Penalty not imposable when discrepancy relates to a mere technical error in Tax Invoice or E-way Bill

[CA Bimal Jain]

The Hon’ble Madras High Court in the case of M/S. JINDAL PIPES LIMITED, REPRESENTED BY ITS AUTHORISED SIGNATORY ANAND GARG VERSUS THE DEPUTY STATE TAX OFFICER (INT) , ROVING SQUAD-I, MADURAI. - 2024 (8) TMI 72 - MADRAS HIGH COURT held that, penalty under Section 129 of the Central Goods and Services Tax Act (“the CGST Act”) is not imposable when discrepancy relates to stating of different location addresses of same recipient, thereby stating that the philosophy under the respective GST enactments is not to levy unjust tax and burden on assessee, who is otherwise regular in paying tax and complies with the law.

Facts:

Jindal Pipes Limited (“the Petitioner”) filed a writ petition against order dated September 05, 2023 (“the Impugned Order”) passed by the State Revenue Department (“the Respondent”) wherein the penalty was imposed on the consignment carried in conveyance. It is stated that the goods carried in the aforesaid conveyance are accompanied by tax invoice and E-Way bill.  However, there was a discrepancy between the PIN code of the Petitioner in the tax invoices and the E-Way Bill. Also, the address stated in the invoice and E-Way bill is different.

Issue:

Whether penalty under Section 129 imposable when discrepancy relates to stating of different location addresses of the same recipient?

Held:

The Hon’ble Madras High Court in the case of M/S. JINDAL PIPES LIMITED, REPRESENTED BY ITS AUTHORISED SIGNATORY ANAND GARG VERSUS THE DEPUTY STATE TAX OFFICER (INT) , ROVING SQUAD-I, MADURAI. - 2024 (8) TMI 72 - MADRAS HIGH COURT held as under:

• Noted that, the discrepancy relating to Pincode in the invoice and E-Way bill is minor violation and thereby, penalty should not be imposed, taking into consideration contents of para no. 5(b) of Circular No. 64/38/2018-GST dated September 14, 2018 (“the Circular”) wherein it is stated that proceedings under Section 129 of the CGST Act, should not be initiated in case where there is error in pincode subject to the condition that the address is correct.
• Further noted that, the discrepancy relating to address in the invoice is on account of the difference in the Head Office and the actual place from which the delivery was made as the petitioner has a separate office from where the Tax Invoices are raised, whereas the despatches are made from the godown where the pipes manufactured by the Petitioner’s factory are stored.
• Opined that, penalty under Section 129(5) of CGST Act on account of technical breach of provision or minor discrepancy relating to the difference in the address stated in the tax invoice and E-Way bill.
• Further opined that, the philosophy under the respective GST enactments is not to levy unjust tax and burden on assessee, who is otherwise regular in paying tax and complies with the law.
• Held that, the Impugned Order is liable to be set aside.

Relevant extract of the Circular:

Para no. 5 of Circular No. 64/38/2018-GST dated September 14, 2018

“5. Further, in case a consignment of goods is accompanied with an invoice or any other specified document and also an e-way bill, proceedings under section 129 of the CGST Act may not be initiated, inter alia, in the following situations:

a) Spelling mistakes in the name of the consignor or the consignee but the GSTIN, wherever applicable, is correct;

b) Error in the pin-code but the address of the consignor and the consignee mentioned is correct, subject to the condition that the error in the PIN code should not have the effect of increasing the validity period of the e-way bill;

c) Error in the address of the consignee to the extent that the locality and other details of the consignee are correct;

d) Error in one or two digits of the document number mentioned in the e-way bill;

e) Error in 4 or 6 digit level of HSN where the first 2 digits of HSN are correct and the rate of tax mentioned is correct;

f) Error in one or two digits/characters of the vehicle number.”

Our Comments:

The Hon’ble Allahabad High Court in the cases of M/S MODERN TRADERS VERSUS STATE OF UP AND 2 OTHERS [2018 (5) TMI 1030 - ALLAHABAD HIGH COURT], M/S GALAXY ENTERPRISES VERSUS STATE OF U.P. AND 2 OTHERS [2023 (11) TMI 359 - ALLAHABAD HIGH COURT], M/S. HINDUSTAN HERBAL COSMETICS VERSUS STATE OF U.P. AND 2 OTHERS [2024 (1) TMI 282 - ALLAHABAD HIGH COURT] and M/S SPIRARE ENERGY PVT LTD. VERSUS STATE OF U.P. AND 3 OTHERS [2024 (2) TMI 362 - ALLAHABAD HIGH COURT] interlalia held that, presence of mens rea for evasion of tax is a necessary ingredient for imposition of penalty under Section 129 of the CGST Act and mere technical error should not lead to imposition of penalty as there is no element of mens rea.

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