Detention and penalty under Section 129(3) unwarranted for technical E-Way Bill lapse absent intent to evade tax

HC allowed the petition, holding that detention of goods and imposition of penalty under Section 129(3) was unwarranted where only a technical lapse existed-one of two E-Way Bills had expired-without any evidence of intent to evade tax. The court found no dispute as to consignor, consignee or goods, and noted authorities had not shown repeated misuse of the E-Way Bill or tax evasion. Respondents were directed to refund the tax and penalty deposited within four weeks.

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Issues involved:
The issues involved in this case are the imposition of penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 based on the expiry of an E-Way Bill during the transportation of goods, and the contention of the petitioner regarding the lack of intention to evade tax.

Imposition of Penalty based on E-Way Bill Expiry:
The petitioner challenged the penalty order dated January 16, 2023, and the appellate order dated January 30, 2023, which were passed due to the expiry of one of the E-Way Bills accompanying the goods being transported. The petitioner argued that apart from this discrepancy, there was no evidence of an intention to evade tax. The petitioner relied on documents including e-Invoices, E-Way Bills, and a mechanic's letter to support the claim that the vehicle had broken down, as evidenced by the 'fast tag' chart. Citing precedents, the petitioner contended that penalties cannot be imposed solely due to missing documents, as seen in judgments like M/s Pepsico India Holdings Limited Lucknow v. Commissioner of Trade Tax and Jain Shudh Vanaspati Limited Ghaziabad and Others v. State of U.P.

Contention of the Petitioner:
The petitioner's counsel argued that the expired E-Way Bill was the only issue, and the authorities did not consider the explanations and supporting documents provided. It was emphasized that there was no intention to evade tax, and the expired E-Way Bill was due to the breakdown of the vehicle. The petitioner highlighted that the factual aspect did not show any intention to evade tax, as mens rea is essential for imposing penalties, as established in previous cases like M/s Hindustan Herbal Cosmetics v. State of U.P. and M/s Falguni Steels v. State of U.P.

Authorities' Response and Ruling:
The Additional Chief Standing Counsel argued that the expired E-Way Bill did not meet the requirements, and the authorities considered the petitioner's arguments. It was noted that the petitioner failed to provide a reason for not issuing a fresh E-Way Bill despite being aware of the expiry. However, the court observed that there was no intention to evade tax, and technical violations without such intent cannot warrant penalties under Section 129(3) of the Act. The court found that although there was a technical violation, the authorities failed to prove any repeated use of the expired E-Way Bill or an intention to evade tax by the petitioner.

Judgment and Relief:
The Court disagreed with the authorities' findings and quashed the orders dated January 16, 2023, and January 30, 2023. It directed the respondents to refund the tax and penalty amount deposited by the petitioner within four weeks. The writ petition was allowed with no costs imposed on either party.

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