2025 (3) TMI 58 - HC - GST

Challenge to detention order and penalty - discrepancies in the E-way bill - HELD THAT - It is not in dispute that by either of the parties that the goods were dispatched along with genuine documents for display in Aahar Exhibition organized at Pragati Maidan New Delhi to which a delivery challan as prescribed under Section 55 (1) was issued along with E-way bill and material entry slip at Pragati Maidan and when on 18.03.2023 the goods were returned again a delivery challan along with exit material slip and the E-way bill was issued as per the provision of the Act. Only a technical error was creeped out i.e. the place of dispatch of goods was mentioned as Ghaziabad in place of New Delhi. This Court in the case of The Commissioner Commercial Tax U.P. Lucknow Vs. S/S Saurabh Traders Railway Bus Stand Pilkhuwa Hapur 2020 (1) TMI 752 - ALLAHABAD HIGH COURT has held the Officer managing the check post after verifying the goods on the basis of other documents available at that point of time and have filled up the blank column of Form 38 and there was no occasion for imposing penalty as has been done by the Assessing Officer. Further the record shows that the authorities have not recorded any finding that the petitioner had intention to evade payment of tax which is mandatory under the Act. This Court in the case of Vacmet India Ltd. 2023 (10) TMI 863 - ALLAHABAD HIGH COURT has held that if the goods are not taxable and accompanied with genuine documents the proceedings are not justified. The proceedings cannot be justified in the eyes of law - Petition allowed.

Summary

The High Court of Allahabad, in a judgment delivered by Hon'ble Piyush Agrawal, J., considered a writ petition filed by a firm registered under the UPGST Act, 2017, which manufactured and supplied kitchen equipment. The petitioner dispatched goods for an exhibition in New Delhi but faced discrepancies in the E-way bill, leading to a detention order and subsequent penalty. The petitioner sought to quash the orders passed under Section 129(3) of the UPGST Act, 2017. The key issues considered in the judgment were whether the goods were taxable, the intention to evade tax, and the validity of the detention order.The petitioner argued that the goods were not taxable and the discrepancies in the E-way bill were due to inadvertence, not an intention to avoid tax. The petitioner relied on precedents such as Vacmet India Ltd. and Shyam Sel and Power Ltd. to support their claim that in the absence of evidence of tax evasion, proceedings under Section 29 of the Act could not be initiated.The Additional Chief Standing Counsel contended that the discrepancies in the E-way bill indicated an attempt to avoid tax, and therefore, the detention order was justified. The Court examined the records and found that the goods were dispatched with genuine documents for an exhibition and that the discrepancies were technical errors, not indicative of tax evasion.The Court referred to the judgment in The Commissioner Commercial Tax U.P. Lucknow Vs. S/S Saurabh Traders Railway Bus Stand Pilkhuwa Hapur to emphasize the importance of mens rea in imposing penalties for tax evasion. It highlighted that the intention to evade tax must be established, and mere procedural defects may not warrant penalties if there is no evidence of tax evasion.Ultimately, the Court held that since the goods were not taxable and were accompanied by genuine documents, the proceedings against the petitioner were not justified. Citing the precedents, the Court quashed the impugned orders and allowed the writ petition. The Court directed the refund of any amounts deposited by the petitioner pursuant to the impugned orders.In conclusion, the judgment focused on the lack of evidence of tax evasion, the technical nature of the discrepancies in the E-way bill, and the importance of establishing mens rea in tax-related proceedings. The Court's decision was based on the principles established in previous judgments and the specific facts of the case, leading to the quashing of the orders against the petitioner.