Minor Invoice and E-Way Bill Date Errors Don't Justify Goods Detention or Penalty Under Section 129(3) CGST Act

The HC held that minor discrepancies in invoice and e-way bill dates, which do not affect tax liability or the nature of goods, cannot justify detention of goods or imposition of tax and penalty under section 129(3) of the CGST Act. The Court found the discrepancy in invoice date to be insignificant and in line with Circular No.64/38/2018, which mandates leniency for such minor errors. The penalty and tax imposed were deemed perverse and illegal. Consequently, the petition was allowed, directing release of the goods and Bank Guarantee.

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Issues:
Challenge to final order under section 129(3) of the Central Goods and Service Tax Act, 2017 for imposing tax and penalty based on discrepancy in e-way bill date. Petitioner seeking release of bank guarantee. Interpretation of Circular No.64/38/2018 regarding penalties for minor discrepancies in invoices/e-way bills. Applicability of Circular to the present case. Consideration of alternative remedy under Article 226 of the Constitution of India.

Analysis:

1. The petitioner challenged a final order under section 129(3) of the CGST Act, 2017, which imposed a tax and penalty due to a discrepancy in the e-way bill date. The petitioner, engaged in electrical contract works, transported goods for a hospital project, but a formatting error in the invoice date led to the detention of goods by the first respondent. The petitioner sought the release of the bank guarantee, arguing that the error was due to the default computer formatting system.

2. The petitioner contended that the penalty was unjustified for a minor discrepancy and cited Circular No.64/38/2018 issued by the CBIC, which outlined situations where penalties should not be imposed for minor errors in documents. The government pleader argued that the petitioner should seek remedy through the appellate forum instead of a writ petition, suggesting the error could be intentional for tax evasion.

3. The court considered the petitioner's arguments despite the availability of an alternative remedy, emphasizing the need to address hardships caused by minor discrepancies. The Circular aimed to prevent penalizing taxpayers for insignificant errors not affecting tax liability. Although the specific error in the case was not explicitly covered by the Circular, it fell under the broader scope of permissible minor discrepancies.

4. The court noted that the discrepancy in the invoice date did not impact tax liability or the nature of goods transported, aligning with the intent of the Circular. Referring to a similar case in the Madras High Court, relief was granted to the taxpayer based on the Circular's principles. Consequently, the court found the imposition of tax and penalty in the present case as excessive and illegal, directing the first respondent to reconsider the order in line with the Circular and the court's observations within a specified timeframe.

5. The judgment quashed the original order and instructed a fresh review, emphasizing adherence to the Circular's guidelines and providing the petitioner with a hearing opportunity. Ultimately, the writ petition was allowed, granting relief to the petitioner based on the interpretation and application of the Circular to the specific circumstances of the case.

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