UPGST | Expired E-Way Bill, But No Intention To Evade Tax: Allahabad High Court Quashes Penalty Order

Recently, the Allahabad High Court has quashed the penalty which was imposed due to production of expired e-way bill at the time of detention. The Court held that no intention to evade tax was established by the authorities. Since, there was no dispute regarding consignor and consignee and the description of the goods, the Court held that penalty could not be imposed for a technical error in absence of any intention to evade tax.

When the goods of the petitioner were intercepted, one of the two e-way bills had expired. However, no discrepancies were found between the goods and the invoices and the other e-way bill. There was no finding regarding intention to evade tax. The reason for expiry of the e-way bill was stated to be the breakdown of vehicle. The letter of the mechanic who repaired the vehicle along with 'fast-tag' chart was produced before the Court as evidence.

Relying on the decision of the Allahabad High Court in M/s Pepsico India Holdings Limited Lucknow v. Commissioner of Trade Tax and Jain Shudh Vanaspati Limited Ghaziabad and Others v. State of U.P. and Others, counsel for petitioner argued that penalty could not be imposed for mere lack of requisite documents with the goods.

Counsel for respondent defended the penalty on grounds that the goods were not accompanied by requisite documents in accordance with the regulations. It was argued that the e-way bill had expired 10 days prior to detention of goods.

Relying on its earlier order in M/s Hindustan Herbal Cosmetics v. State of U.P. and Others and M/s Falguni Steels v. State of U.P. and Others, the Court observed that intention to evade tax is essential for imposition of penalty.

The Court held that the documents provided by the petitioner was not considered by the authorities.

“However, it is to be noted that the goods in the vehicle were for two e-Invoices and two E-Way Bills and only one E-Way Bill had expired. There is no dispute with regard to the consignor and consignee nor any dispute with regard to the description of the goods in the vehicle. In relation to the e-Invoices and the E-Way Bills, the authorities have not been able indicate any intention whatsoever on behalf of the petitioner to evade tax. Indubitably, there is a technical violation that has been committed by the petitioner,” held Justice Shekhar B. Saraf.

Since the authorities had failed to make a case of intention to evade tax, the Court held that penalty under Section 129(3) cannot be imposed based on technical errors.

Accordingly, the penalty order and the subsequent order of the appellate authority were quashed.

Case Title: M/s Globe Panel Industries India Pvt. Ltd. vs. State Of U.P. And Others 2024 LiveLaw (AB) 74 [Writ Tax No. 141 of 2023]

Case citation: 2024 LiveLaw (AB) 74

Counsel for Petitioner: Shubham Agrawal

Counsel for Respondent: Rishi Kumar

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