Mens rea requirement for GST penalty: minor e-way bill address error alone cannot sustain detention or penalty.

Penalty under Section 129 of the CGST Act cannot be sustained on a mere technical or typographical discrepancy in the e-way bill when the goods, invoice and e-way bill otherwise match and there is no material showing intent to evade tax. The HC held that the view that mens rea is irrelevant was contrary to law. As the only error was in the dispatch address and the record did not support an inference of tax evasion, the penalty orders were quashed and the tax and penalty deposited were directed to be refunded.

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Issues: Whether penalty under Section 129(3) of the Central Goods and Services Tax Act, 2017 could be sustained where the only discrepancy was in the dispatch address mentioned in the e-way bill and there was no material indicating an intention to evade tax.

Analysis: The impugned penalty order proceeded on the premise that mens rea was not required for imposition of penalty. That approach was held to be contrary to law. In the absence of any discrepancy between the goods, invoice and e-way bill, and with only a minor error in the dispatch address, the material did not support an inference of tax evasion. Penalty under Section 129 could not be imposed merely on a technical or typographical error without any supporting circumstance showing intent to evade tax.

Conclusion: The penalty orders were unsustainable and were quashed and set aside. The respondents were directed to refund the tax and penalty deposited by the petitioner.

Final Conclusion: The writ petition succeeded, with the impugned penalty action annulled and consequential refund relief granted.

Ratio Decidendi: Imposition of penalty under Section 129 of the Central Goods and Services Tax Act, 2017 requires material showing mens rea to evade tax, and a mere minor or typographical discrepancy in the e-way bill is insufficient to sustain penalty.

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