Penalty for technical error in e-way bill Part B u/s 129(3) set aside for lack intent to evade tax

HC set aside the orders imposing penalty under s.129(3) of the GST Act for non-filling of Part B of the e-way bill. It held that mere non-generation of Part B, particularly due to an undisputed technical glitch, does not establish intent to evade tax, which is a necessary precondition for invoking s.129(3). As no authority had recorded any finding on intention to evade, and the tax liability itself was not in dispute, the levy of penalty was held unsustainable in law. The impugned penalty and related orders were quashed and the petition was allowed.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether penalty under section 129(3) of the GST Act can be imposed solely on the basis of non-filling of Part B of the e-way bill, in the absence of any finding regarding intention to evade tax.

1.2 Whether a technical glitch preventing completion of Part B of the e-way bill, when all other documents are in order and goods match the tax invoice, justifies seizure and penalty under section 129(3) of the GST Act.

1.3 Whether, upon setting aside the seizure and penalty orders, the authority is bound to refund amounts deposited pursuant to the impugned proceedings.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Imposition of penalty under section 129(3) of the GST Act for non-filling of Part B of e-way bill in absence of intention to evade tax

Legal framework (as discussed): The Court proceeded on section 129(3) of the GST Act, which provides for levy of penalty in cases of detention/seizure of goods in transit. The Court relied on prior decisions holding that non-filling of an e-way bill, by itself, does not attract penalty under section 129(3) absent intention to evade tax.

Interpretation and reasoning: The Court noted that the only ground for interception and seizure was that Part B of the e-way bill had not been generated. It found that all other requisite documents were produced at the time of interception and that the goods were found in accordance with the description in the tax invoice. The Court observed that in the penalty order under section 129(3), no reasons had been assigned indicating any intention to evade tax, and none of the authorities below had recorded any finding on such intention. Referring to the Division Bench decision which had "categorically held that non-filling of e-way bill will not attract penalty under section 129(3) of the GST Act," and to other coordinate decisions reiterating the same view, the Court applied that legal position to the present facts.

Conclusions: The Court held that mere non-filling of Part B of the e-way bill, without any finding or material indicating intention to evade tax, does not justify imposition of penalty under section 129(3) of the GST Act. The impugned penalty order and appellate order could not be sustained in law.

Issue 2: Effect of technical glitch preventing completion of Part B of the e-way bill when other documents are in order

Interpretation and reasoning: The Court recorded the petitioner's stand that Part B could not be filled due to a technical glitch, and noted from the record that this explanation, based on technical error, had not been disputed at any stage. It further noted that all other documents were duly filled and the goods in transit matched the tax invoice description. The State could not dispute the legal proposition laid down in the precedents cited by the petitioner. In absence of any contrary material or challenge to the plea of technical error, and in view of the settled position that non-filling of e-way bill alone does not attract section 129(3) penalty, the Court accepted that there was no intention to evade tax.

Conclusions: The Court concluded that the non-filling of Part B of the e-way bill, occasioned by a technical glitch and accompanied by complete and correct supporting documents, could not trigger valid proceedings for seizure or penalty under section 129(3) of the GST Act.

Issue 3: Consequential relief and refund of amount deposited

Interpretation and reasoning: Having found that there was no intention to evade tax and that penalty under section 129(3) was unsustainable, the Court held that the impugned orders of penalty and dismissal of appeal were liable to be quashed. It then considered the consequence of such quashing on amounts already deposited by the petitioner in pursuance of the impugned proceedings.

Conclusions: The Court quashed the impugned orders, allowed the writ petition, and directed the concerned authority to refund any amount deposited by the petitioner pursuant to the proceedings within two months from the date of production of a certified copy of the order.

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