2022 (9) TMI 374 - HC - GST

E-way bill Part-B missing due to technical glitch; seizure and penalty quashed, refund ordered after no tax evasion evidence.

Penalty and seizure were challenged on the ground that Part-B of the e-way bill was not filled due to a technical glitch. The HC held that mere ... Seizure and detention for non-compliance with e-way bill Part-B - technical glitch in e-way bill entry (vehicle number) and administrative clarification - absence of mens rea/intent to evade tax as defence to seizure, demand and penalty - relevance of clarificatory circulars and Ministry advisories to assessment of culpability - refund of amounts collected pursuant to quashed demand and penaltySeizure and detention for non-compliance with e-way bill Part-B - technical glitch in e-way bill entry (vehicle number) and administrative clarification - absence of mens rea/intent to evade tax as defence to seizure, demand and penalty - Validity of the demand, penalty and seizure where Part B of the e way bill lacked the vehicle number due to a technical error and whether the impugned orders are sustainable in absence of intent to evade tax. - HELD THAT: - The court found that the sole ground for seizure and the consequent demand and penalty was non filling of Part B of the e way bill. The petitioner explained that the vehicle number (a Delhi registration) could not be entered in Part B on account of a technical glitch. That explanation is supported by departmental and Ministry clarificatory circulars which recognised problems in filling Part B and advised specific modes of entry; the Ministry circular also cautioned against invoking seizure powers for minor errors such as missing or incorrect vehicle digits. There was no allegation or finding that the goods were being transported without payment of tax or that the petitioner intended to evade duty. In these circumstances, and having regard to the departmental circulars and the judgment relied upon by the petitioner dealing with the same issue, the court concluded that prima facie no mens rea to evade tax could be inferred merely from the missing Part B entry caused by a technical glitch. Consequently the impugned demand/penalty order and the appellate order were unsustainable and were set aside.Impugned order dated 18.04.2018 and appellate order dated 14.05.2019 set aside for the reasons stated; amounts collected pursuant to those orders to be refunded.Final Conclusion: Writ petition allowed; the orders of demand/penalty and the appellate dismissal were set aside in view of the technical defect in Part B of the e way bill, lack of any finding of intent to evade tax, and supporting departmental/MoF circulars; respondents directed to refund the amounts collected within two months. Issues:Challenge to demand/penalty order dated 18.04.2018 and appellate order dated 14.05.2019; Refund of penalty amount; Allegation of incomplete e-way bill leading to goods seizure.Analysis:The petitioner, a company engaged in Trading of Ready-made garments, challenged the demand/penalty order and the appellate order passed by the authorities. The issue arose when the respondent inspected the goods being transported by the petitioner's vehicle and found the e-way bill incomplete, leading to goods' detention and subsequent seizure. The petitioner explained that a technical glitch resulted in the e-way bill's Part-B not being filled, as the vehicle number was not registered due to a technical error. The petitioner argued that the department acknowledged this technical issue in a Clarificatory Circular, advising on the correct form filling. The petitioner contended there was no intent to evade duty, supported by the Circulars issued by the Ministry of Finance addressing similar issues.The petitioner highlighted the Circular dated 14.09.2018, emphasizing that minor errors, such as missing digits/characters in the vehicle number, should not invoke penalty under section 129 of the CGST Act. The petitioner also referenced a previous judgment where the court set aside a seizure order in similar circumstances. The Standing Counsel defended the impugned order, disputing the technical glitch explanation provided by the petitioner.The Court noted that the only allegation against the petitioner was the incomplete Part-B of the e-way bill, with no accusation of tax evasion. The petitioner's explanation for the error was supported by Ministry Circulars addressing such problems. The Court found no intent to evade duty, especially considering the vehicle's Delhi number registration, similar to a previous judgment's scenario. Consequently, the impugned orders were set aside, and the writ petition was allowed, directing the respondents to refund the amount paid by the petitioner within two months.In conclusion, the Court ruled in favor of the petitioner, emphasizing the technical nature of the error in the e-way bill and the absence of any intent to avoid tax payment. The judgment underscored the importance of considering technical glitches and relevant circulars in such cases to prevent undue penalization.