2024 (2) TMI 363 - HC - GST

Detention of goods alongwith vehicle - levy of penalty - only discrepancy that was found at the time of detention was that one of the E-Way Bills had expired - petitioner could not explain the reason for not issuing a fresh E-Way Bill - HELD THAT - The factual aspect in the present case did not indicate any intention whatsoever to evade tax. Furthermore, the documents that have been relied upon by the petitioner have not been considered by the authorities. The authorities have dealt with the issue with regard to the expiry of the E-Way Bill and held that no explanation was offerred by the petitioner with regard to the fresh generation of the E-Way Bill, as the same had expired ten days before the detention. However, it is to be noted that the goods in the vehicle were for two e-Invoices and two E-Way Bills and only one E-Way Bill had expired. There is no dispute with regard to the consignor and consignee nor any dispute with regard to the description of the goods in the vehicle. In relation to the e-Invoices and the E-Way Bills, the authorities have not been able indicate any intention whatsoever on behalf of the petitioner to evade tax. Indubitably, there is a technical violation that has been committed by the petitioner. However, the authorities have not been able to indicate in any manner that the E-Way Bill had been used repeatedly nor have they made out any case with regard to an intention to evade tax by the petitioner. Accordingly, this Court is of the view that such a technical violation by itself without any intention to evade tax cannot lead to imposition of penalty under Section 129(3) of the Act. This view is fortified by a catena of judgments. This Court directs the respondents to refund the amount of tax and penalty deposited by the petitioner within a period of four weeks from date - petition allowed.

Summary

Issues involved:
The issues involved in this case are the imposition of penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 based on the expiry of an E-Way Bill during the transportation of goods, and the contention of the petitioner regarding the lack of intention to evade tax.

Imposition of Penalty based on E-Way Bill Expiry:
The petitioner challenged the penalty order dated January 16, 2023, and the appellate order dated January 30, 2023, which were passed due to the expiry of one of the E-Way Bills accompanying the goods being transported. The petitioner argued that apart from this discrepancy, there was no evidence of an intention to evade tax. The petitioner relied on documents including e-Invoices, E-Way Bills, and a mechanic's letter to support the claim that the vehicle had broken down, as evidenced by the 'fast tag' chart. Citing precedents, the petitioner contended that penalties cannot be imposed solely due to missing documents, as seen in judgments like M/s Pepsico India Holdings Limited Lucknow v. Commissioner of Trade Tax and Jain Shudh Vanaspati Limited Ghaziabad and Others v. State of U.P.

Contention of the Petitioner:
The petitioner's counsel argued that the expired E-Way Bill was the only issue, and the authorities did not consider the explanations and supporting documents provided. It was emphasized that there was no intention to evade tax, and the expired E-Way Bill was due to the breakdown of the vehicle. The petitioner highlighted that the factual aspect did not show any intention to evade tax, as mens rea is essential for imposing penalties, as established in previous cases like M/s Hindustan Herbal Cosmetics v. State of U.P. and M/s Falguni Steels v. State of U.P.

Authorities' Response and Ruling:
The Additional Chief Standing Counsel argued that the expired E-Way Bill did not meet the requirements, and the authorities considered the petitioner's arguments. It was noted that the petitioner failed to provide a reason for not issuing a fresh E-Way Bill despite being aware of the expiry. However, the court observed that there was no intention to evade tax, and technical violations without such intent cannot warrant penalties under Section 129(3) of the Act. The court found that although there was a technical violation, the authorities failed to prove any repeated use of the expired E-Way Bill or an intention to evade tax by the petitioner.

Judgment and Relief:
The Court disagreed with the authorities' findings and quashed the orders dated January 16, 2023, and January 30, 2023. It directed the respondents to refund the tax and penalty amount deposited by the petitioner within four weeks. The writ petition was allowed with no costs imposed on either party.