Hai sir..
we have exported some used old machines to srilanka under LUT without payment of tax.
we have made commercial invoice for export, packing list, certification from charted engineer, unfortunately we have not generated the e invoice, we plan to generate the e invoice upon completing export formalities by CHA and getting the shipping bill.
but roving squad has interrupted the vehicle on the way to port, and levied penalty for not generated e invoice on real time under section 122 as conveyance of goods without covering proper documents.
we have explained as much as possible but officer not in a position to come down frim his stand.
finally we have paid the penalty under 122 and released the vehicle.
kindly requesting you guide me, if we file appeal is there any possibility to get order in our favour of us by paying minimum penalty under 125, because there is no tax evasion in this transaction and we have exported under LUT without payment of duty.
kindly advise.
3 Replies
SRINIVASAN M
(Others)
(52 Points)
Replied 24 March 2025
You can try for refund as it is a procedural violation.
kamatchi sundaram
(accounts)
(106 Points)
Replied 24 March 2025
Some of them telling that.. there is possibility to shift the penalty section from 122 to 129 by appeal officer which will double the penalty again... is there any legal possibilities for that??
CA Rashmi Gandhi
(Chartered Accountant)
(86432 Points)
Replied 25 March 2025
Appeal Possibility:
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Since there is no tax evasion and the transaction was an export under LUT, you may argue that the violation was procedural.
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Section 126 states that penalties should be proportional and no penalty should be imposed for minor breaches or errors without fraudulent intent.
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You may file an appeal under Section 107 arguing that the penalty should be reduced to ₹25,000 under Section 125 instead of a harsher penalty under Section 122.
Legal Backing & Case Laws for Your Appeal
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Penalty under Section 122(1)(i) vs. Section 122(3)(e)
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Rule 48(5) of CGST Rules states that an invoice not generated as an e-invoice shall not be treated as an invoice under the GST Act.
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However, as per ICAI's Background Material, a failure to issue an e-invoice falls under Section 122(3)(e), which attracts a penalty of ₹25,000, as it is a procedural lapse rather than tax evasion.
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Case Law Interpretation
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In Director General of Anti-Profiteering vs. J.P. and Sons [2019(22) G.S.T.L. 473 (N.A.P.A)], it was held that an incorrect invoice due to procedural lapses does not necessarily lead to severe penalties under Section 122(1)(i).
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This supports the argument that e-invoice non-generation should attract a penalty under Section 122(3)(e) rather than 122(1)(i).
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General Penalty under Section 125
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If an act does not specifically fall under Section 122, then Section 125 applies, which prescribes a maximum penalty of ₹25,000.
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This strengthens the case that your non-generation of an e-invoice (without intent to evade tax) should attract a reduced penalty under Section 125.
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Principle of Proportionality (Section 126)
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Section 126 states that no penalty should be imposed for minor breaches of tax regulations if they are easily rectifiable and made without fraudulent intent.
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Your situation (since the e-invoice was eventually generated) can be argued as a procedural lapse rather than an intent to evade tax, supporting your appeal for a lower penalty.
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