2024 (1) TMI 1455 - HC - GST

Technical Omission in E-Way Bill Part 'B' Without Tax Evasion Intent Does Not Justify Penalty Under Section 129(3)

M/s Exch. Therm Engineering Company Versus State Of UP And 4 Others

The HC ruled that a technical error in not filling Part 'B' of the e-Way Bill without tax evasion intent does not warrant a penalty under Section 129(3) ... Levy of penalty u/s 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - non-filling of Part 'B' of the e-Way Bill - intention to evade tax or not - HELD THAT:- In the present case, the facts are quite similar to one in M/s Citykart Retail Pvt. Ltd.'s case [2022 (9) TMI 374 - ALLAHABAD HIGH COURT] and there are no reason why this Court should take a different view of the matter, as the invoice itself contained the details of the truck and the error committed by the petitioner was of a technical nature only and without any intention to evade tax. Once this fact has been substantiated, there was no requirement to levy penalty under Section 129(3) of the Act. The orders dated May 1, 2018 and March 15, 2019 are quashed and set aside. The petition is allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal issue considered in this judgment was whether the non-filling of Part 'B' of the e-Way Bill, without any intention to evade tax, justifies the imposition of a penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017.2. ISSUE-WISE DETAILED ANALYSISRelevant legal framework and precedents: The legal framework revolves around Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017, which pertains to the imposition of penalties for discrepancies in the e-Way Bill. The petitioner relied on precedents set in VSL Alloys (India) Pvt. Ltd v. State of U.P. and M/s Citykart Retail Private Limited v. Commissioner Commercial Tax, which established that a mere technical error in the e-Way Bill, without intent to evade tax, should not warrant a penalty.Court's interpretation and reasoning: The Court interpreted the requirement of filling Part 'B' of the e-Way Bill as a procedural formality. It emphasized that the absence of intent to evade tax is crucial in determining the applicability of penalties. The Court found that the details of the truck were present on the invoice, and there was no discrepancy in the goods being transported, indicating no intent to evade tax.Key evidence and findings: The key evidence was the invoice that contained the truck details and the lack of variance between the goods transported and the invoice. The Court also considered the absence of any allegations from the Department regarding tax evasion intent by the petitioner.Application of law to facts: Applying the legal framework to the facts, the Court concluded that the non-filling of Part 'B' of the e-Way Bill was a technical error without any tax evasion intent. This conclusion was supported by the precedents cited, which highlighted similar circumstances where penalties were deemed inappropriate.Treatment of competing arguments: The petitioner argued that the error was technical and cited precedents supporting this view. The respondent relied on the appellate authority's order, emphasizing the non-compliance with the e-Way Bill requirements. The Court favored the petitioner's argument, highlighting the lack of intent to evade tax.Conclusions: The Court concluded that the technical error in not filling Part 'B' of the e-Way Bill, without any intent to evade tax, did not justify the imposition of a penalty under Section 129(3) of the Act. The orders imposing the penalty were quashed.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'In the present case, the facts are quite similar to one in M/s Citykart Retail Pvt. Ltd.'s case (supra) and I see no reason why this Court should take a different view of the matter, as the invoice itself contained the details of the truck and the error committed by the petitioner was of a technical nature only and without any intention to evade tax.'Core principles established: The judgment reinforced the principle that technical errors in procedural compliance, such as non-filling of Part 'B' of the e-Way Bill, should not attract penalties in the absence of intent to evade tax. The Court emphasized the importance of intent in determining the applicability of penalties under the GST framework.Final determinations on each issue: The Court determined that the orders dated May 1, 2018, and March 15, 2019, imposing penalties on the petitioner, were unjustified and set them aside. It directed the respondents to return the security to the petitioner within six weeks, providing consequential reliefs.