2024 (3) TMI 335 - HC - GST

Levy of penalty - document/invoice number has wrongly been mentioned in the e-way bill - no intent to evade tax - HELD THAT - There is definitely an error with regard to typing of the document/invoice number and there is a difference of four digits instead of the permitted two digits (as per the government circular) as submitted by the learned Additional Chief Standing Counsel. However, law is not to remain in a vacuum and has to be applied equitably in appropriate cases. A typographical error in the e-way bill without any further material to substantiate the intention to evade tax should not and cannot lead to imposition of penalty. In the case of M/s. Varun Beverages Limited 2023 (2) TMI 133 - ALLAHABAD HIGH COURT there was a typographical error in the e-way bill of 4 letters (HR 73). In the present case, instead of 0401 , 2224 was incorrectly entered into the e-way bill which clearly appears to be a typographical error. In certain cases where lapses by the dealers are major, it may be deemed that there is an intention to evade tax but not so in every case. Typically when the error is a minor error of the nature found in this particular case, the imposition of penalty under Section 129 of the Act is without jurisdiction and illegal in law - petition allowed.

Summary

Issues:
The issues involved in the judgment are the imposition of penalty for a typographical error in the e-way bill and the applicability of mens rea for evasion of tax under Section 129 of the Goods and Service Tax Act, 2017.

Imposition of Penalty for Typographical Error in E-way Bill:
The petitioner, a registered dealer under the Act, supplied plywood to another dealer with all necessary documents. However, a typographical error in the e-way bill led to the seizure of the goods by tax authorities. The authorities imposed a penalty solely based on the incorrect document/invoice number in the e-way bill, despite no other infractions or attempts to evade tax by the petitioner. The petitioner argued that the error was a typographical mistake, citing relevant case law to support their position. The Additional Chief Standing Counsel contended that penalties are not imposed for minor errors beyond two digits, as per a government circular, and attempted to distinguish previous judgments cited by the petitioner.

Applicability of Mens Rea for Evasion of Tax:
The court analyzed the case in light of previous judgments, including one involving a similar typographical error in an e-way bill. The court emphasized that the presence of mens rea, or intention to evade tax, is essential for the imposition of penalties under Section 129 of the Act. It was concluded that a typographical error without evidence of intent to evade tax should not result in penalty imposition. Drawing parallels with previous cases, the court found that in instances of minor errors like the one in this case, penalties under Section 129 are unjustified and illegal. Consequently, the court quashed the impugned orders and granted relief to the petitioner within a stipulated timeframe, allowing the writ petition.

This summary provides a detailed breakdown of the judgment, addressing each issue involved and highlighting the key arguments and conclusions made by the court.