Supreme Court Order for Vardan Associates Pvt Ltd
In a recent landmark judgment, the Supreme Court of India addressed penalties imposed for transporting goods after the expiry of E-way bill validity. The case of Vardan Associates Pvt Ltd. vs. Assistant Commissioner of State Tax Central Section & Ors provides significant insights into the legal complexities surrounding goods transportation and penalty imposition.
Background of Case
The petitioner, Vardan Associates Pvt Ltd., specializes in horizontal directional drilling for underground utilities. The case arose from the transportation of capital goods from Auraiya, Uttar Pradesh, to Durgapur, West Bengal, where the consignment was intercepted after the E-way bill expired, resulting in hefty tax and penalty charges.
Arguments of the Appellant
The delay in transportation was attributed to the unavailability of a vehicle from the transporter in Auraiya. Despite depositing a portion of the tax amount and offering to furnish a bank guarantee for the penalty, the release of the consignment was denied.
The appellant contended that as the consignment constituted an “inter-unit transfer” of capital goods rather than a sale/purchase transaction, it should not be subject to GST.
Respondent Counter Arguments
The respondent emphasized that the appellant, engaged in such transactions, cannot claim ignorance of the law. They stressed the importance of timely transportation and compliance with E-way bill regulations.
The penalty was justified due to its impact on government revenue and the seriousness of tax matters.
Supreme Court Decision
The Supreme Court focused on the quantum of the penalty and upheld the appellant’s obligation to comply with the law by generating a new E-way bill.
Penalty Reduction by Court
While upholding the tax amount, the Court reduced the penalty to 50% of the initial amount, totaling ₹27,00,000, resulting in a total payment of ₹81,00,000 by the petitioner.
Rationale of the judgement
The reduction in penalty was justified considering the appellant’s ownership of the consignment and its contractual obligations. The Court emphasized leniency in such circumstances.
Cautionary Notes
The Court warned the appellant to exercise caution in the future, considering the unique circumstances of the case.
Conclusion
The Supreme Court’s decision in the Vardan Associates case sheds light on the complexities of goods transportation and E-way bill compliance. The reduction in penalty strikes a balance between enforcing financial consequences and recognizing the specific challenges faced by businesses. This ruling sets a precedent for similar cases, underscoring the importance of adhering to tax regulations while acknowledging genuine business challenges.
To Access the Telangana HC Order on Applicability of GST on Transfer of LDR CLICK HERE
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