2024 (7) TMI 1303 - HC - GST

Levy of penalty - goods detained on the ground that E Tax Invoice was not generated as per Rule 48 of the Goods and Services Tax Rules, 2017 - existence of mens rea or not - HELD THAT - It is admitted that while transiting the goods in question all documents as required under Rule 138 A of the Rules were accompanying with the goods. Only a technical error has been committed by the petitioner for not generating E Tax Invoice before movement of goods in question. It is not in dispute that Waybill was generated. It is not the case of the Revenue that there was any discrepancy with regard to quality and quantity of the goods as mentioned in Tax Invoice, E Waybill as well as G.Rs accompanying the goods. The error committed by the petitioner for not generating E Tax Invoice before movement of goods is a human error. It is also not in dispute that prior to 1st August, 2022 the dealers who were having annual turn over of more than Rs. 20 crores was required to issue E Waybill. In absence of any finding with regard to mens rea the proceeding under section 129(3) of the Act cannot be initiated. The impugned order dated 26.12.2022 passed by respondent no.4 as well as the order dated 26.5.2023 passed by respondent no.3 are hereby quashed. The writ petition is allowed.

Summary

Issues:
Challenge to penalty imposition for not generating E Tax Invoice as per GST Rules.

Analysis:
The petitioner sought to quash the penalty order and the appellate order confirming it, arguing that the goods were detained due to the absence of an E Tax Invoice, despite compliance with other documentation requirements. The petitioner contended that there was no provision for carrying an E Tax Invoice under Rule 138A of the Goods and Services Tax Rules, and that the authorities erred in seizing the goods without evidence of tax avoidance intent. It was highlighted that the annual turnover was below the threshold for E Tax Invoice issuance, and a recent reduction in the turnover limit from Rs. 20 crores to Rs. 10 crores led to a genuine mistake due to lack of awareness. The petitioner emphasized the absence of any finding on tax evasion intent.

The standing counsel countered, citing Section 129(3) of the UPGST and CGST Act 2017, which mandates the issuance of a tax invoice as per Rule 48(4) of the Rules. The counsel argued that the petitioner's failure to comply justified the authorities' actions and requested the dismissal of the writ petition.

The Court acknowledged that all required documents were present during transit, with only the E Tax Invoice missing due to a technical error. Notably, there were no discrepancies in the documentation regarding the goods' quality and quantity. The Court recognized the recent reduction in the turnover threshold for E Tax Invoice issuance and deemed the petitioner's omission a human error. Critically, the Court noted the absence of any evidence or finding indicating an intent to evade tax, crucial for initiating proceedings under section 129(3) of the Act. The Court questioned the lack of any recorded finding on mens rea for tax evasion by the authorities. Consequently, in the absence of evidence of mens rea, the Court quashed the penalty orders and allowed the writ petition.

As a result of the judgment, any amount deposited during the proceedings was directed to be returned to the petitioner within one month of the order's certified copy production.