E way bill vehicle number discrepancy and penalty quashed where no intent to evade tax; refund ordered

Penalty imposed for discrepancies in an e way bill was annulled because the department failed to prove any intention to evade tax; the transporting vehicle number mismatch was treated as a clerical error and payment proofs and customs checks supported lawful movement, so penalty was unjustified and deposited amounts were ordered refunded. The ruling emphasises that penalties under transit non compliance require proof of deliberate tax evasion rather than inadvertent mistakes, placing the burden of proof on the tax authority and reserving punitive measures for deliberate misconduct.

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Issues involved:
The issues involved in the judgment are the imposition of penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 based on discrepancies in the e-way bill and documents during the transportation of goods from a SEZ unit to a Domestic Traffic Area (DTA).

Facts and Contentions:
The petitioner, a company engaged in manufacturing Artist Brush and materials, sold goods to a buyer in Delhi from its SEZ unit in Noida. During transportation, the goods were detained by authorities due to a discrepancy in the vehicle number mentioned on the e-way bill. The petitioner argued that it was a clerical error caused by a change in the transporting vehicle. The respondent contended that such errors could lead to tax evasion.

Analysis and Conclusion:
Upon reviewing the documents, the court found that the goods were properly checked by customs, and all necessary duties and taxes were paid. The court emphasized that the burden of proof lies on the department to show intention to evade tax in case of clerical errors. As the department failed to prove any intent to evade tax and did not discredit the payment proofs provided by the petitioner, the imposition of penalty was deemed unjustified. Referring to the principles laid down in a previous judgment, the court reiterated that penalties should be reserved for intentional tax evasion, not inadvertent errors.

Judgment:
The court quashed the orders imposing penalty and allowed the writ petition, directing the refund of any deposited amount by the petitioner within four weeks. The court emphasized the importance of establishing intent to evade tax before imposing penalties, ensuring a fair and just tax system.

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