GST e-way bill penalty requires intent to evade tax; maximum detention penalty was quashed as unsustainable.

Penalty and detention under the Uttar Pradesh GST regime for e-way bill non-compliance were treated as unsustainable where the show cause notice and order disclosed no allegation or finding of intent to evade tax. The Court relied on earlier Division Bench authority that action taken amid shifting e-way bill requirements, and based on a mistaken understanding of the notification framework, could not be sustained in the absence of deliberate evasion. It also noted that the maximum penalty had been imposed despite the availability of a lesser penalty under the statute. The writ petition succeeded and the impugned orders were quashed with consequential relief.

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Issues: Whether the penalty and detention orders passed under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 were sustainable in the absence of any allegation or finding of intention to evade tax, and whether the maximum penalty was justified when a lesser penalty provision was available.

Analysis: The petition challenged the detention and penalty orders under Article 226. The record disclosed no allegation in the show cause notice or the order under Section 129(3) that non-compliance with the e-way bill requirement was committed with intent to evade tax. The matter was treated as covered by earlier Division Bench decisions which had held that, in the peculiar circumstances of rapid changes in the e-way bill regime, action taken on the basis of a mistaken understanding of the applicable notification framework was not sustainable when no deliberate evasion was shown. The Court also noted that the authorities imposed the maximum penalty even though the statute provided for a lesser penalty under Section 122.

Conclusion: The penalty and detention orders were held unsustainable and were quashed. The issue was decided in favour of the assessee.

Final Conclusion: The writ petition succeeded and the impugned orders were set aside with consequential relief.

Ratio Decidendi: A penalty under the goods and services tax regime for e-way bill non-compliance cannot be sustained in the absence of material showing intention to evade tax, especially where the authorities act under a mistaken understanding of shifting procedural requirements and impose a penalty harsher than warranted by the statute.

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