The petitioner, Vishnu Singh, was engaged in the transportation of goods within the State of Uttar Pradesh. While generating the e-way bill required for the movement of goods, the petitioner inadvertently entered the wrong tax invoice number.
The e-way bill contained all other necessary details, such as the correct description of goods, vehicle details, quantity, and the correct GSTIN of both the consignor and consignee. However, due to the mismatch in the tax invoice number, the vehicle carrying the goods was intercepted by the GST authorities, and proceedings were initiated under Section 129 of the CGST Act, 2017.
The authorities contended that any discrepancy in an e-way bill constitutes a violation of GST law, justifying the detention of goods and the imposition of penalties. The petitioner, on the other hand, argued that this was a minor clerical error with no intent to evade tax, and therefore, no penalty should be imposed.
Legal Provisions Involved:
1. Section 129 of the CGST Act, 2017 (Detention, Seizure, and Release of Goods and Conveyances in Transit)
This section provides that if goods are transported in contravention of GST provisions, they can be detained and released only upon payment of:
100% of the tax payable + equivalent penalty (if the owner comes forward for payment), or
50% of the value of goods + tax payable (if the owner does not come forward).
The key objective of this section is to curb tax evasion and ensure compliance with GST regulations.
2. Section 68 of the CGST Act, 2017 (Requirement of E-Way Bill)
Mandates that an e-way bill must accompany the movement of goods beyond a certain threshold limit.
Any mismatch or error in an e-way bill can be scrutinized by authorities.
Arguments by the Petitioner :
Clerical Error Without Malafide Intent: The discrepancy in the invoice number was purely inadvertent and typographical, with no intention of evading tax.
Correct Tax Paid: The transaction was duly recorded in the books of accounts, and the applicable GST was paid.
No Revenue Loss to the Government: Since the invoice and e-way bill were otherwise valid, there was no loss of revenue.
Principle of Natural Justice: Imposing a penalty under Section 129 for a minor clerical mistake is excessive and goes against the principle of proportionality in taxation.
Judicial Precedents: The petitioner cited previous cases where courts had ruled that minor discrepancies in e-way bills should not lead to harsh penalties.
Arguments by the State Authorities:
Invoice Number is a Critical Element: The tax invoice number is an essential document that links the transaction to a particular sale. A mismatch could indicate a potential fraudulent transaction.
Strict Compliance Required: As per GST law, transporters and businesses are responsible for ensuring that all details in an e-way bill match the accompanying invoice.
Possible Intent to Evade Tax: The incorrect invoice number could have been a deliberate attempt to manipulate transactions and evade tax.
Observations of the Allahabad High Court:
After examining the facts and legal provisions, the Allahabad High Court made the following key observations:
The court acknowledged that the mismatch in the invoice number was a clerical mistake and did not indicate an intent to evade tax.
The petitioner had produced valid supporting documents showing the legitimacy of the transaction.
Section 129 is meant to prevent tax evasion and not to penalize minor human errors.Noe
Penalizing a business for an inadvertent, non-substantive error is excessive and does not serve the purpose of GST law.
Since the petitioner had already paid the correct GST, there was no financial loss to the government.
Courts have previously ruled that procedural errors without tax evasion intent should not result in harsh penalties.
The High Court followed this principle, ruling in favor of the petitioner.
Final Judgment:
No penalty under Section 129 should be imposed in cases where a clerical mistake (such as an incorrect tax invoice number) occurs in an e-way bill.
The High Court quashed the penalty order and directed the authorities to release the detained goods without any penalty or fine.
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