GST penalty proceedings quashed for single digit discrepancy between tax invoice and e-way bill under Section 129

The Allahabad HC quashed proceedings under Section 129 of the GST Act where a single digit discrepancy existed between the tax invoice and e-way bill. The court relied on its earlier decision in M/s Cavendish Industries Ltd., which established that mens rea to evade tax is essential for penalty imposition. The court also considered a circular dated 14.9.2018. Finding no intention to evade tax in the minor clerical error, the HC held that the impugned orders could not be sustained in law and allowed the petition, quashing the penalty proceedings against the petitioner.

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ISSUES:

Whether a clerical or typographical error in the e-way bill or tax invoice number, without any mens rea to evade tax, justifies seizure of goods and imposition of penalty under Section 129 of the GST Act.Whether proceedings under Section 129 of the GST Act can be initiated when there is an error in one or two digits of the document number mentioned in the e-way bill.Whether the impugned orders of seizure and penalty can be sustained in the absence of intention to evade tax.

RULINGS / HOLDINGS:

The Court held that "mens rea to evade tax is essential for imposition of penalty" under Section 129 of the GST Act, and a "typographical error in the e-way bill without any further material to substantiate the intention to evade tax should not and cannot lead to imposition of penalty."The Court relied on a circular dated 14.9.2018 which "categorically" states that proceedings under Section 129 of the GST Act "may not be initiated, if there is any error in one or two digits of the document number mentioned in the e-way bill."Accordingly, the impugned orders of seizure and penalty were quashed and set aside as they were "without jurisdiction and illegal in law" due to lack of mens rea and presence of only a minor clerical error.Any amount deposited pursuant to the impugned orders shall be refunded with interest at 4% from the date of deposit until actual payment.

RATIONALE:

The Court applied the legal framework under Section 129 of the GST Act, emphasizing the necessity of mens rea for imposing penalties related to tax evasion.Precedents were considered, including prior decisions holding that minor typographical errors in e-way bills do not constitute intent to evade tax and thus do not warrant penalties or seizure.The Court referred to a specific circular dated 14.9.2018 clarifying that minor errors in document numbers on e-way bills should not trigger proceedings under Section 129.No dissenting or differing opinions were recorded; the judgment followed established principles reinforcing the protection of taxpayers against penalties arising from clerical mistakes absent fraudulent intent.

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