2024 (2) TMI 760 - HC - GST

Penalty quashed for incorrect place of supply in E-Way bills due to auto-population error without fraudulent intent

Allahabad HC allowed writ petition challenging penalty for incorrect place of supply in E-Way bills. Four out of eight E-Way bills contained wrong address ... E-way bill - place of supply - technical/clerical error - penalty under Section 129 - presumption of intention to evade tax - goods accompanied by invoice and bilty - burden on department to establish intentionE-way bill - place of supply - technical/clerical error - penalty under Section 129 - presumption of intention to evade tax - goods accompanied by invoice and bilty - burden on department to establish intention - Whether the penalty imposed under Section 129 of the Act could be sustained where four out of eight e-way bills incorrectly recorded the place of supply (registered office) but the invoices and bilties correctly recorded the factory destination and the error was a clerical/typographical mistake. - HELD THAT: - The Court found that although four e-way bills contained an incorrect address, the incorrect address was not anonymous but the registered office of the petitioner and all eight invoices and eight bilties correctly recorded the destination. Where goods are accompanied by relevant invoices and bilties and the incorrect entries are typographical or clerical, a presumption of intention to evade tax does not automatically arise. A presumption of evasion may be raised in cases of wholesale disregard of the Rules (for example, absence of invoice or e-way bill), but such a presumption is rebuttable and the department must point to evidence of intention. On the facts, no evidence of intention to evade tax was found and the mistake on the part of suppliers in auto-populating the principal place of business was a plausible explanation. Consequently, imposition of the harsh penalty under Section 129 was without basis in law and liable to be quashed. [Paras 8, 9, 11, 12, 13]Impugned penalty order dated February 14, 2020 and the order in appeal dated October 13, 2020 are quashed and set aside; writ petition allowed.Final Conclusion: Penalty imposed under Section 129 of the Uttar Pradesh Goods and Services Tax Act, 2017 was quashed where the incorrect place of supply in some e-way bills amounted to a clerical/typographical error, invoices and bilties correctly recorded the destination, and no intention to evade tax was shown. Issues involved: Application under Article 226 seeking writ of certiorari for quashing penalty order and appeal order related to incorrect place of supply in E-Way bills.Facts of the case:The petitioner, engaged in manufacturing pressure cookers, faced penalty for incorrect place of supply in E-Way bills leading to seizure of goods.Contentions of the Petitioner:Petitioner argued that the incorrect address in E-Way bills was a technical breach due to supplier error, with correct destination address in accompanying documents.Respondent's Arguments:Respondent contended that the error raised tax evasion presumption, citing legal precedents.Analysis and Conclusion:The Court found no intention to evade tax, distinguishing cited cases where no such intention was evident. Emphasized that technical errors without intent do not warrant penalty. Quoted Chanakya's Arthashastra to highlight fair tax collection. Consequently, the penalty order and appeal order were quashed.Judgment Outcome:The writ petition was allowed, and the penalty orders were set aside.