2025 (3) TMI 1305 - HC - GST

Challenge to penalty order passed u/s 129(3) of the Central Goods and Services Tax Act 2017 - intent to evade (mens rea) present or not - original invoice was not present with the goods but a photocopy of the same was present - weight of the truck that was weighed two days after detention was 25410 kilograms which was 270 kilograms more than the weight shown in the invoice - HELD THAT - It is to be noted that in catena of judgements of this Court and the other High Courts have categorically held that the penalty to be levied under Section 129 (3) of the Act has to be based on intention to evade tax. It is to be further noted that in the order passed under Section 129 (3) of the Act the authorities have accepted the explanation of the petitioner with regard to the difference in weight and the only reason for which the penalty has been imposed is with regard to absence of original copy of the invoice. Since the photocopy of the invoice alongwth e-way bill was present therefore we do not find any intention to evade tax as the invoice that was present alongwith the goods was matching with the e-way bill and there was no discrepancy between the two. Since no mens rea to evade tax was there we are of the view that the detention proceedings alongwith order under Section 129(3) of the Act are arbitrary and invalid in law. Accordingly the impugned orders dated March 2 2025 and March 6 2025 are quashed and set aside - Petition disposed off.

Summary

In the case before the Allahabad High Court, the petitioner challenged the penalty order (MOV-09) and detention order (MOV-06) under Section 129 of the Central Goods and Services Tax Act, 2017, related to the absence of an original invoice and a discrepancy in the weight of goods. The petitioner argued that the photocopy of the invoice and the e-way bill were compliant with legal requirements and attributed the weight difference to rain, emphasizing its negligible impact. The court noted that the respondent authorities failed to demonstrate any "intention to evade tax," a necessary condition for imposing penalties under Section 129(3) of the Act. The court referenced precedents, including the Supreme Court's decision in *Assistant Commissioner (ST) vs. Satyam Shivam Papers Private Limited* and a previous ruling by a coordinate bench, underscoring the requirement of mens rea for tax evasion. The court found the penalty and detention orders arbitrary and invalid, leading to their quashing and setting aside. The writ petition was disposed of with these observations.