that the facts in the present case were materially different.

Here, the goods were being transported and unloaded without the relevant statutory documents, and the required e-way bill was generated only after interception. Consequently, the Tribunal held that the principle relied upon by the appellant could not be applied to grant relief in the present case.

Tribunal Distinguishes Other High Court Decisions

The appellant's reliance on Satyam Shivam Papers Pvt. Ltd. and Podaran Foods India Pvt. Ltd. was also rejected.

The Tribunal noted that Satyam Shivam Papers concerned transportation where the e-way bill had expired, whereas Podaran Foods dealt with general principles concerning invocation of Section 129. According to the Tribunal, those factual circumstances were different from the present case.

Tribunal's Final Finding

The Tribunal held that the absence of the required tax invoice and e-way bill at the time of interception constituted a substantive violation.

It observed that the appellant was aware of the procedure required for movement of goods but had not generated the necessary documents for delivery to REC Flow Technology LLP before the movement. The Tribunal therefore upheld the finding that the subsequent generation of the e-way bill was an afterthought intended to cover the contravention.

Accordingly, the Tribunal held that the penalty imposed under Section 129(1) was legal and valid.

GST Case Law Heramb Enterprises Versus C Pushpalatha, Additional Commissioner Of Commercial Taxes, Smr-2 Bengaluru Karnataka

Citation-2026 TAXONATION 2603 (GSTAT BENGALURU)

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