Case Of: Marcowagon Retail Pvt Ltd
Issued By: Gujarat High Court
Order No: SLP 2236 of 2025
Date: 24th April 2025
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The petitioner, engaged in exports to the UAE, was transporting goods from Gurugram to the Mundra port under a Letter of Undertaking (LUT) without IGST payment.
Though a valid e-invoice and e-way bill were generated, the e-way bill expired before the goods reached the check post as the vehicle suffered breakdown.
State GST authorities intercepted the vehicle, issued Form MOV-1 to MOV-7, and imposed a 200% penalty under Section 129(1)(a) via Form MOV-9.
The petitioner argued no tax was payable on zero-rated supplies, and the penalty should align with that for exempt goods under the law.
The Court held that while zero-rated supplies are taxable, no tax is “payable” when made under LUT, negating the basis for penalty under Section 129(1)(a).
It clarified the difference between “leviable” and “payable,” stating that penalty applies only when tax is actually payable.
The Court deemed the expired e-way bill a procedural lapse, not tax evasion, citing CBIC Circular 64/38/2018-GST for leniency in such cases.
The penalty was limited to ₹25,000, the bank guarantee was ordered to be released, and the MOV-9 order was directed to be modified.