2024 (2) TMI 1073 - HC - GST

Penalty u/s 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 - goods detained on the ground that the goods were being transported on a vehicle different from that declared on e-way bill - onus to prove (shifting burden on petitioner) - HELD THAT - The said goods were intercepted only two-three hours after the goods have left the SEZ Unit, and therefore, it cannot be said that this e-way bill was wrongly being used. It is a fact that the burden of proof lies on the petitioner in certain cases to show that there was no evasion of tax. However, when the the error in the documents is only that of a clerical or typographical error, the initial burden of proof lies on the department to show there was intention to evade tax. In the present case the department has failed to do so and infact has not even tried to do so. The documents produced by the petitioner at the time of the interception itself indicates that the goods have been transported from a SEZ Unit to the DTA after payment of custom duty and payment of IGST. The department has accordingly failed to shift the burden of proof on the petitioner as the only error found by the department was that the vehicle number was incorrect. Apart from this one error in the e-way bill, nothing has been shown by the department to justify the imposition of penalty under Section 129(3) of the Act. The impugned order also failed to take into account the document produced by the petitioner of the transporter wherein the explanation was given with regard to the reason for the mistake of the vehicle number in the e-way bill. The intention to evade tax is sine qua non before imposition of penalty. In present case the department has failed to establish any such intention whatsoever. Furthermore, the Appellate Authority has failed to look into all the documents that were produced by the petitioner to rebut the allegation of the department with regard to intention to evade tax. The impugned orders dated June 22, 2019 and June 22, 2018 are quashed and set aside - petition allowed.

Summary

Issues involved:
The issues involved in the judgment are the imposition of penalty under Section 129(3) of the Uttar Pradesh Goods and Services Tax Act, 2017 based on discrepancies in the e-way bill and documents during the transportation of goods from a SEZ unit to a Domestic Traffic Area (DTA).

Facts and Contentions:
The petitioner, a company engaged in manufacturing Artist Brush and materials, sold goods to a buyer in Delhi from its SEZ unit in Noida. During transportation, the goods were detained by authorities due to a discrepancy in the vehicle number mentioned on the e-way bill. The petitioner argued that it was a clerical error caused by a change in the transporting vehicle. The respondent contended that such errors could lead to tax evasion.

Analysis and Conclusion:
Upon reviewing the documents, the court found that the goods were properly checked by customs, and all necessary duties and taxes were paid. The court emphasized that the burden of proof lies on the department to show intention to evade tax in case of clerical errors. As the department failed to prove any intent to evade tax and did not discredit the payment proofs provided by the petitioner, the imposition of penalty was deemed unjustified. Referring to the principles laid down in a previous judgment, the court reiterated that penalties should be reserved for intentional tax evasion, not inadvertent errors.

Judgment:
The court quashed the orders imposing penalty and allowed the writ petition, directing the refund of any deposited amount by the petitioner within four weeks. The court emphasized the importance of establishing intent to evade tax before imposing penalties, ensuring a fair and just tax system.