Published on: 31 August 2023 at 15:30 IST
The Allahabad High Court has revoked a penalty order imposed under Section 129 of the GST Act, reasoning that the absence of an E-way bill due to a minor technical error does not indicate an intention to evade taxes, especially when no other discrepancies are present.
The petitioner had sent five consignments through its normal business operations, accompanied by corresponding invoices. These goods were being transported from Gwalior to Panna, Madhya Pradesh, passing through the state of Uttar Pradesh. However, the consignments were intercepted by authorities in Uttar Pradesh since the E-way bill was not with the goods. Consequently, a penalty order was issued under Section 129(3) of the GST Act. The petitioner’s initial appeal against the penalty was dismissed.
The petitioner’s counsel referred to a notification issued by the State of Madhya Pradesh, exempting certain items from the requirement of an E-way bill during transportation.
The petitioner argued that the goods in transit were covered by this notification and thus did not necessitate an E-way bill within Madhya Pradesh. Furthermore, there were no discrepancies found in the tax invoices or the goods.
The State’s counsel, however, contested the application of the aforementioned notification, asserting that the goods were intercepted in Uttar Pradesh without a valid E-way bill.
The Court determined that seizing the goods was unwarranted since they were never unloaded in Uttar Pradesh, and there was no intention to do so. Additionally, the goods were exempted from requiring an E-way bill.
The Court highlighted that vehicle transporting goods from Gwalior to Panna inevitably passed through Uttar Pradesh for a short stretch.
Justice Piyush Agrawal, presiding over the case, noted: “On perusal of the impugned order, it is also found that it is categorically mentioned that the origination as well as termination of the goods in question was in the State of Madhya Pradesh, meaning thereby the authorities are of the view that the goods were not to be unloaded in the State of UP or any intention to avoid tax. However, mainly on the ground of some small technical fault for not carrying the e-way bill, the penalty ought not to have been levied in the absence of any discrepancy in the document accompanying the goods. In view of the above, the impugned orders cannot be sustained in the eyes of the law.”
Consequently, the Court set aside the penalty order and directed the authority to refund the amount deposited by the petitioner.