2024 (5) TMI 1036 - HC - GST

Court Quashes Penalty Over Minor E-Way Bill Error: No Intent to Evade Tax Found, Petition Allowed.

The HC of Allahabad quashed the penalty order and appellate authority's decision against the petitioner under the GST Act for a wrong vehicle number in ... Penalty under Section 129(3) of the Goods and Services Tax Act, 2017 - e-way bill discrepancy as human error in vehicle number entry - Circular No.41/15/2018-GST and 49/23/2018-GST - treatment of minor errors in e-way bill - absence of intention to evade tax - writ jurisdiction to quash tax detention and penalty ordersE-way bill discrepancy as human error in vehicle number entry - Circular No.41/15/2018-GST and 49/23/2018-GST - treatment of minor errors in e-way bill - penalty under Section 129(3) of the Goods and Services Tax Act, 2017 - absence of intention to evade tax - Whether incorrect vehicle registration number in the e-way bill (UP 80 CT 7024 entered instead of UP 83 CT 2724) constituted a minor human error covered by the departmental circulars so as to preclude imposition of penalty under Section 129(3). - HELD THAT: - The Court found that the goods were in transit accompanied by requisite documents and the only defect was the wrong entry of the vehicle number in the e-way bill. Having considered the departmental circulars dealing with correction of minor mistakes in e-way bills, and in the absence of any material placed by the Department to show intention to evade tax, the discrepancy was treated as a human error. The Court held that such a minor and isolated error in recording the vehicle registration, without any evidence of tax evasion, does not attract proceedings for penalty under the relevant provision and that the detaining authority's and first appellate authority's orders could not be sustained. The determinative reasoning is that where transport of goods is genuine, accompanied by documents, and the only fault is a clerical error in vehicle number entry, penal action under Section 129(3) is not warranted. [Paras 7, 9, 10]The wrong vehicle number in the e-way bill was a minor human error covered by the circulars and, absent any intention to evade tax, the penalty order under Section 129(3) and the appellate order were set aside.Final Conclusion: Writ petition allowed; detention/penalty order dated August 9, 2023 and appellate order dated October 31, 2023 set aside for being unsustainable in law given the minor e-way bill error and absence of any material showing intent to evade tax. Issues:Assailing penalty order under GST Act - Wrong mention of vehicle number in e-way bill - Interpretation of circular regarding errors in e-way bill.Analysis:The judgment by the High Court of Allahabad dealt with a writ petition challenging a penalty order under the Goods and Service Tax Act, 2017, based on the wrong mention of a vehicle number in the e-way bill. The petitioner, a registered dealer in electronic goods, was transporting goods from Agra to Mathura when the vehicle was intercepted due to a discrepancy in the e-way bill. The penalty order imposed a substantial amount, leading to an appeal that was dismissed by the appellate authority. The petitioner argued that the mistake in the e-way bill was unintentional and cited relevant case laws to support their claim of no tax evasion intent.The Standing Counsel contended that the circular issued by the Commissioner in 2018 allowed for minor errors in transporter details but emphasized that a complete mismatch in vehicle registration numbers cannot be overlooked. The court examined the facts and the circulars to determine whether the incorrect entry of the vehicle number constituted a human error covered under the circulars. It was established that the goods were being legitimately transported, and the only discrepancy was in the vehicle registration number mentioned in the e-way bill.Given that there was no intention to evade tax and the error was minor, the court concluded that the penalty imposed was unwarranted. The judgment highlighted that the authorities failed to establish any deliberate tax evasion by the dealer apart from the incorrect vehicle registration number in the e-way bill. Consequently, the court set aside the penalty order and the appellate authority's decision, granting relief to the petitioner. The writ petition was allowed, and the orders dated August 9, 2023, and October 31, 2023, were deemed unsustainable and quashed.