Minor Vehicle Number Error in E-Way Bill Does Not Equate to Tax Evasion, Penalty Quashed for Genuine Clerical Mistake

HC ruled that a minor vehicle number discrepancy in an e-way bill during stock transfer does not constitute tax evasion. The court set aside penalty orders totaling Rs. 1,15,696, finding the error was a human mistake without intent to evade tax. The decision emphasized that technical errors should not trigger punitive measures when goods are legitimately transported and all necessary documentation is present.

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Issues:
The judgment involves the legality of penalty orders u/s 129(3) of the Goods and Service Tax Act, 2017, based on a discrepancy in the e-way bill regarding the vehicle number during a stock transfer.

Details:
The petitioner, a registered dealer under the GST Act of 2017, engaged in the business of manufacturing and selling batteries, faced penalty orders due to a discrepancy in the vehicle number mentioned in the e-way bill during a stock transfer from Saharanpur to Ghaziabad. The penalty order imposed a tax and penalty totaling Rs. 1,15,696, which was challenged through an appeal under Section 107 of the Act, subsequently dismissed on August 5, 2019, leading to the writ petition.

The petitioner argued that the discrepancy in the e-way bill was a human error, with all necessary documents accompanying the goods during transit, indicating no intention to evade tax. Legal precedents were cited to support the contention that such errors should not attract penalties for tax evasion.

The Standing Counsel contended that the circular issued by the Commissioner in 2018 does not allow for discrepancies in the vehicle details mentioned in the e-way bill, emphasizing the mismatch between the actual vehicle number and the one in the e-way bill.

The Court deliberated on whether the incorrect vehicle number in the e-way bill constituted a human error covered under relevant circulars. It noted that the goods were legitimately being transported via stock transfer, with no intent to evade tax, and that the discrepancy was minor, not indicative of tax evasion.

Consequently, the Court found that the penalty orders were unsustainable in law as there was no evidence of tax evasion by the dealer, only a minor error in the e-way bill. Both the penalty order and the appellate order were set aside, and the writ petition was allowed, ruling in favor of the petitioner.

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