Expired E-Way Bill Does Not Justify Harsh Penalty Under GST Law: Gujarat High Court Orders ₹18 Lakh Refund

The Gujarat High Court has ordered refund of Rs. 18,00,140 collected as penalty from Balkrishna Industries Limited, holding that imposition of penalty merely because an e-way bill expired during transit was unsustainable in the facts of the case.

A Division Bench of Justice A.S. Supehia and Justice Pranav Trivedi held that “In wake of such undisputed fact, the imposition of harsh penalty under Section 129(3) of the CGST Act was uncalled for and is also beyond the scope of Section 129(1)(a) of the CGST Act.”

The case arose after an e-way bill dated  March 21, 2025 expired at 2400 hours on 22 March 2025. Under Rule 138(10) of the CGST Rules, it could have been extended till 0800 hours on 23 March 2025. The vehicle was intercepted at 1522 hours on 23 March 2025, about 15 hours after expiry.

The court recorded that due to breakdown of the conveyance, the transporter could not extend the e-way bill. It further noted that the management of Balkrishna Industries Limited remained unaware of the expiry during transit.

The company had challenged the order dated November 29, 2025 and the appellate order dated 02 December 2025 passed in Form GST APL-04. It sought a declaration that the penalty of Rs 18,00,140 was not imposable under Section 129(1)(a) of the CGST Act.

Earlier, while issuing notice, the bench observed that if the issue was squarely covered by precedent, it may not relegate the petitioner to the GST Appellate Tribunal since the tribunal bench was not yet constituted.

On instructions, the state accepted that the issue was covered by the decision in Marcowagon Retail Pvt Ltd v. Union of India.

Referring to that judgment, the Court reiterated that where there is contravention of Rule 138, which is procedural in nature and there is no tax payable, computation of penalty would fail. In Marcowagon, the Court had held that “no tax is payable on the zero rated supply though leviable," and therefore, a penalty could not be computed in the absence of tax payable.

Holding that the present case was squarely covered, the bench quashed the impugned orders and directed refund of Rs 18,00,140 along with applicable interest within twelve weeks.

For Petitioner: Advocate Chiranjeev D Tandon

For Respondent: Assistant Government Pleader Nimisha Parekh