Landmark Cars (P.) Ltd. V/s Union of India {HIGH COURT OF GUJARAT}

Landmark Cars (P.) Ltd. V/s Union of India { HIGH COURT OF GUJARAT} :

Date of Order : 14-06-2024

In the case of Landmark Cars (P.) Ltd. v. Union of India, decided by the Gujarat High Court, the issue revolved around the imposition of tax and penalty under Section 129 of the GST Act due to a minor error on an e-way bill. Landmark Cars, a distributor of Mercedes Benz vehicles, encountered a situation where a truck carrying cars broke down during transportation. To ensure delivery, a replacement truck was used, which resulted in a discrepancy in the vehicle number compared to what was initially mentioned on the e-way bill.

The tax authorities detained the goods and imposed penalties under Section 129, citing the mismatch in the vehicle number as a violation. However, the Gujarat High Court ruled in favor of Landmark Cars, setting aside the tax and penalty demand. The court emphasized several key points:

1. Nature of the Error: The court acknowledged that the discrepancy in the vehicle number on the e-way bill due to the replacement truck was a minor error. This was crucial because under Circular No. 64/38/18 dated 14-9-2018, minor errors in documentation should typically result in a nominal penalty, specifically Rs. 500 under the CGST Act and Rs. 1000 under the IGST Act.
2. Intent and Compliance: It was noted that there was no intention on the part of Landmark Cars to evade taxes or to transfer goods improperly. The chassis numbers of the cars remained consistent with those stated in the invoices and e-way bills, indicating that the discrepancy in the vehicle number did not affect the accountability or compliance aspects of the transaction.
3. Legal Basis: The High Court underscored that the demand for tax and penalty under Section 129 was without proper jurisdiction in this case. Section 129 is intended to address situations where there is a clear intent to evade tax or violate GST provisions, which was not evident here. Therefore, the imposition of severe penalties was deemed unjustified.
4. Conclusion: By setting aside the tax and penalty demand, the Gujarat High Court upheld the principles of fairness and proportionality in tax administration. The decision ensures that minor errors, especially those caused by unforeseen circumstances like vehicle breakdowns during transport, should not lead to disproportionate penalties but rather nominal fines as specified under relevant circulars and notifications.

This case serves as a reminder of the importance of adhering to procedural fairness and considering the circumstances surrounding minor errors in GST compliance. It highlights the role of courts in safeguarding taxpayer rights and ensuring that penalties are commensurate with the nature of the infraction, contributing to a more balanced and equitable application of GST laws.