No Penalty on Delayed E-Way Bill Generation Without Intent to Evade Tax
In a major relief for businesses, no penalty shall apply on delayed e-way bill generation if there’s no intent to evade tax. The Central Board of Indirect Taxes and Customs (CBIC), in multiple clarifications and recent court rulings, has affirmed that mere delay or non-generation of an e-way bill does not automatically attract a penalty, unless malafide intent or tax loss is proven.
What is an E-Way Bill?
An e-way bill is an electronic document required under GST for movement of goods worth over ₹50,000. It ensures transparency and helps check tax evasion.
CBIC Clarification: No Automatic Penalty
CBIC, via Circular No. 64/38/2018-GST dated 14.09.2018, clarified that:
“If there is no intention to evade tax and movement of goods is genuine, mere procedural lapse of not carrying an e-way bill may not invite a penalty under Section 129.”
This was reaffirmed in various High Court judgments, including:
- Rajeev Traders vs State of UP (2023) – No penalty was upheld since there was no tax loss.
- K. P. Sugandh Ltd vs State of Gujarat (2022) – Held that penalty under Section 129 requires mens rea (guilty intent).
When Can Penalty Be Imposed?
Penalty under Section 129 of the CGST Act is applicable only if:
- Goods are being transported without documents and
- There is intent to evade tax
In such cases, a penalty equal to 100% of tax payable may be imposed.
When Penalty is Not Applicable
No penalty if:
- E-way bill was generated late but tax invoice and delivery challan were present
- Delay was due to technical or logistical issues
- Movement was genuine, and goods were accounted for in books
- Transport was due to job work or return without sale
Key Legal Angle
According to Section 129(1)(a) of CGST Act:
“Where any person transports goods… in contravention of the Act, all such goods shall be liable to detention or seizure…”
But courts have consistently ruled that “contravention” must not be trivial or clerical. If tax is already paid and goods are genuine, detention and penalty are not warranted.
Expert View: Don’t Panic, Just Explain
CA Krishnan S., a GST practitioner, shares:
“If your e-way bill is delayed but you’ve paid GST, don’t panic. Explain the reason in reply to Form GST MOV-07. Officers are instructed not to impose penalty blindly.”
Steps to Handle E-Way Bill Delay
- Retain Tax Invoice and transport documents
- Generate e-way bill immediately upon noticing lapse
- If detained, respond to Form MOV-07 within 7 days
- Attach a letter of explanation
- Seek legal recourse under Article 226 if penalty is imposed unjustly
Summary S
No penalty on delayed e-way bill generation if tax is paid and there’s no intent to evade. CBIC and courts have clarified that genuine cases won’t attract Section 129 penalty.
FAQs
Q1. Is e-way bill mandatory for all goods?
Yes, for goods above ₹50,000 in value unless exempt under Rule 138.
Q2. Can I be penalised if e-way bill is generated after starting transport?
Not always. If there’s no tax evasion, you may escape penalty, especially if documents and tax are in order.
Q3. What is the penalty under Section 129?
Penalty is equal to the tax amount payable, and goods may be seized. But only if evasion is proven.
Q4. Can I appeal if penalty is wrongly imposed?
Yes, you can approach the Appellate Authority or file a writ under Article 226.
Final Words
Genuine taxpayers often face unnecessary harassment for e-way bill delays. But law is on your side if there’s no tax loss. Keep your documentation proper and use expert help if needed. For smooth GST compliance and penalty defence, reach out to Efiletax today — your trusted partner in tax and legal matters.