2024 (2) TMI 655 - HC - GST

Taxpayer Wins Challenge Against Technical E-Way Bill Penalty, Secures Relief Under Section 129(3) of UPGST Act

HC allowed writ petition challenging penalty under Section 129(3) of UPGST Act. The court found the penalty unsustainable as the e-Way Bill defect was ... Penalty under Section 129(3) for non-filling of Part B of e-Way Bill - Intention to evade tax - Inter-branch transfer versus sale to third party - Technical defect in e-Way Bill compliance - Return of securityPenalty under Section 129(3) for non-filling of Part B of e-Way Bill - Intention to evade tax - Inter-branch transfer versus sale to third party - Technical defect in e-Way Bill compliance - Whether penalty imposed under Section 129(3) of the UPGST Act for non-filling of Part B of the e Way Bill is sustainable where there is no intention to evade tax and the movement was an inter branch transfer. - HELD THAT: - The Court found on the facts that the invoices contained the vehicle number, only Part B of the e Way Bill remained unfilled, and the department failed to demonstrate any intention on the part of the petitioner to evade tax. The movement of goods was between branches of the petitioner and not a sale to a third party. The petitioner relied on earlier decisions, including M/S Roli Enterprises Vs. State of U.P. and Others and the Allahabad High Court decisions in VSL Alloys (India) Pvt. Ltd v. State of U.P. and another and M/s Citykart Retail Private Limited through Authorized Representative vs. Commissioner Commercial Tax and Another , which the Court treated as directly on point. Applying those precedents, the Court held that non filling of Part B, absent any intention to evade tax, is a technical defect which does not justify imposition of penalty under Section 129(3). Consequently, the penalty and appellate order were set aside. [Paras 3, 5, 6, 7, 8]Penalty imposed under Section 129(3) of the UPGST Act for non filling of Part B of the e Way Bill was unsustainable in the absence of any intention to evade tax; the impugned orders are quashed and set aside and consequential reliefs granted, including return of security.Final Conclusion: Writ petition allowed; penalty order dated March 6, 2020 and appellate order dated September 16, 2023 quashed and set aside; respondents directed to return the security to the petitioner within six weeks. Issues involved:The issues involved in the judgment are the imposition of penalty under Section 129(3) of the Uttar Pradesh Goods and Service Tax Act, 2017 based on the non-filling up of Part 'B' of the e-Way Bill without any intention to evade tax.Imposition of Penalty under Section 129(3) of UPGST Act:The writ petitioner challenged the penalty imposed under Section 129(3) of the UPGST Act, along with the order of the Appellate Authority. The petitioner argued that the invoices contained the vehicle number for transportation, only part B of the e-way bill was not generated, and there was no intention to evade tax. Citing relevant case law, the petitioner contended that non-filling up of Part 'B' of the e-Way Bill without any intention to evade tax should not lead to penalty under Section 129(3) of the UPGST Act. The court noted that the department failed to establish any intention of tax evasion by the petitioner. Relying on precedents, the court found no reason to disagree with the petitioner's position. It was concluded that the penalty imposed was unsustainable as the defect was technical in nature without any intent to evade tax.Decision and Relief:The High Court quashed and set aside the orders imposing the penalty dated March 6, 2020, and September 16, 2023. The writ petition was allowed, and consequential reliefs were directed to follow. The respondents were instructed to return the security to the petitioner within six weeks.