LI Network
Published on: February 16, 2024 at 12:53 IST
In a recent judgment, the Allahabad High Court quashed a penalty order under Section 129 of the Goods and Service Tax Act, 2017 against M/s Hawkins Cookers Limited, stating that governments should collect taxes like honeybees collect honey from a flower without disturbing its petals.
Justice Shekhar B. Saraf, while referring to Chanakya’s Arthashastra, emphasized that technical errors, such as an incorrect address on e-way bills, should not result in harsh penalties if there is no intention to evade tax.
The petitioner, engaged in the manufacturing and selling of pressure cookers, faced discrepancies in e-way bills during the transportation of raw materials from Maharashtra to Uttar Pradesh.
While four out of eight e-way bills had the correct delivery address, the remaining four erroneously mentioned the principal place of business at Kanpur instead of the factory at Jaunpur. The goods were intercepted, and a detention memo was issued.
The petitioner argued that the error was technical and unintentional, arising from the automatic reflection of the business address during e-way bill generation. The Court acknowledged that the petitioner’s claim was not far-fetched, given the absence of discrepancies in invoices and bilties.
The Court clarified that penalties under Section 129 require an intention to evade tax, usually present in cases of wholesale disregard of rules.
However, in situations involving technical or clerical errors in documents accompanied by goods, the department must indicate an intention to evade tax. The Court emphasized that a technical error in an e-way bill should not warrant a harsh penalty.
As a result, the Allahabad High Court allowed the writ petition, quashing the penalty order against M/s Hawkins Cookers Limited.
Case Title: M/S Hawkins Cookers Limited v. State Of U.P. And 2 Others [WRIT TAX No. – 739 of 2020]