2024 (7) TMI 1450 - HC - GST

Detention of goods on its onward journey - detention on the ground that the goods were being dispatched on a place different than mentioned in the documents - levy of penalty u/s 129 of the UPGST Act - existence of mens rea or not - HELD THAT - It is not in dispute that the purchaser was of Chandpur, but the goods were to be consigned to M/s Udit Engineers, Aligarh. When the goods were onward journey, the same were intercepted as in the e-way bill, the place of delivery was mentioned as Chandpur (UP), instead of Aligarh. This error can occur due to human error while filling up the form/e-way bill. Further, there is no finding recorded by any of the authorities below that there was a mens rea for evading payment of tax. Even before this Court, there is no pleading on behalf of the Sate that there was any intention to evade tax. This Court in Nancy Trading Company 2024 (7) TMI 1303 - ALLAHABAD HIGH COURT has held that ' 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. The said limit has now been reduced with effect from 1st August, 2022 to Rs. 10 crores, hence there was bona fide mistake on the part of the petitioner for not generating E Tax Invoice but in absence of any specific finding with regard to mens rea for evasion of tax, the proceeding under section 129 (3) of the Act should not have been initiated. ' The impugned order dated 30.09.2020 passed by the respondent no. 3 as well as the impugned order dated 21.08.2019 passed by the respondent no. 2 cannot be sustained in the eyes of law - petition allowed.

Summary

Issues: Challenge to penalty orders under section 129 of the UPGST Act due to discrepancy in e-way bill mentioning the wrong place of delivery.

Analysis:
The petitioner, engaged in the supply of electrical goods, challenged penalty orders dated 30.09.2020 and 21.08.2019 issued by the respondents for an error in an e-way bill. The goods were consigned to Aligarh but the e-way bill mentioned Chandpur (UP) as the place of delivery. The petitioner argued that the error was unintentional and did not affect the quality or quantity of the goods. The authorities did not establish mens rea for tax evasion, as required under section 129(3) of the GST Act. The petitioner cited precedents like Nancy Trading Company Vs. State of U.P. & 3 Others and Shyam Sel & Power Limited Vs. State of U.P. to support their case.

The ACSC supported the penalty, stating that the discrepancy in the e-way bill justified the penalty under the Act and Rules. The goods were seized, and no response was submitted post-detention. However, the Court noted that there was no intention to evade tax, and the error in the e-way bill was likely due to human error. The absence of mens rea for tax evasion was crucial in determining the validity of the penalty orders.

Referring to the judgment in Nancy Trading Company, the Court emphasized that technical errors, without intent to evade tax, should not warrant penalties under section 129(3) of the Act. The Court quashed the impugned orders dated 30.09.2020 and 21.08.2019, as there was no evidence of deliberate tax evasion and the error in the e-way bill was deemed a human mistake. The petitioner's writ petition was allowed, and any amount deposited during the proceedings was ordered to be returned within a month.