Judicial Relief: Tax Penalty Overturned as Technical Non-Compliance Lacks Deliberate Intent Under Section 129(3)

The HC allowed the writ petition challenging tax penalty under Section 129(3) of UP GST Act. The court found no mens rea for tax evasion, noting IGST was already paid during goods import and technical E-Way Bill non-compliance was promptly rectified. The HC quashed the penalty orders and directed return of security within four weeks, emphasizing intent matters in tax enforcement.

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Issues involved:
The issue involves a writ petition challenging the penalty levied under Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017, and the order of the Appellate Authority under Section 107 of the Act.

Judgment Details:

Issue 1: Penalty Levied under Section 129(3) of the Act
The petitioner was aggrieved by the penalty levied by the Assistant Commissioner, Commercial Tax, Mobile Squad, Unit-I, Ghaziabad under Section 129(3) of the Act. The factual matrix revealed that although there was a technical fault in not filling up Part B of the E-Way Bill at the time of interception, the petitioner promptly rectified this by filling it up before the detention order was passed. Notably, the goods were imported from China, and IGST at 28% was already paid during import. It was emphasized that since IGST had been paid to the customs authorities during import, no further tax was applicable under the Act. The petitioner contended that there was no mens rea for tax evasion, citing precedents where mens rea was deemed essential for imposing penalties. The Court observed that there was no intent to evade tax, and the only issue was the technical non-compliance with Part B of the E-Way Bill.

Issue 2: Order of the Appellate Authority under Section 107 of the Act
The petitioner also challenged the order of the Appellate Authority passed under Section 107 of the Act. Given that IGST had already been paid during import and there was no mens rea for tax evasion, the Court found the impugned orders unsustainable. Relying on previous judgments emphasizing the necessity of mens rea for imposing penalties, the Court quashed and set aside the orders dated October 25, 2018, and January 27, 2020. The writ petition was allowed, and the respondents were directed to return the security to the petitioner within four weeks from the date of the judgment.

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