2024 (4) TMI 771 - HC - GST

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

M/s Luminous Power Technologies Private Limited Versus State of U.P. And 2 Others

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 ... Writ Petition Challenging the Penalty order - Wrong description of the vehicle is entered by the dealer in the e-way bill - Goods shifted through Truck, accompanying delivery challan, e-way bill and bilty - intercepted the goods and detained the vehicle - HELD THAT:- It is not in dispute that goods were being transported by the dealer through stock transfer from its unit at Saharanpur to its sale depot at Ghaziabad. From perusal of the e-way bill which has been brought on record, it is clear that the vehicle number has been mentioned as UP-14BT/3276. As there is no dispute to the fact that it is a case of stock transfer and there is no intention on the part of dealer to evade any tax, the minor discrepancy as to the registration of vehicle in State in the e-way bill would not attract proceedings for penalty u/s 129 and the order passed by the detaining authority as well as first appellate authority cannot be sustained. Moreover, the Department has not placed before the Court any other material so as to bring on record that there was any intention on the part of the dealer to evade tax except the wrong mention of part of registration number of the vehicle in the e-way bill. The number of vehicle through which the goods were transported was manually corrected by the transporter while only there is a minor discrepancy in Part-B of the e-way bill where the description of the vehicle is entered by the dealer. Thus, the orders dated May 21, 2018 and August 5, 2019 are unsustainable in the eyes of law and both the orders are hereby set aside. Writ petition succeeds and is hereby allowed. 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.