Appellate Authority Overturns Penalties Imposed for Minor E-Way Bill Errors

The appellate authority found the penalty imposed under Section 129 of the CGST/HPGST Act unwarranted. It was determined that minor mistakes in the E-way Bill should only attract a penalty of Rs. 500/- each under CGST and HPGST, as per relevant circulars. The authority noted that the appellant's actions did not indicate an intention to evade taxes. Consequently, the orders imposing penalties were set aside, and the additional demand was ordered to be refunded. A penalty of Rs. 500/- under SGST and Rs. 500/- under CGST was imposed on the taxpayer in accordance with the GST Circular.

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Issues Involved:
1. Validity of the penalty imposed under Section 129 of the CGST/HPGST Act, 2017.
2. Minor mistakes in E-way Bill and their implications.
3. Adherence to the principles of natural justice.
4. Double taxation concerns.

Issue-Wise Detailed Analysis:

1. Validity of the penalty imposed under Section 129 of the CGST/HPGST Act, 2017:

The appellant contested the penalty imposed by the Assistant Commissioner of State Taxes & Excise, Chamba, for a clerical error in the vehicle number mentioned in the E-way Bill. The vehicle number was incorrectly entered as HP32A1597 instead of HP32A3097. The goods were detained under Section 129(1) of the CGST/HPGST Act, 2017. The appellant argued that the mistake was inadvertent and did not indicate an intention to evade tax. The adjudicating authority, however, imposed a penalty, asserting that there was an intention to evade tax.

2. Minor mistakes in E-way Bill and their implications:

The appellant argued that all material particulars of the invoice and goods matched, except for the minor clerical error in the vehicle number. They cited Rule 138 of the CGST Rules, 2017, which emphasizes the importance of Part A of the E-way Bill over Part B. The appellant referred to GST Council Circular No. 64/38/2018 dated 14th September 2018, which provides for minor penalties in cases of minor mistakes, such as errors in one or two digits of the vehicle number. The appellant contended that the penalty should be limited to Rs. 500/- each under CGST and HPGST, as per the circular.

3. Adherence to the principles of natural justice:

The appellant claimed that the order was passed without issuing a show-cause notice, violating the principles of natural justice. They cited Section 129 of the CGST Act, 2017, which mandates issuing a notice specifying the tax and penalty payable and providing an opportunity for the concerned person to be heard before determining any tax, interest, or penalty. The appellant argued that the adjudicating authority bypassed this legal requirement, rendering the order invalid.

4. Double taxation concerns:

The appellant argued that the same transaction could not be taxed twice. They stated that they had already discharged IGST on the entire value of the goods supplied, and the adjudicating authority's demand for CGST and HPGST led to double taxation. They asserted that this action violated the basic principles of equity and natural justice, as well as the intention and mandate of the GST law.

Judgment:

The appellate authority found that the penalty imposed under Section 129 was unwarranted. The GST Council Circular No. 64/38/2018 dated 14th September 2018, and the corresponding HP circular, provided that minor mistakes in the E-way Bill, such as errors in one or two digits of the vehicle number, should attract a penalty of Rs. 500/- each under CGST and HPGST. The authority noted that the circulars were not merely advisory but had to be followed. The respondents failed to prove that the appellant was using the wrong vehicle numbers as a modus operandi to evade taxes.

Therefore, the orders of the ACST&E, Chamba, were set aside, and the additional demand deposited by the appellant was ordered to be refunded. A penalty of Rs. 500/- under SGST and Rs. 500/- under CGST was imposed on the taxpayer in accordance with the GST Circular. The judgment was reserved on 01.11.2019 and released subsequently.

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