Disproportionate Penalty Quashed: E-Invoice Compliance Oversight Leads to Penalty Reversal Under CGST/SGST Acts

HC ruled in favor of petitioner challenging penalty under Section 129 of CGST/SGST Acts. The court found the penalty disproportionate given no tax evasion occurred, only E-invoice generation was missed. HC quashed the original penalty order, directed reconsideration under Section 122 and Section 126, and ordered refund of collected amounts.

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Issues:
Challenge to penalty under Section 129 of CGST/SGST Acts for failure to generate E-invoice.

Analysis:
The petitioner challenged the penalty imposed under Section 129 of the CGST/SGST Acts, contending that the only defect was the non-generation of an E-invoice. It was argued that the goods were accompanied by E-way Bill and invoices, with no allegation of tax evasion. The petitioner argued that if any penalty were to be imposed, it should be under Section 122, considering the provisions of Section 126. Reference was made to a previous judgment supporting this argument.

Maintainability of Writ Petition:
The Government Pleader objected to the maintainability of the writ petition, citing the availability of an appeal under Section 107 of the CGST/SGST Acts as an effective alternative remedy. It was contended that the non-generation of the E-invoice was a clear violation of the law, as per the counter affidavit. The Government Pleader highlighted the requirement to generate E-invoices as per the relevant notification and rules, emphasizing that the failure to comply led to the initiation of penal proceedings under Section 129.

Court's Decision:
After hearing both parties, the court found in favor of the petitioner, citing a previous judgment that penalties under Section 129 should be reserved for cases involving tax evasion or intentional violations. The court quashed the order imposing the penalty under Section 129 and directed the competent authority to consider penalties under Section 122 and Section 126 instead. Any amount collected from the petitioner was to be refunded. The court overruled the objection regarding the availability of an alternative remedy through appeal, emphasizing the specific circumstances of the case and the legal justifications provided. The writ petition was disposed of accordingly.

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