Penalty under Section 129 quashed for typographical error in e-way bill invoice number without tax evasion intent

The Allahabad HC allowed a petition challenging penalty imposition under Section 129 for incorrect document/invoice number in e-way bill. The petitioner had entered "2224" instead of "0401," creating a four-digit difference exceeding the permitted two-digit variance per government circular. The court held that mere typographical errors without evidence of tax evasion intent cannot justify penalty imposition. Citing precedent from M/s. Varun Beverages Limited, the HC distinguished between minor clerical mistakes and major lapses indicating evasion intent. The court ruled penalty imposition was without jurisdiction and illegal, emphasizing equitable application of law rather than mechanical enforcement for innocent errors.

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Issues:
The issues involved in the judgment are the imposition of penalty for a typographical error in the e-way bill and the applicability of mens rea for evasion of tax under Section 129 of the Goods and Service Tax Act, 2017.

Imposition of Penalty for Typographical Error in E-way Bill:
The petitioner, a registered dealer under the Act, supplied plywood to another dealer with all necessary documents. However, a typographical error in the e-way bill led to the seizure of the goods by tax authorities. The authorities imposed a penalty solely based on the incorrect document/invoice number in the e-way bill, despite no other infractions or attempts to evade tax by the petitioner. The petitioner argued that the error was a typographical mistake, citing relevant case law to support their position. The Additional Chief Standing Counsel contended that penalties are not imposed for minor errors beyond two digits, as per a government circular, and attempted to distinguish previous judgments cited by the petitioner.

Applicability of Mens Rea for Evasion of Tax:
The court analyzed the case in light of previous judgments, including one involving a similar typographical error in an e-way bill. The court emphasized that the presence of mens rea, or intention to evade tax, is essential for the imposition of penalties under Section 129 of the Act. It was concluded that a typographical error without evidence of intent to evade tax should not result in penalty imposition. Drawing parallels with previous cases, the court found that in instances of minor errors like the one in this case, penalties under Section 129 are unjustified and illegal. Consequently, the court quashed the impugned orders and granted relief to the petitioner within a stipulated timeframe, allowing the writ petition.

This summary provides a detailed breakdown of the judgment, addressing each issue involved and highlighting the key arguments and conclusions made by the court.

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