‘Small Technical Fault For Not Carrying E-Way Bill’: Penalty Set-Aside By Allahabad High Court In Absence Of Any Other Discrepancies

The Allahabad High Court has set aside a penalty order under Section 129 of the GST Act on the ground that the missing E-way bill is a minor technical fault and does not prove intention to evade tax in the absence of any other discrepancies.

Petitioner, in ordinary course of business, sent five consignments for which five invoices were issued. The goods were being transported from Gwalior to Panna, Madhya Pradesh and passed through the State of UP, where they were intercepted as the e-way bill was not accompanying them. Consequently, a penalty order was passed under Section 129 (3) of the GST Act. The first appeal preferred by the petitioner was dismissed.

Counsel for Petitioner relied on a notification issued by the State of Madhya Pradesh in which certain items have been exempted from the need for an e-way bill while being transported. It was argued that the goods in transit were exempted under the notification, therefore, no e-way bill was required for transportation within Madhya Pradesh. Further, no discrepancies were found in the tax invoices and goods.

Counsel for State denied the application of the aforesaid notification as the goods were intercepted in the State of U.P. without an e-way bill.

The Court observed that the seizure of goods ought not to have been made as the goods were never unloaded in U.P. and there was an intention to do the same and the said goods were exempted from the requirement of the e-way bill. For the purpose of transportation from Gwalior to Panna, vehicles have to necessarily pass through the State of U.P. for a short distance.

A bench comprising of Justice Piyush Agrawal held

“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 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 document accompanying the goods. In view of above, the impugned orders cannot be sustained in the eyes of law.”

Accordingly, the order imposing penalty was set aside and the authority was directed to refund the amount deposited by the Petitioner.

Case Title: J.K. Cement Ltd. vs. State Of U.P. And 3 Others [WRIT TAX No. - 44 of 2023]

Case Citation: 2023 LiveLaw (AB) 295

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