2025 (11) TMI 670 - HC - GST

Penalty under section 129(3) quashed where e-way bill Part B unfilled due to technical error, no intent to evade tax

M/s Archana Plasmould Versus State of Up And 2 Others

HC quashed orders imposing penalty under section 129(3) of the GST Act, finding Part B of the e-way bill remained unfilled due to a technical error and ... Levy of penalty u/s 129(3) of the GST Act - Part B of the E-way bill accompanying with the goods was not generated - intent to evade payment of tax - HELD THAT:- The record shows that the stand of the petitioner was that due to technical glitch, Part - B of the e-way fill could not be filled, but there was no intention to evade payment of tax as well as none of the authorities below has recorded any finding with regard to intention to evade payment of tax. The Division Bench of this Court in M/s Tata Hitachi Construction Machinery Company Private Limited [2025 (5) TMI 770 - ALLAHABAD HIGH COURT] has categorically held that non-filling of e-way bill will not attract penalty under section 129(3) of the GST Act. Further, the record reveals that due to technical error, Part - B of the e-way bill could not be filled, which has not been disputed at any stage. Thus, there was no intention of the petitioner to evade payment of tax, which would amount to levy of penalty under section 129(3) of the GST Act - the impugned orders cannot be sustained in the eyes of law and same are hereby quashed. Petition allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether levy of penalty under section 129(3) of the GST Act is warranted solely on the ground of non-filling of Part B of the e-way bill where the goods and accompanying documents otherwise conform to the tax invoice and there is no recorded intention to evade tax. 2. Whether non-filling of Part B of the e-way bill due to a technical glitch, without any finding of intent to evade tax, disentitles the consignee/consignor from relief and sustains detention/seizure and penalty under section 129(3). 3. Whether earlier decisions of the Court holding that mere non-filling of e-way bill does not attract penalty under section 129(3) are applicable and binding in the present facts. ISSUE-WISE DETAILED ANALYSIS Issue 1: Applicability of penalty under section 129(3) for non-filling of Part B of the e-way bill Legal framework: Section 129(3) of the GST Act authorises penalty/penal consequences in cases of detention, seizure and release of goods/vehicles where evasion or contravention is alleged; the provision must be read with the e-way bill regime which requires generation/completion of prescribed parts of the e-way bill for movement of goods. Precedent treatment: The Court followed prior decisions of the same High Court (including the Division Bench and Single Judge decisions cited by the petitioner) which held that mere non-filling of the e-way bill/Part B does not, by itself, attract punitive action under section 129(3) where there is no finding of evasion of tax. Interpretation and reasoning: The Court examined the record and found that at the time of interception all requisite documents were produced and the goods matched the tax invoice description. No finding was recorded by the authorities below indicating intention to evade tax. The petitioner's explanation that Part B could not be filled due to a technical glitch was not disputed. In light of precedent and the absence of any finding of malafide or intent to evade, imposition of penalty under section 129(3) solely on the basis of incomplete Part B is unwarranted. Ratio vs. Obiter: Ratio - Penalty under section 129(3) cannot be sustained solely for non-filling of Part B of the e-way bill when (a) supporting documents are in order, (b) goods match the invoice, and (c) there is no recorded intention to evade tax. Observations reinforcing the importance of recorded intention and technical glitches are ratio insofar as they inform the application of section 129(3); ancillary remarks about policy or administrative practice are obiter. Conclusions: The Court concluded that imposition of penalty under section 129(3) on the facts before it is not sustainable and quashed the impugned orders imposing such penalty. Issue 2: Effect of technical glitch preventing completion of Part B and evidentiary value of absence of recorded intention to evade tax Legal framework: Compliance with statutory/formal requirements (such as completion of e-way bill parts) is necessary for movement of goods; however, the statutory scheme contemplates penal consequences only where evasion or contravention justifying detention/seizure/penalty is established. Precedent treatment: Earlier judgments relied upon were treated as bindingly persuasive and applicable - they recognised that inadvertent or technical failures to fill e-way bill particulars do not automatically equate to taxable evasion warranting penalty, absent corroborative findings. Interpretation and reasoning: The Court placed weight on (i) the uncontradicted claim of a technical error preventing Part B completion, (ii) production of requisite documents at interception, and (iii) absence of any authority's recorded finding of intent to evade tax. The Court reasoned that penal consequences under section 129(3) require more than non-compliance with a formality; there must be a causal link to evasion or culpable conduct, which was missing here. Ratio vs. Obiter: Ratio - Technical glitches that prevent completion of Part B, when accompanied by production of documents and no finding of intent, negate the basis for penalty under section 129(3). Obiter - comments about administrative remedies or improvement of e-way bill systems are not binding. Conclusions: The Court held that the technical inability to complete Part B, in absence of intent to evade tax, disentitles authorities from levying penalty under section 129(3); the impugned penalty orders were quashed. Issue 3: Application of earlier High Court precedents and their effect on the present matter Legal framework: Doctrine of precedent within the same High Court and persuasive weight of Division Bench decisions where applicable to like facts. Precedent treatment: The Court expressly followed prior High Court decisions which held that mere non-filling of the e-way bill does not constitute a ground for penalty under section 129(3) absent evidence of evasion. Interpretation and reasoning: The Court found the present facts to be squarely covered by those precedents: the presence of documentation, matching of goods to invoice, and no recorded intention to evade aligned the case with earlier decisions. The Court noted that the State could not meaningfully distinguish those authorities on material facts. Ratio vs. Obiter: Ratio - Previous decisions are applied as binding authority for the legal proposition that mere incompletion of e-way bill particulars does not by itself attract section 129(3) penalty where intent to evade is absent. Observations distinguishing fact patterns in other contexts would be obiter unless addressing materially different issues. Conclusions: The Court applied and followed the cited precedents, which contributed decisively to quashing the impugned orders. Relief and consequential directions (legal effect of the decision) Conclusions: The impugned detention/seizure and penalty orders under section 129(3) were quashed. The authority concerned was directed to refund any amounts deposited in pursuance of the proceedings within two months from production of a certified copy of the order. Cross-references See Issue 1 and Issue 2 for interrelated reasoning on the insufficiency of mere e-way bill non-compliance to sustain section 129(3) penalties; see Issue 3 for application of controlling precedents.